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Article
Publication date: 2 March 2012

Lucio Cassia, Alfredo De Massis and Emanuele Pizzurno

This study aims to investigate the relationship between the presence of the family variable within a business enterprise and the managerial factors affecting the success…

Abstract

Purpose

This study aims to investigate the relationship between the presence of the family variable within a business enterprise and the managerial factors affecting the success of new product development (NPD). This can be structured into three research questions: What is the relationship between the presence of the family variable within a business enterprise and the managerial factors affecting the success of NPD activities? How the managerial factors affecting the NPD process are faced in family firms? Which are the main differences (e.g. strengths and/or weaknesses) in dealing with the managerial factors affecting the NPD process between family and non‐family firms?

Design/methodology/approach

The study employs a grounded‐theory and case‐study approach to investigate the relationship between the presence of the family variable within a business enterprise and the managerial factors affecting the success of NPD. The starting point is an in‐depth literature review on the managerial factors differentiating family from non‐family firms, and the managerial factors affecting NPD success. Then, a multiple case‐study on five Italian family firms and five Italian non‐family enterprises is conducted. The case‐studies lead to the development of an empirically grounded theoretical framework that outlines how the distinctive characteristics of family businesses are related to the managerial factors affecting NPD success.

Findings

Family firms clearly emerge as more long‐term oriented than non‐family enterprises. The long‐term orientation of family businesses vs non‐family companies seems to play a pivotal role in originating NPD projects with long‐term thrust. If a company is long‐term oriented it is reasonable to expect that it will put its long‐term vision in NPD programs, thus reaching a NPD long‐term thrust.

Research limitations/ implications

The study advances research on strategic innovation and NPD in family vs non‐family firms. It develops new theory at the important intersection of family business and innovation/NPD research, filling a gap in the literature and providing justification and guidance for the design of more comprehensive studies. Future research could investigate and test the theoretical framework on a wider empirical base, using either qualitative or quantitative methods.

Originality/ value

The paper addresses the failure of innovation management research to recognize, embrace, and deliberately incorporate family firms. It therefore fills a gap in the literature and extends prior research by introducing specific propositions that are supported by the case data and originally integrating them in the general research stream on NPD and family‐firm characteristics. The originality of the study lies also in the fact that it appears to be the first comparative analysis on this specific topic involving both family and non‐family enterprises.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 18 no. 2
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 22 February 2013

Kuntara Pukthuanthong, Thomas J. Walker, Dolruedee Nuttanontra Thiengtham and Heng Du

– The purpose of this paper is to examine whether and how family ownership enhances or damages firm value.

Abstract

Purpose

The purpose of this paper is to examine whether and how family ownership enhances or damages firm value.

Design/methodology/approach

The paper studies a sample of Canadian companies listed on the Toronto Stock Exchange (TSX) between 1999 and 2007 and apply multivariate regression with firm value as a dependent variable. The paper measures firm value as Tobin ' s Q and ROA based either on net income or EBITDA. The independent variables include family firm dummy and ownership percentage.

Findings

It is found that control-enhancing mechanisms which are often employed by family companies add value to companies. Furthermore, it is found that agency conflicts between ownership and management are less costly than those between majority and minority shareholders, suggesting that family ownership helps resolve the agency conflicts between ownership and management and in turn enhances firm value. Finally, it is found that family companies with founders as CEOs outperform those with descendants as CEOs.

Research limitations/implications

The paper studies Canadian family firms; as such, the sample size is not relatively large. Nonetheless, the results should be generalized as Canada is one of the largest markets in the world and have high integration with the rest of the world.

Practical implications

The results suggest investors should invest in family ownership firms.

Originality/value

The paper shows whether firm ownership increases firm value and the determinant of family firm value.

Details

International Journal of Managerial Finance, vol. 9 no. 1
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 1 April 1997

Paul Westhead and Marc Cowling

Explores whether there are any significant performance and ambitions differences between independent family and non‐family unquoted companies in the UK. To detect “real”…

Abstract

Explores whether there are any significant performance and ambitions differences between independent family and non‐family unquoted companies in the UK. To detect “real” performance and ambitions differences, rather than demographic “sample” differences between family and non‐family companies, a “matched” sample methodology has been utilized. Concludes that there are strong similarities between the two groups of companies in terms of “hard” objective performance and ambition indicators. Such differences as do occur are reflected in the finding that family companies are markedly more likely to stress non‐financial objectives than non‐family companies. Discusses implications for future research exploring the characteristics and performance of family and non‐family companies.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 3 no. 1
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 19 March 2019

Faisal Shahzad, Ijaz Ur Rehman, Sisira Colombage and Faisal Nawaz

The purpose of this paper is to empirically investigate the impact of two monitoring mechanisms: family ownership (FO) and financial reporting quality (FRQ) on investment…

Abstract

Purpose

The purpose of this paper is to empirically investigate the impact of two monitoring mechanisms: family ownership (FO) and financial reporting quality (FRQ) on investment efficiency (IE) over the period of 2007–2014 for listed firms on the Pakistan Stock Exchange.

Design/methodology/approach

The authors employ two-dimensional pooled OLS cluster at the firm and year level, two-stage least square regression and feasible generalized lease square regression regression methods.

Findings

The findings suggest that higher FRQ and FO are associated with higher IE. Further, the authors report that higher FRQ and FO mitigate over- and under-investment. The impact of FRQ on IE is stronger (weaker) for family-controlled businesses. The results for these particular estimates are robust for alternative estimation techniques and measures of FRQ and FO.

Originality/value

The study draws on both agency and behavioral agency theories and therefore contributes to the literature in the following ways. First, the authors examine a relationship between FRQ and IE. Second, the authors test the impact of FO on IE. Third, the authors test the moderating impact of FO on the relationship between FRQ and the IE of family and non-family firms in relatively less regulated emerging market.

Details

Managerial Finance, vol. 45 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 7 August 2017

Rateb Mohammmad Alqatamin, Zakaria Ali Aribi and Thankom Arun

This study aims to examine the effect of CEO’s personal characteristics on earnings management (EM) practices.

Abstract

Purpose

This study aims to examine the effect of CEO’s personal characteristics on earnings management (EM) practices.

Design/methodology/approach

The authors use panel data for 201 non-financial companies listed on the Amman Stock Exchange (ASE) for the period 2008-2013. The authors use random effect models to test the hypothesis of this study and extent the analysis to family versus non-family.

Findings

The study finds a positive relation between CEO’s overconfidence and EM practices in Jordan. Moreover, the findings reveal that managers in family companies are more likely to engage in EM practices than non-family companies. The findings shed more light on the intricate relationship between CEO’s characteristics, the decision-making process and financial reporting.

Practical implications

Results of this study could be beneficial for a number of users of financial information such as investors, auditors, regulators, lenders, as well other players in the capital market to make right decisions.

Originality/value

A literature review finds that much less studies have investigated the relationship between EM practices and personal CEO characteristics (gender and overconfidence) in developing countries such as Jordan. Furthermore, no study yet has examined the influence of CEO age on EM practices. The authors extend previous literature by providing empirical evidence about effect of some personal CEO’s characteristics on EM practices.

Details

International Journal of Accounting & Information Management, vol. 25 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 7 August 2018

Atanas Nik Nikolov and Yuan Wen

This paper brings together research on advertising, family business, and the resource-based view (RBV) of the firm to examine performance differences between publicly…

Abstract

Purpose

This paper brings together research on advertising, family business, and the resource-based view (RBV) of the firm to examine performance differences between publicly traded US family vs non-family firms. The purpose of this paper is to understand the heterogeneity of family vs non-family firm advertising after such firms become publicly traded.

Design/methodology/approach

The authors draw on the RBV of the firm, as well as on extensive empirical literature in family business and advertising research to empirically examine the differences between family and non-family firms in terms of performance.

Findings

Using panel data from over 2,000 companies across ten years, this research demonstrates that family businesses have higher advertising intensity than competitors, and achieve higher performance returns on their advertising investments, relative to non-family competitors. The results suggest that the “familiness” of public family firms is an intangible resource that, when combined with their advertising investments, affords family businesses a relative advantage compared to non-family businesses.

Research limitations/implications

Family involvement in publicly traded firms may contribute toward a richer resource endowment and result in creating synergistic effects between firm “familiness” and the public status of the firm. The paper contributes toward the RBV of the firm and the advertising literature. Limitations include the lack of qualitative data to ground the findings and potential moderating effects.

Practical implications

Understanding how family firms’ advertising spending influences their consequent performance provides new information to family firms’ owners and management, as well as investors. The authors suggest that the “familiness” of public family firms may provide a significant advantage over their non-family-owned competitors.

Social implications

The implications for society include that the family firm as an organizational form does not need to be relegated to a second-class citizen status in the business world: indeed, combining family firms’ characteristics within a publicly traded platform may provide firm performance benefits which benefit the founding family and other stakeholders.

Originality/value

This study contributes by highlighting the important influence of family involvement on advertising investment in the public family firm, a topic which has received limited attention. Second, it also integrates public ownership in family firms with the family involvement–advertising–firm performance relationship. As such, it uncovers a new pathway through which the family effect is leveraged to increase firm performance. Third, this study also contributes to the advertising and resource building literatures by identifying advertising as an additional resource which magnifies the impact of the bundle of resources available to the public family firm. Fourth, the use of an extensive panel data set allows for a more complex empirical investigation of the inherently dynamic relationships in the data and thus provides a contribution to the empirical stream of research in family business.

Details

Journal of Family Business Management, vol. 8 no. 3
Type: Research Article
ISSN: 2043-6238

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Article
Publication date: 28 January 2020

Carolin Neffe, Celeste P.M. Wilderom and Frank Lattuch

Several studies of family firm failures have pointed to non-family members in leading positions as a reason. However, non-family members have often played a key role in…

Abstract

Purpose

Several studies of family firm failures have pointed to non-family members in leading positions as a reason. However, non-family members have often played a key role in family-firm longevity, while non-family executives’ involvement in family firms is increasing. These non-family executives who (co-)run family firms are thought to require an almost impossible set of behavioural qualities. The aim of this exploratory study is to find out how specific leader behaviours of effective family executives and non-family executives may differ.

Design/methodology/approach

Based on Dulewicz and Higgs’ (2005) broad leadership frame, the authors draw attention to a large range of behaviours of family-firm executives. In-depth interviews were conducted with successful German executives, both family and non-family ones. Their answers had to contain specific behavioural examples.

Findings

More behavioural similarities than differences are shown between family- and non-family-based executives. Yet, the self-reflective communicative behavioural qualities of the non-family executives could balance a lack of such qualities among the family-based executives. Based on the three major differences – decision-making style, communication versatility and self-awareness – specific new research propositions are distilled about effective family firm leadership.

Originality/value

Practical suggestions for recruiting non-family executives are offered. Future quantitative longitudinal research on how to pair specific behavioural qualities of family and non-family based executives that optimise family-firm longevity is urgently needed.

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Article
Publication date: 11 June 2018

Wouter Broekaert, Bart Henssen, Johan Lambrecht, Koenraad Debackere and Petra Andries

The purpose of this paper is to analyze how the sense of control, psychological ownership and motivation of both family owners and non-family managers in family firms are…

Abstract

Purpose

The purpose of this paper is to analyze how the sense of control, psychological ownership and motivation of both family owners and non-family managers in family firms are interrelated. This paper analyzes the limits set by family owners when delegating control to their non-family managers and the resulting potential for conflict and demotivation of the non-family managers.

Design/methodology/approach

Building on the existing literature, first, an overview of the literature on psychological ownership and control is presented. Second, the paper analyzes the insights gained from interviews with 15 family owners and non-family managers in five family firms.

Findings

This study finds that motivating non-family managers is not merely a matter of promoting a sense of psychological ownership throughout the company. A strong sense of psychological ownership may facilitate but also hinder the cooperation between family and non-family. Family owners are often only willing to delegate operational control, while non-family managers also feel entitled to participate in strategic decision making. This leads to the proposition that non-family managers’ psychological ownership in family firms’ conflicts with family owners’ desire to maintain control.

Originality/value

This study answers the calls to seek additional insight in how non-family managers function within family firms. By shedding light on the complex relationship between control, psychological ownership and motivation in family firms, the study responds to the calls for more empirical validation of the psychological ownership framework and for more research into the potential negative effects of psychological ownership in the family business.

Details

Journal of Family Business Management, vol. 8 no. 2
Type: Research Article
ISSN: 2043-6238

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Article
Publication date: 29 November 2018

Pallab K. Biswas, Helen Roberts and Rosalind H. Whiting

Based on the socioemotional wealth (SEW) perspective and agency theory, the purpose of this paper is to examine how the introduction of the 2006 Corporate Governance (CG…

Abstract

Purpose

Based on the socioemotional wealth (SEW) perspective and agency theory, the purpose of this paper is to examine how the introduction of the 2006 Corporate Governance (CG) Guidelines and family governance affected the level of the corporate social responsibility (CSR) reporting of non-financial companies in Bangladesh.

Design/methodology/approach

The authors use multivariate regression to analyse 2,637 firm-level annual observations, from 1996 to 2011 annual reports of Bangladeshi publicly listed non-financial-sector companies, to investigate how firm-level CG quality affects CSR disclosure in family and non-family firms.

Findings

CG quality significantly increases the level of CSR disclosure and this relationship is stronger prior to the new CG Guidelines. Family firms’ CSR reporting levels are significantly lower than non-family firms’, and this effect is stronger after the change in the CG Guidelines. CEO duality, the presence of an audit committee and profitability improve family-firm CSR reporting in Bangladesh, while non-family CSR disclosures are positively associated with board size and firm competition. Board independence is not related to CSR disclosure.

Originality/value

The authors provide evidence of the benefit of the CG Guidelines’ introduction on company CSR disclosure in an emerging economy and the importance of specific governance mechanisms that differentiate family and non-family-firm CSR disclosures in Bangladesh using a SEW framework.

Details

Management Decision, vol. 57 no. 10
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 29 October 2019

Roberto Tommasetti, Marcelo Á. da Silva Macedo, Frederico A. Azevedo de Carvalho and Sergio Barile

The purpose of this paper is to contribute to the literature on financial reporting quality (FRQ) within family firms (FFs), assessing whether longevity can determine a…

Abstract

Purpose

The purpose of this paper is to contribute to the literature on financial reporting quality (FRQ) within family firms (FFs), assessing whether longevity can determine a different propensity to earning management (EM) behaviors.

Design/methodology/approach

The sample, composed by Italian and Brazilian listed family (and non-family) firms, is segregated into old and young. For each subsample, unsigned discretionary accruals are calculated, using two different EM models. A linear regression model is then proposed, together with some robustness tests, to confirm the research hypothesis.

Findings

The outcome is that, within FFs, the entrenchment effect seems to be diminishing with the company’s age, up to become lower than the alignment effect. With some caveat, research also demonstrates that old FFs are more propense to supply higher FRQ than any other subsample group.

Research limitations/implications

The authors demonstrated that, in terms of EM decision process, FFs become virtuous just with time. More research is needed to evaluate the impact of the share and management control separately and to analyze different generation segmentation.

Practical implications

This paper could help non-family stakeholders, as it shows that different company types (family vs non-family), at a different stage of the life-cycle (young vs old) have a different attitude toward FRQ. On the other hand, family owners could exploit the longevity as a value driver.

Originality/value

This paper suggests that agency theory and socio-emotional theory are complementary in explaining the family control role in earnings management decisions. The study also contributes to the debate of FF homogeneity and on risk behavior in FFs, often portrayed as having a patient capital.

Details

Journal of Family Business Management, vol. 10 no. 1
Type: Research Article
ISSN: 2043-6238

Keywords

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