Family-owned business & performance

Written on 10 March 2015.



Family Firms and Performance: Where do we stand?

Despite the dominance of family firms, most academic research is not targeted to them and they remain largely unknown in the literature. Research regarding the specificities of management and governance practices of family firms is especially scarce. The EDHEC Family Business Center undertakes research on management quality within family firms, developing issues such as governance, management, succession, finance and family business role in society. PhD. Lopez-de-Silanes, F. and Dr. Timothée Waxin have recently published interesting papers on these issues.
Family Firms and Performance: Where Do We Stand?
Lopez-de-Silanes, F. and Dr. Timothée Waxin (2014)
Family-owned firms are a major feature of the business landscape worldwide, from Europe to Asia to the Americas. They dominate the global corporate landscape, but little is known about their relative performance. The paper provides a systematic analysis of the literature on the comparative performance of family firms in the fields of finance and management, and an assessment of the robustness of the evidence thus far. This review shows that existing studies provide puzzling and conflicting evidence with substantial variation pointing in both directions. The paper then identifies potential explanations to help us interpret the data. Two robust patterns emerge from the analysis. Primarily, firms where founders play a role account for a large share of the positive relative performance of family firms found in the literature. Secondly, family firms with control-enhancing mechanisms and those located in countries with poor investor protection underperform. These lessons suggest that close founding family engagement and improving corporate governance in family firms may help firms improve their performance, valuations and access to capital.
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