REVIEW PAPER Identifying and classifying family businesses J. Die ´guez-Soto • P. Lo ´pez-Delgado • A. Rojo-Ramı ´rez Received: 12 January 2013 / Accepted: 9 May 2014 / Published online: 27 May 2014 Ó Springer-Verlag Berlin Heidelberg 2014 Abstract One of the main challenges facing those researching family business is that of defining what exactly constitutes a family business when considering whe- ther family businesses and non-family businesses are different or not. Most research on the definition of family firms has been conceptual-based, and the choice of definition has lacked empirical support. Previous research has not yet obtained conclusive results regarding the differences between family and non-family firms. Moreover, very few countries worldwide have explicit database information to enable them to recognize family firms. This research uses an abductive method to identify family-involved firms (FIFs) with homogeneous features compared to the rest of firms regarding performance, an essential indicator of the firm’s success. Second and later generation FIFs, despite their internal differences, make up a uniform group of firms when considering several dimensions of performance (leverage, efficiency and profitability), and differ significantly from the rest of firms. At the same time we test whether entrepreneurial firms (lone- founder firms) should be considered family firms or non-family firms, according to their behavior. Results agree with making a distinction between lone-founder firms, in which no relatives are involved as internal stakeholders, and FIFs. Keywords Family business identification Family business classification Performance Leverage Survival Efficiency Profitability J. Die ´guez-Soto (&) P. Lo ´pez-Delgado Faculty of Economics, University of Ma ´laga, El Ejido s/n, 29071 Ma ´laga, Spain e-mail: [email protected]P. Lo ´pez-Delgado e-mail: [email protected]A. Rojo-Ramı ´rez Faculty of Economics, University of Almerı ´a, Ctra. Sacramento s/n La Can ˜ada de San Urbano, 04120 Almerı ´a, Spain e-mail: [email protected]123 Rev Manag Sci (2015) 9:603–634 DOI 10.1007/s11846-014-0128-6
Transcript
REVIEW PAPER
Identifying and classifying family businesses
J. Dieguez-Soto • P. Lopez-Delgado • A. Rojo-Ramırez
Received: 12 January 2013 / Accepted: 9 May 2014 / Published online: 27 May 2014! Springer-Verlag Berlin Heidelberg 2014
Abstract One of the main challenges facing those researching family business isthat of defining what exactly constitutes a family business when considering whe-ther family businesses and non-family businesses are different or not. Most researchon the definition of family firms has been conceptual-based, and the choice ofdefinition has lacked empirical support. Previous research has not yet obtainedconclusive results regarding the differences between family and non-family firms.Moreover, very few countries worldwide have explicit database information toenable them to recognize family firms. This research uses an abductive method toidentify family-involved firms (FIFs) with homogeneous features compared to therest of firms regarding performance, an essential indicator of the firm’s success.Second and later generation FIFs, despite their internal differences, make up auniform group of firms when considering several dimensions of performance(leverage, efficiency and profitability), and differ significantly from the rest of firms.At the same time we test whether entrepreneurial firms (lone- founder firms) shouldbe considered family firms or non-family firms, according to their behavior. Resultsagree with making a distinction between lone-founder firms, in which no relativesare involved as internal stakeholders, and FIFs.
Keywords Family business identification ! Family business classification !Performance ! Leverage ! Survival ! Efficiency ! Profitability
J. Dieguez-Soto (&) ! P. Lopez-DelgadoFaculty of Economics, University of Malaga, El Ejido s/n, 29071 Malaga, Spaine-mail: [email protected]
What is a family business (Lansberg et al. 1988)? Are family businesses (FBs)different from non-family businesses (NFBs) (Daily and Dollinger 1991)? Are therespecial dynamics that are characteristic of FBs (Kets de Vries 1993)? Thesequestions were some of the very first to be asked in family business research andcontinue to motivate much research in this area. There is no doubt that remarkableprogress has been made in answering these questions, and the consensus seems to bethat what actually defines a family firm is its essence, the vision developed by adominant family-controlled coalition sustainable across generations (Chua et al.1999). However, the definition of what a family business is continues to be one ofthe main challenges facing family business researchers when considering whetherFBs and non-family businesses are different (Chrisman et al. 2005).
Chua et al. (1999) suggested the importance of distinguishing between two typesof definitions: theoretical and operational. However, both types of definition areneeded to study family firms, and the components of family involvement may beused operationally to delineate a population for study. Family involvement is aninclusive concept that embraces family ownership, management, governance andtrans-generational continuity of succession (Handler 1989). Nevertheless, theexistence of the components of family involvement does not ensure that these firmspossess the essence of a family business.
In this regard, Astrachan et al. (2002) proposed the familiness-power, experienceand culture scale (F-PEC), an alternative method for assessing the family influenceon a continuous scale instead of restricting its use as a categorical variable, thusproviding a framework with which to reconcile the components-of-involvement andessence approaches. However, scholars generally choose a family-involvement-based definition to differentiate FBs from NFBs, with subsequent testing performedto determine whether companies behave differently according to different theories.To date, no conclusive results regarding the differences between FBs and NFBshave been obtained. For example, various studies find that family involvementimproves, worsens or has no effect on firm performance. These findings areunsatisfactory for scholars who attempt to justify them in different ways (Dyer2006). Some reasons suggested for these conflicting results include that differingdefinitions of FBs are applied using different combinations of the components offamily involvement (Westhead and Cowling 1998) and that these definitions areonly operational-based, ignoring the essence of a family business (Chua et al. 1999).In this regard, Sharma (2004) notes that a taxonomy for differentiating between FBsand NFBs and among different types of FBs is lacking. Furthermore, very fewcountries worldwide have explicit information available in databases to recogniseFBs, perhaps because no single FB definition is uniformly accepted. Therefore, themajority of researchers are forced to work with small samples because membershiplists of professional associations, mailing lists of family firm consultants andsurveys or interviews are the only means of distinguishing FBs. As such, the
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research community might welcome a method for identifying different types of FBsfrom databases, enabling them to work with a larger number of firms.
Based on the foregoing arguments, we consider that there are at least two ways inwhich it would be useful to identify a distinct group of firms in which familyinvolvement is a key feature, henceforth referred to as family-involved firms (FIFs).First, it is difficult to reconcile findings from different studies using distinctdefinitions of FB. Second, family involvement might influence a firm’s perfor-mance. Thus, it would be valuable to recognise a distinct group of firms in whichfamily involvement is an essential characteristic and whose performance is differentbecause it is an essential indicator of the organisational success and competitiveadvantage of firms and provides indications of the firms’ contribution to economicdevelopment from different perspectives.
Against this background, and applying a pseudo-operational definition of FB, weaddress four interrelated but different questions throughout the manuscript. First, weraise the issue of whether it would be possible to split all firms into homogeneousgroups that are distinct from each other. Researchers usually tackle this issue bydefining FBs operatively and later analysing the differences between NFBs and FBs.Our proposal takes another direction: those firms characterised by any component offamily involvement and common features in performance with respect to other firmsare recognised as a homogeneous group of FBs (abductive method).
Second, we address the question of whether one or more groups could be relatedto family involvement in the firms. We believe that the simultaneous existence ofdifferent components of family involvement can be used to overcome thischallenge. Specifically, we feel that an operational definition of FB should be biasedtowards being inclusive. Therefore, we opt for a broad definition within whichdistinct types of FBs, depending on their components of family involvement, can beidentified, classified and compared. To this end, a classification of firms iselaborated based on the legal nature of the firm; lone-founder or family involvementin the ownership, management or governance; and the ownership concentration. Alarge number of potential FBs are validated empirically by a cross-sectional analysisbased on a sample of 4,958 Spanish firms taken from the SABI (Analysis System ofSpanish Balance Sheets) database. After applying several different statisticaltechniques, our results identify four different types of FBs: co-preneurs, independentFBs, professionally run FBs and FBs run solely by family members.
Thirdly, we attempt to test whether these types of FBs share homogeneousfeatures regarding several dimensions of performance and in what way FIFs behavedifferently from other firms, thereby providing more empirical evidence regardingthe unique characteristics of FBs. To test whether time is an underlying variable ofthe performance dimensions analysed, we also consider the trans-generationalcontinuity of succession component of family involvement, comparing FBs inwhich an inter-generational transfer took place with the rest of the firms,emphasising the homogeneity of the group of firms identified.
This research is interesting in several ways. First, this study defines FBoperatively but using an abductive method, which might complement the use of adeductive one. Second, it contributes to a better understanding of FBs, providing ataxonomy for distinguishing between FBs and NFBs as well as among different
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types of FB. The study shows that FIFs, even with evident differences, form ahomogeneous group of firms with regard to distinct dimensions of performance andare wholly different from non-family-involved firms. Furthermore, testing isperformed using a sample composed mainly of privately held firms, whereas mostprevious research focuses on publicly traded firms. Lastly, this study offers thescientific community a tool with which to recognise FBs from databases, therebyenabling researchers to work with larger data samples.
The section following this introduction describes the conceptual framework,including a literature review and the hypotheses used herein. Section three explainsthe method applied, and section four presents the results. Section five is devoted to adiscussion of the results. Lastly, section six presents the main conclusions.
2 Literature review and hypotheses
2.1 FB definition
Various authors have attempted to identify the intrinsic qualities and fundamentalnature of FBs. Chua et al. (1999) view the essence of an FB as a vision developed bya dominant coalition controlled by members of the same family or a small numberof families and sustainable across generations of the family or families. Habbershonand Williams (1999) believe that the essence should include the concept of‘‘familiness’’. The authors have suggested that family-influenced firms differ fromother firms in that they own a unique bundle of resources and capabilities resultingfrom interactions between the family unit, the business entity and the individualfamily members (Habbershon et al. 2003). Furthermore, Gomez-Mejia et al. (2007)highlight that FBs are also distinct because they share socioemotional wealth.Certainly, definitions based on the essence of such firms allow researchers todifferentiate FBs from NFBs and to identify different types of FBs.
These theoretical definitions must be transformed into operational definitions toconduct empirical studies. However, operative definitions have their own limita-tions. Some authors base their definition on objective criteria, such as the percentageof family ownership or the number of family members occupying management orboard positions (Dyer 2006). Other researchers have defined a firm as an FB basedon subjective aspects, such as whether a respondent believes the firm is an FB(Smith 2007). In addition, some scholars have used intention to transfer ownershipto the next generation as a criterion (Litz 1995), whereas others believe that an FB isdefined by is inter-generational ownership dispersion (Kellemarnns et al. 2012). Asthe existence of components makes the essence possible (Chua et al. 1999), scholarsalso have utilised family involvement to define FB, a broad term that includesfamily ownership, management, governance and trans-generational continuity ofsuccession (Handler 1989). However, having a family component is necessary butnot sufficient to define an FB (Chrisman et al. 2005; Chua et al. 1999). Table 1shows some of the main criteria included in the current international definitions ofFBs.
Nevertheless, empirical research concerning whether FBs are different fromNFBs (Daily and Dollinger 1991) is not conclusive. As previously stated, one of thereasons for the contradictory conclusions might be the application of differingdefinitions of FBs. For instance, some authors have stressed that when entrepreneurfirms (lone-founder-run) are considered family firms, family firms as a group areviewed as better performers (Miller et al. 2007; Villalonga and Amit 2006).
2.2 Performance in FBs
Performance is an essential indicator of the organisational success and competitiveadvantage of firms. If firms are able to identify the factors that determine improvedperformance, they can take advantage of their unique attributes. Thus, the literatureon business strategy and financial economics has paid more attention to the analysisof performance in FBs (Mazzi 2011). As a consequence, there is no doubt that itwould be useful to identify a distinct group of firms with family involvement as akey feature in all firms to determine which type of organisation is more efficient:FBs or NFBs.
Agency theory, the stewardship perspective and resource-based theory areusually adopted as points of reference to explain performance differences betweenFBs and NFBs (Maury 2006; Miller and LeBreton Miller 2005). Agency theoryproposes that ownership and governance structure influence firm decisions (Fama1980; Fama and Jensen 1983; Jensen and Meckling 1976). Controlling shareholdersoften use their power and superior information to expropriate minority shareholders(Miller et al. 2007). Thus, family shareholders might undermine minorityshareholders’ wealth by protecting incompetent family managers or workers andexpropriating firm assets, thereby reducing firm performance (Gomez-Mejia et al.2001). Some agency theorists believe that FBs are more vulnerable to self-controlproblems due to the lack of formal information and control systems (Naldi et al.2007). FBs’ tendencies toward conflict (Kaye 1991), altruism (Gomez Mejia et al.2001) or amoral familism (Christensen 2002) may lead to worse performance. Onthe other hand, other followers of this theory believe that the alignment betweenowner and manager ensures effective decision-making, maximising their families’wealth (Zahra 2005).
The stewardship perspective suggests that family owners use their influence tobenefit all of the organisation’s stakeholders, enhancing the sustainable value of thebusiness, freed from short-term financial market demands (Le Breton Miller andMiller 2009). Specifically, the aim of guaranteeing family control of the firm(Chrisman et al. 2004), the family’s interest in the long-term survival of the businessand concern about compromising the family name and reputation (Bartholomeuszand Tanewski 2006; Naldi et al. 2007) may curtail opportunistic behaviour withrespect to earnings obtained (Anderson and Reeb 2003). In this sense, resource-based theory posits that FBs are better at building social capital and creatingprofitable relationships with stakeholders than other firms are (Miller et al. 2009).
Some research has confirmed that family ownership (Martınez et al. 2007; Maury2006) and family management (Anderson and Reeb 2003; Maury 2006) have apositive effect on performance. However, other scholars have found a negative
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influence of family ownership (Morck et al. 2000) and family management(Filatotchev et al. 2011) on performance. Additionally, some authors, such asBlanco-Mazagatos et al. (2007), Le Breton-Miller et al. (2011) and Westhead andHoworth (2006), have not observed significant differences in financial performancemeasures between family- and non-family-managed firms. Lastly, Steward and Hitt(2012) summarise past research on family involvement in performance andhighlight that in public firms, family involvement generally has a positive effect onperformance, whereas for private firms, family involvement generally has aninsignificant or negative effect on performance. Briefly, most studies have founddifferences between FBs and NFBs with regard to performance.
2.3 Hypothesis
As indicated above, the findings in the previous literature are indeed highly sensitiveto both the way in which FBs are defined and the nature of the sample examined.Therefore, it seems crucial to test which types of family firms actually exhibithomogeneous behaviour.
Chrisman et al. (2003) believe the development of methods for distinguishingFBs from NFBs is still in its infancy. We would add that the methods fordiscriminating different types of FBs are also nascent. In this context, we addressthe apparently puzzling evidence on the use of a uniform definition of a family firm.We adopt an unusual method to define an FB, and much of our contribution ismethodological.
Most scholars use a deductive method in their research based on a generallyaccepted rule: FBs and NFBs perform differently. They then test whether there aredifferences between the two groups of firms. As described above, they reachdifferent results depending on the operative definition used. Scientists haveexpressed caution about the use of deductive reasoning because it does not allow fornew findings (Daros 2002). In this study, an abductive method is proposed as analternative to classical research methods because it may be the most effective way toobtain new knowledge (Pierce 1988) and is a suitable option for addressing issuesthat have not been sufficiently explained. We believe this approach may beappropriate to address the unsolved problem of a uniform definition of a family firm,given that it is based on examining a multitude of facts and allowing the facts tosuggest a theory (Hoffmann 1998).
Specifically, we aver that if the results confirm that a group of firms performdifferently from the rest of the firms and the literature review establishes that moststudies have found differences between FBs and NFBs with regard to performance,as described above, then the group of firms that perform differently may be FIFs.
In summary, we attempt to demonstrate that FBs are different using the premisethat those firms that behave differently from the rest of the firms in severaldimensions of performance are likely to be FIFs.
Thus, the following hypothesis is formulated:
H1 Firms with some component of family involvement perform differently fromother firms.
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3 Method
3.1 Database
Financial data were obtained from the Spanish SABI database. This database wasalso used by Sacristan-Navarro et al. (2011), among others. Data were collected inthe year 2009 and refer to the 2006–2007 period. To reduce heterogeneity, westratified the sample by size and industry. In total, our sample included data for4,958 companies. To reduce heteroscedasticity and non-normality problems,numerous samples of firms falling into several categories were used and weredistributed in a uniform way (500 firms by stratum), except for large-scaleagricultural firms and construction firms, as these populations included fewer firms(see Table 2).
The following companies were excluded from the data set: firms withoutfinancial information available for the period 2002–2007; firms affected by specialsituations, such as bankruptcy proceedings, winding up, liquidation or periods of noactivity; and firms in the financial and insurance sectors, among others.1 Microcompanies were also excluded, as the financial information for such firms is oftennot reliable. Lastly, SABI includes 115,695 firms that have overcome formerlimitations and that have been classified by size and industry, as this is important inquantitative research (Dyer 2006; Smith 2007; Anderson and Reeb 2003; Lee 2006).Each company is assigned to a specific industry according to CNAE-2009.2
Firms from the SABI were classified according to the legal nature of the firm;lone-founder or family involvement in ownership, management or governance; andthe ownership concentration (Lopez-Gracia and Sanchez-Andujar 2007). Specifi-cally, to look for family ties, we took advantage of the Spanish custom of givingchildren two surnames, one from each parent. The surnames of all internalstakeholders involved in the management and governance of the business (theshareholders, CEO and directors of the firm) were compared, as also done byGomez-Mejıa et al. (2001) and Perez-Gonzalez (2006). Subsequently, eightdifferent classes of firms were considered (see Fig. 1). We measured familyinvolvement as a typology, as also done by Garcia-Castro and Sharma (2012).
Type 1–2 Spanish firms of non-family character. General and limited partnerships(Type 1). Firms whose last owner is a business (Type 2)
Type 3 No coincidence of surnames exists among the last shareholders,directors or CEO (internal group). As with Type 1–2, such companiesare clearly NFBs
Type 4 Entrepreneurial firms (lone-founder proxy). The same person holds thestatus of sole shareholder, director and CEO
Type 5
1 Public administration and defence; obligatory national health service; associative activities; homeactivities, such as employers of domestic staff as well as producers of goods and services for own use; theactivities of extraterritorial organizations and organisms.2 The CNAE-2009 is integrated in the Statistical Classification of Economic Activities in the EuropeanUnion, usually known as NACE (Rev. 2), and is similar to the Standard Industrial Classification (SIC).
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Table 2 Sample firms selected by industry and size
Population Active firms for 2002–2007 in SABI that fulfil the following conditions:
1. A capitalistic nature
2. Non-financial and non-insurance firms
3. Non-micro companies
4. Accounting data are available for the entire period
Place Spain
Date publication 2009
Sampling method Stratified sampling by size of firm and industry
Sample size 4,958 firms
Allocation Uniform
Confidence level 95 %
Error .02 %
Agriculture Manufacturing Construction Services Total
Is the firm a general or limited partnership or is a company the last and main owner?
No
No
Is there a coincidence among surnames of theinternal group?
No
Yes
YesDoes the internal group* consist of two people ofdifferent gender?
Yes
NoDoes the internal group consist of just one person?
Yes
No shareholder owns more than 25% of shares No
Yes
Type 6Independent FB
No
Type 7Professionally-run FB
Type 8FB run solely by family
members
Type 5Co-preneurs
Type 4Entrepreneurial firm
Type 3NFB
Type 1-2NFB
Is there surnames coincidence with CEO?
Yes
Fig. 1 Operational identification of FB in SABI. *Internal group are CEO, directors and shareholders
612 J. Dieguez-Soto et al.
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Co-preneurial FB. The shareholder, director and CEO positions are heldby only two people of the opposite sex and with different surnames.They are most likely to have family ties by marriage (all marriedwomen keep their maiden name after marrying in Spain)
Type 6 Independent FB. Surnames coincide between interest groups, and noshareholder owns more than 25 % of the shares. There are family ties,and the equity is not concentrated in the hands of only a fewshareholders, being distributed more widely amongst them
Type 7 Professional FB. The surnames of the shareholders and/or directors arethe same, indicating family ties, but those surnames do not match thoseof the CEO. The company is probably run by someone outside of thefamily
Type 8 Solely family-run FB. Surnames coincide among shareholders and/ordirectors, and those names match those of the CEO. In this case, thecompany is probably run by someone in the family
The distribution of the sample among the different types of firms is as follows:45 % of firms are clearly NFBs (types 1, 2 and 3), 27 % are entrepreneurial firmsand 28 % are FIFs (4 % are co-preneurial firms, 1 % independently run, 3 %professionally run and 20 % run solely by family members).
3.2 Variables
Several measures are used to assess the performance of the organisation.Specifically, performance is measured in terms of leverage, efficiency, growth,profitability and survival. These measures provide indications of the firm’scontribution to economic development from different perspectives. Leverageindicates the level of risk-averse behaviour and how successfully the firm hasmanaged debt. Previous FB researchers have used capital structure as a measure offirm performance (Romano et al. 2001). Efficiency indicates how effectivelyresources have been used to generate output. Growth tends to be linked to long-termprofitability. Profitability is considered to measure financial performance. Survivalmeasures resilience in difficult times. Following earlier works, leverage is measuredby the ratio liabilities/(equity ? liabilities) (Wang 2006). Efficiency is measured asasset utilisation (ln of net turnover) (Kotey 2005; Lopez-Gracia and Sanchez-Andujar 2007) and as capital expenditures divided by property, plant and equipment(Miller et al. 2011). Sales and employment growth are considered predictors offuture profitability (Sciascia and Mazzola 2008; Westhead and Howorth 2006).Profitability is measured as EBITDA/equity (ROE) and EBITDA/total assets (ROA)(Anderson and Reeb 2003). Age is recognised as a proxy of survival and measuredas the ln of the number of years since the company was founded (Lopez-Gracia andSanchez-Andujar 2007). We also control for industry (services, construction,manufacturing and agriculture) and size (small, medium and large).
Identifying and classifying family businesses 613
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3.3 Statistical procedures
The literature suggests relevant variables for discriminating between FBs and NFBs.However, the differences between FBs and NFBs do not seem conclusive, indicatingthat either there are no differences or the differences are unnoticed, which could bedue to the following factors, among others:
1. Family firms are very heterogeneous, and a rigid definition is unsuitable. Aclassification of homogeneous populations of firms is needed to classify thedifferent types of FBs (Chrisman et al. 2003).
2. The financial information used is volatile. This volatility may be due to theaggregation of heterogeneous corporate groups (Dyer 2006) or the existence ofa great number of outliers, which is common when working with microeco-nomic information.
3. There are no differences among the considered variables, although they may befound in other variables.
We have made a significant effort to ensure that these differences are notoverlooked. The analysis is undertaken according to the following guidelines:
1. The empirical analysis investigates which group of firms performs differentlyfrom the rest of the firms. We use several criteria to group different types offirms: considering all firms or only FIFs, including or excluding entrepreneurialfirms and co-preneurial firms in the category of FBs, etc. Therefore, a priori,several possible definitions of FB are considered (see Fig. 1).
2. The empirical analysis only addresses homogeneous groups and extracts theoutliers to avoid distorting the result. Statistical techniques are applied to eachof the 12 sector sizes (four productive sectors multiplied by three companysizes). After detecting the outliers, they are then extracted from each variable.The highest and lowest values are suppressed only if they are atypical.3
3. Several performance measures are applied. We ultimately only work with thosevariables for which significant results are found. Problems with microeconom-ics data (non-normal distribution, outliers, etc.) might mask the relevance ofdetached variables.
After data processing, an exploratory analysis is conducted to detect differencesbetween different groups of firms. First, the Kruskal–Wallis (K–W) non-parametrictest4 is used to identify groups with homogeneous behaviour regarding performance.This behaviour is then confirmed using three univariate techniques (Student’s t test,the Mann–Whitney (M–W) U test and the Kolmogorov–Smirnov (K–S) test) and amultivariate technique (logistic regression). Logistic regression is chosen because it
3 The suppression of elements of the sample supposes a loss of information. We have been very cautious,only eliminating the values in every sector size that are placed out of the interval ðQ1 # 3RQ; Q3 þ3RQÞ where Q1 is quartile 1, Q3 is quartile 3 and RQ is the inter-quartile range or the difference betweenquartiles 1 and 3. This treatment of extreme values offers the advantage of robustness.4 ‘‘…procedures based on the mean are often very sensitive to the occurrence of extreme or outlyingobservations (specially in small samples), which is why so-called distribution free or non-parametricmethods are considered’’ (Andersen et al. 1987).
614 J. Dieguez-Soto et al.
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is better than discriminant analysis in non-normality cases (Hair et al. 1998), andsome of the variables used in this analysis are non-normal. All analyses areperformed for the 2-year period of 2006–2007.
In conclusion, we take an abductive approach: we observe differences to obtain agroup of firms with homogeneous features. A group of firms sharing similar featuresregarding performance is found, and this group is observed to be composedexclusively by FIFs (Figs. 2 and 3).
4 Results
After applying the K–W test (see Table 3), for groups 5–8 (co-preneurs,independent FBs, professionally run FBs and businesses run solely by familymembers), the level of significance, in many cases, is[.1, and the equality of theaverages is therefore accepted. However, the equality of averages is rejected if all ofthe firms are considered (types 1–8) or if the entrepreneurial firms (type 4) are takeninto account together with groups 5–8 (types 4–8). The firms of types 5–8 are
Previous literature
This study
Identifying Family
Business
Observing differences in performance
Fig. 2 FBs abductive identification
Fig. 3 Method
Identifying and classifying family businesses 615
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Tab
le3
Kruskall–Wallistest(outliers
included)
Type
Survival
(lnage)
Efficiency
(lnassetturnover)
Leverage(debt/(debt?
equity))
Profitability(ROE=
EBITDA/equity)
2007
2007
2006
2007
2006
2007
2006
Servsm
all
1–8
.000
.176
.283
.500
.177
.549
.056
4–8
.000
.087
.399
.513
.260
.341
.045
5–8
.050
.397
.417
.344
.255
.242
.042
Servmedium
1–8
.001
.055
.227
.413
.199
.180
.231
4–8
.000
.707
.843
.234
.089
.128
.124
5–8
.006
.613
.755
.140
.471
.072
.130
Servlarge
1–8
.020
.050
.174
.005
.000
.596
.002
4–8
.005
.018
.073
.062
.002
.384
.000
5–8
.508
.803
.713
.035
.028
.775
.066
Const
small
1–8
.007
.022
.035
.007
.024
.006
.000
4–8
.005
.019
.024
.022
.046
.121
.003
5–8
.890
.711
.669
.366
.240
.189
.691
Const
medium
1–8
.000
.009
.112
.396
.147
.007
.000
4–8
.000
.061
.486
.189
.063
.117
.029
5–8
.062
.952
.683
.910
.376
.947
.592
Const
large
1–8
.000
.000
.024
.085
.185
.004
.004
4–8
.000
.001
.012
.035
.080
.005
.001
5–8
.466
.077
.270
.450
.413
.358
.199
Manufsm
all
1–8
.000
.163
.672
.097
.073
.059
.038
4–8
.000
.283
.493
.080
.042
.144
.107
5–8
.170
.853
.685
.381
.314
.236
.801
616 J. Dieguez-Soto et al.
123
Tab
le3continued
Type
Survival
(lnage)
Efficiency
(lnassetturnover)
Leverage(debt/(debt?
equity))
Profitability
(ROE=
EBITDA/equity)
2007
2007
2006
2007
2006
2007
2006
Manuf
medium
1–8
.055
.901
.577
.009
.039
.000
.000
4–8
.009
.834
.321
.008
.041
.003
.001
5–8
.180
.696
.319
.125
.339
.433
.201
Manuf
large
1–8
.117
.869
.782
.806
.357
.855
.861
4–8
.052
.838
.938
.725
.367
.800
.505
5–8
.142
.979
.958
.741
.345
.831
.355
Agricsm
all
1–8
.016
.012
.372
.001
.003
.206
.196
4–8
.006
.015
.391
.001
.003
.108
.075
5–8
.561
.972
.980
.051
.024
.942
.235
Agricmedium
1–8
.011
.034
.215
.312
.174
.492
.838
4–8
.007
.036
.186
.314
.253
.363
.690
5–8
.038
.124
.293
.322
.807
.842
.621
Agriclarge
1–8
.270
.421
.769
.270
.359
.332
.848
4–8
.234
.163
.522
.807
.866
.750
.917
5–8
.139
.212
.755
.755
.815
.640
.697
Significantheterogeneity
(***1%,**5%,*10%)is
indicated
inbold
andnearlysignificantheterogeneity
(from
10to
20%)in
italic.Wehaveaccentuated
those
variablesthat
changefrom
heterogeneity
tohomogeneity
ifwereduce
theanalysisfrom
alltypes
to5–8types
Identifying and classifying family businesses 617
123
homogeneous and could be the group of FBs that we seek. These are firms in whichtwo surnames are the same among shareholders, CEO and/or directors or twointernal stakeholders who are married. That is, they are firms with some componentof family involvement. The K–W results allow us to reduce the eight types of firmsto only two groups: FBs and NFBs. However, although the conclusion reached inthis analysis seems clear, we cannot observe the transition from heterogeneity tohomogeneity in all cases, only in the cells emphasised in Table 3. For this reason,additional statistical analyses are carried out.
A parametric test is then applied (Student’s t test) in addition to two non-parametric techniques (the M–W and K–S tests) to test whether there are differencesbetween the two samples (FBs as types 5, 6, 7 and 8 and NFBs as types 1, 2, 3 and4). The results of the confirmatory univariate analysis confirm the conclusions of theexploratory analysis (see Table 4) and even increase the number of cases ofdissimilarities between FBs and NFBs.
To take into account the trans-generational continuity of the successioncomponent of family involvement, testing whether time is an underlying variableof the performance dimensions analysed, we also compare FBs in which an inter-generational transfer5 took place with the rest of the firms. Table 5 shows thedifferences in the whole sample (all industries and sizes) in the case of FBs and inthe case of FBs in second and later generations. We can observe that thedifferences are greater in second and later generations, especially those regardingprofitability.
Lastly, a logistic regression is applied. In Table 6, four statistical estimations aredisplayed. For the first two, the dependent variable has a value of 1 for FBs (types5–8) and 0 for the rest of the firms. For the last two, the dependent variable has avalue of 1 for FBs with trans-generational continuity and 0 for the rest of the firms.We have introduced two control variables: industry and size. However, industry isnot a relevant variable and does not appear in the final estimations. Moreover, toavoid including the same information in independent and dependent (trans-generational continuity) variables, we do not consider the ln age variable (survivaldimension) as an independent variable. The four statistical estimations aresufficiently adequate6 (Garson 2011), but in the regressions in which second- andlater-generation FBs are taken into account, the goodness of fit values are muchbetter.
Leverage and efficiency coefficients are significant in all cases. Profitability isonly relevant if we consider trans-generational continuity, as anticipated by theunivariate tests (Table 5). The most important result of the logistic regression is thesign of the coefficient. It should be noted that the sign is negative in all casesregarding leverage, efficiency and profitability. More specifically, the modelsindicate that all of these variables are lower in FBs. The stability of the coefficient indifferent years and cases is remarkable; thus, the model is sufficiently robust.
5 For succession, a threshold of 25 years is used to create a proxy measure. If a company is\25 yearsold, it is considered to be in the first-generation stage. If it is more than 25 years old, it is assumed that asuccession has been completed.6 Broadly speaking, we can affirm that the classification table result is[70 % and the LR and Wald testresults are\.01. The Nagelkerke pseudo R2 and ROC curve is not high but is adequate.
618 J. Dieguez-Soto et al.
123
Tab
le4
FBversusNFB(therestofthefirm
s)
Test
Survival
(lnage)
Efficiency
(lnassetturnover)
Leverage(debt/(debt?
equity))
Profitability
(ROE=
EBITDA/equity)
2007
2007
2006
2007
2006
2007
2006
Servsm
all
t.000
.043
.465
.414
.121
.407
.947
M-W
.000
.021
.364
.334
.160
.215
.373
K–S
.000
.070
.214
.523
.101
.359
.365
Servmedium
t.038
.501
.085
.474
.094
.666
.482
M-W
.079
.434
.141
.519
.086
.965
.170
K–S
.042
.380
.425
.777
.068
.923
.422
Servlarge
t.003
.095
.232
.000
.000
.029
.001
M-W
.005
.081
.109
.000
.000
.056
.009
K–S
.004
.160
.304
.005
.000
.063
.009
Const
small
t.008
.041
.027
.064
.037
.814
.054
M-W
.002
.031
.070
.044
.053
.450
.106
K–S
.003
.045
.139
.064
.017
.254
.197
Const
medium
t.001
.048
.095
.017
.082
.090
.034
M-W
.000
.031
.065
.005
.022
.038
.099
K–S
.000
.053
.121
.026
.026
.053
.061
Const
large
t.007
.013
.037
.124
.014
.469
.512
M-W
.013
.003
.004
.093
.006
.707
.123
K–S
.016
.006
.001
.341
.031
.355
.130
Manuf
small
t.000
.368
.195
.037
.067
.173
.202
M-W
.000
.288
.152
.061
.106
.410
.401
K–S
.000
.090
.330
.061
.218
.308
.552
Identifying and classifying family businesses 619
123
Tab
le4continued
Test
Survival
(lnage)
Efficiency
(lnassetturnover)
Leverage(debt/(debt?
equity))
Profitability
(ROE=
EBITDA/equity)
2007
2007
2006
2007
2006
2007
2006
Manuf
medium
t.018
.646
.388
.678
.666
.119
.263
M-W
.025
.401
.218
.805
.778
.147
.300
K–S
.023
.470
.044
.710
.710
.422
.642
Manuf
large
t.057
.629
.557
.072
.068
.016
.878
M-W
.151
.558
.196
.094
.047
.119
.918
K–S
.157
.430
.068
.355
.066
.409
.842
Agricsm
all
t.001
.010
.019
.009
.020
.032
.000
M-W
.001
.003
.047
.011
.077
.007
.002
K–S
.000
.011
.281
.041
.130
.025
.012
Agricmedium
t.242
.404
.530
.964
.647
.516
.504
M-W
.330
.347
.509
.926
.674
.240
.934
K–S
.363
.178
.435
.967
.975
.088
.297
Agriclarge
t.830
.650
.793
.015
.010
?.526
.545
M-W
.713
.511
.554
.035
.014
.090
.265
K–S
.675
.431
.813
.062
.016
.069
.336
Univariate
tests:Student’st,Mann–Whitney
andKolm
ogorov–Smirnov(outliers
omitted)
Bold
indicates
differencesat
the1,5or10%
levels.Italic
indicatesdifferencesat
the10–20
%level
?indicatesnonorm
alityin
large-scaleagriculturalfirm
sonly
because
ofthesm
allsample
(n=
38)
620 J. Dieguez-Soto et al.
123
Tab
le5
FBversustherestofthefirm
sandFBwithtrans-generational
continuityversustherestofthefirm
s
Survival
(lnage)
Efficiency
(lnasset
turnover)
Leverage(debt/
(debt?
equity))
Profitability
(ROE=
EBITDA/equity)
2007
2007
2006
2007
2006
2007
2006
FBsversusrestoffirm
st
7.427***
-4.553***
-3.399***
-4.493***
-5.476***
-1.836*
-3.154***
M-W
-7.041***
-4.568***
-3.593***
-4.583***
-5.204***
-2.448**
-3.409***
K–S
3.759***
2.235***
1.909***
2.157***
2.288***
1.390**
1.890***
FBwithtrans-generational
continuityvs.restoffirm
st
53.407***
-6.739***
-4.330***
-8.346***
-7.982***
-10.081***
-10.231***
M-W
-23.746***
-6.916***
-4.505***
-8.714***
-8.328***
-6.643***
-7.298***
K–S
14.014***
3.246***
2.427***
4.411***
4.005***
3.319***
3.690***
Univariate
tests(allindustries
andsizes):Student’st,Mann–WhitneyandKolm
ogorov–Smirnov(outliers
omitted)
Wecanonly
observethesignin
Student’sttest
because
thesignis
alwaysnegativein
theMann–Whitneytest
andalwayspositivein
theKolm
ogorov–Smirnovtest,
regardless
ofthevariable
studied
Significantdifferencesat
1%
(***),5%
(**)or10%
(*)
Identifying and classifying family businesses 621
123
Table 7 Descriptive data for FB and NFB (n = 4.460)
2007 Mean Median Standarddeviation
Max. Min.
Full sample
Survival 18.6290 15.9712 13.2234 107.08 1.00
Efficiency 1.9181 1.4597 2.0637 44.86 .01
Leverage .6713 .7076 .2,264 1.63 .00
Profitability .4353 .3258 .4667 3.67 -2.35
NFB (types 1, 2, 3 and 4)
Survival 18.2845 14.8753 13.9108 107.08 1.00
Efficiency 1.9771 1.4947 1.9985 30.24 .01
Leverage .6793 .7147 .2271 1.63 .00
Profitability .4475 .3329 .4732 3.32 -2.35
FB (types 5, 6, 7 and 8)
Survival 19.7469 18.0164 11.4388 72.04 1.00
Efficiency 1.7301 1.3613 2.1633 44.86 .01
Leverage .6527 .6837 .2213 1.37 .00
Profitability .4043 .3087 .4394 3.44 -1.22
Second-generation and later FB
Survival 35.6964 33.1575 9.2780 72.04 25.02
Efficiency 1.2762 1.1693 .9151 6.70 .01
Leverage .5853 .5914 .2151 1.12 .02
Profitability .2734 .2404 .2629 1.27 -.90
Summary statistics for the full sample
Table 6 Logistic regression (outliers omitted)
Year 2007 FB (1) versus rest of firms (0) FB with trans-generational continuity(1) versus rest of firms (0)
-2 lg likelihood 5,144.355 5,097.641 2,103.996 2,090.652
Nagelkerkepseudo R2
.262 .264 .787 .788
LR all coefficients .000 .000 .000 .000
ROC curve .582 .585 .666 .661
Significant at 1 % (***), 5 % (**) or 10 % (*)
622 J. Dieguez-Soto et al.
123
Table 7 presents a descriptive analysis for the full, NFB, FB and FB with trans-generational continuity samples. This analysis will be useful in the discussion of theresults.
5 Discussion of results
Given that the majority of our Spanish sample is composed of privately held firms,we first discuss our findings against the backdrop of previous literature regarding theinfluence of family involvement on performance in mainly private firms. We alsotake into account the differences and similarities of the corresponding definitionsunderlying the original study. Next, we identify the group of FIFs withhomogeneous features relative to the remaining firms. Third, we explain whathappens when only FIFs in the second and later generations are included in theformer group. Lastly, we conclude with a specific discussion about lone-founder andco-preneurial firms (Table 8).
Concerning indebtedness, the leverage ratio confirms significant differencesbetween FBs and NFBs. Specifically, FBs are statistically significantly less indebtedthan NFBs. These results are similar to those obtained by Oswald et al. (2009) andSciascia and Mazzola (2008), who found a significant and negative relationshipbetween family involvement in management and leverage when considering theownership and management component in the definition of FBs. Gallo et al. (2004),using self-perception to define FBs, reached the same conclusion. Rutherford et al.(2008) used the F-PEC scale to define FBs and found a negative significantinfluence of family culture on debt to equity. This result can be explained whenconsidering how owners tend to minimise risks when focusing on financialobjectives (Westhead and Howorth 2007). FBs show aversion to debt because it isconsidered a loss of control (Allouche et al. 2008), and they usually rely morestrongly on internally generated funds. Therefore, this finding indicates that FBsexhibit different financial behaviour than NFBs, a conclusion in line with those ofother researchers, such as Lopez-Gracia and Sanchez Andujar (2007). However,these results are opposite to those conclusions argued by authors who believe thatthe aversion of FBs to opening the equity to non-family shareholders may meanindebting the firm (Anderson et al. 2002; Blanco-Mazagatos et al. 2007). Lastly, ouroutcomes complement other work suggesting that family firms are willing to incurgreater performance hazards only if it is necessary to protect their emotionalendowment (Gomez-Mejıa et al. 2007).
Regarding efficiency, significant results are obtained with respect to assetutilisation, which is considerably lower in FBs than in NFBs. This finding iscoherent with the results of former studies (Lopez-Gracia and Sanchez-Andujar2007). However, in private firm samples, Kotey (2005) and Miller et al. (2009) donot find differences in efficiency using ownership and management as componentsof family involvement. Risk-averse behaviour makes FBs more likely to declineprofitable projects, simply because they are considered too risky for family wealth,decreasing the capacity to generate revenue in relative terms of asset utilisation.
Moreover, they do not rely on external resources, investing less in its productivecapacity, which may produce lower efficiency.
Concerning profitability, the differences between FBs and NFBs are notcompletely significant with respect to ROE. However, without being significant,FBs are less profitable than NFBs. The implication of this result is coherent with thevast majority of the previous literature. Most of the studies that have defined FBsbased on ownership and management involvement have not found any significantrelationship between family involvement and profitability (Kim and Gao 2013;Kotey 2005; Miller et al. 2009). Nevertheless, some studies have found significanteffects exhibiting a negative (Sciascia and Mazzola 2008) or positive relationship(Mazzola et al. 2013) between family involvement in management and financialprofitability. If we use self-perception and/or succession to define FBs, the results donot change substantially. That is, there are no significant differences with regard toprofitability between FBs and NFBs (Westhead and Cowling 1997; Smith 2008), orthe family influence is negative (Gallo et al. 2004; Jorissen et al. 2005). Lastly,Rutherford et al. (2008) use the F-PEC scale to define FBs and provide a furtherempirical examination of the relationship between ‘‘familiness’’ and performance.Overall, the findings depend on the ‘‘familiness’’ component and outcome measure.The authors only find a significant negative influence of the family experiencedimension on perceived financial performance. Due to their risk-averse behaviour,FBs are less willing to be indebted. Therefore, lower leverage as well as theexclusion of profitable but risky schemes, agency costs from altruism andexpropriation of minority shareholders might explain the results regarding ROE.
Lastly, regarding survival, FBs are found to be older than NFBs, as Gallo et al.(2004) confirmed previously using self-perception to define FBs. The willingness ofFBs to reinvest profits into the business makes them less vulnerable in difficulttimes, thereby prolonging their life expectancy. They tend to ensure long-termfeasibility, reject investments that are too risky and rely on internal funds.
In summary, to maintain ownership within the family and avoid losing control,FIFs tend to eschew debt and external equity. As a consequence, they acquire fewerresources and invest less in their productive capacity, which may trigger lowerefficiency. Their tendency towards caution and conservatism mean they incur lowerdebt and reject risky projects. This effect leads to lower financial profitability,greater reliance on internal resources and increased life expectancy.
We now aim to justify which types of FIFs present uniform dimensions ofperformance in comparison to the rest of the firms. The univariate and multivariatestatistical techniques corroborate that co-preneur firms, independently run, profes-sionally run and solely family-run FBs (types 5–8) are a homogeneous group offirms in relation to leverage, efficiency, financial profitability and survival. Thisgroup of FBs includes those with dispersed and concentrated ownership, those withprofessional and non-professional CEOs, those with family and non-familymembers on the board of directors and those with different types of family ties.Similarly to Rutherford et al. (2008), we coincide with Jacquemin and De Ghellinck(1980), who state that ‘‘very family firms’’ perform neither better nor worse butactually similarly to ‘‘less family firms’’.
Identifying and classifying family businesses 627
123
On the other hand, when the trans-generational continuity of the successioncomponent of family involvement is taken into account, divergences with respect tothe rest of the firms are revealed. Firms with some component of ownership,management or governance and those in second or later generations are significantlyless indebted, less efficient and less profitable than the rest of the firms. Arosa et al.(2010), who defined FBs according to family ownership and managementcomponents, find no relationship between ownership concentration and profitabilityin family firms not managed by the first generation. Molly et al. (2010), who defineFBs considering family ownership and self-perception, do not detect significanteffects of succession on firm profitability. However, they find that the secondgeneration negatively influence the leverage of the company, although this effect isreversed in later generations of FBs. Westhead and Howorth (2006) also do not findthat multi-generation firms report significantly poorer performance. In this case,ownership, management, self-perception and succession are included in thedefinition of FBs. Our findings are in line with those of Kaye and Hamilton(2004), who consider that FBs often become more risk-averse after succession. Alower debt rate, efficiency and profitability may be explained by the fact that FBswith intergenerational succession often pay more attention to wealth preservationthan further wealth creation. Moreover, conflicts arising among family memberswhen their interests are not aligned (Chrisman et al. 2005) or descendants’ lack ofcompetences and skills can also erode performance in FBs.
Finally, we aim to shed light on the consideration of lone-founder and co-preneurial firms as FBs. Many authors incorporate sole proprietors into their FBdefinition (Astrachan and Shanker 2003; Lopez-Gracia and Sanchez-Andujar 2007),whereas others prefer not to include firms with only one shareholder because theycannot be classified with the available information (Menendez-Requejo 2006). Thisresearch opts to not consider a lone-founder business as an FB becauseentrepreneurial firms do not show homogenous features regarding FIFs (Kruskall–Wallis test). Our results show that entrepreneurial firms are more indebted, smaller,more profitable and younger than FBs and the rest of NFBs. These results supportthe distinction between entrepreneurial firms, in which no relatives are involved asinternal stakeholders, and FIFs. The special features of entrepreneurial firms makethem prone to taking more risks, being more indebted (which might correspond tomore financial resources and financial flexibility) and having more opportunities forgrowth and over-performance given the personal characteristics of the lone founder(hard-working, capable, business-oriented, etc.) and their early life-cycle stages.Therefore, we confirm that the apparently puzzling evidence regarding theperformance of FBs could be partially explained by the inclusion or exclusion ofentrepreneurial firms as FBs (Miller et al. 2007). Moreover, the empirical data inthis work supports co-preneurial firms as FBs. The ‘‘co-preneurs’’ (Barnett andBarnett 1988), couples in which both partners are involved in the business, showhomogeneous performance features relative to the rest of the FIFs. Therefore, thesmallest available unit of analysis for the family (Blenkinsopp and Owens 2010)must be considered as a common form of FB, in line with Muske and Fizgerald(2006). Nevertheless, the results confirm that co-preneurial firms (debt ratio = .70;asset utilisation = .30; ROE = .49; age = 2.60) are the type of FB most similar to
628 J. Dieguez-Soto et al.
123
entrepreneurial firms (debt ratio = .74; asset utilisation = .50; ROE = .57;age = 2.40) with respect to the features analysed.
6 Conclusions
The present study highlights the importance of defining and distinguishing FBs fromNFBs in business studies. Most research on the operational definition of FBs isconceptual-based, and its selection is not supported empirically (Heck and Scannel1999). As differing definitions of FBs have been applied (Westhead and Cowling1998), no conclusive results regarding the differences between FBs and NFBs havebeen obtained. Moreover, very few countries worldwide have explicit informationfor recognising FBs available in their databases.
This study addresses the challenge of defining FBs operatively using a distinctmethod. The FIFs that perform differently than other companies are identified asFBs. Our results identify four different types of firms with family involvement inownership, management or governance with similar characteristics: co-preneurs,independent FBs, professionally run FBs and FBs run solely by family members. Allof these firms share homogeneous features regarding several dimensions ofperformance, namely, leverage, efficiency and survival, thereby providing addi-tional empirical evidence regarding the unique characteristics of FBs. When thetrans-generational succession component is also taken into account, profitability(ROE) is added to the dimensions of performance, for which significant differencesare found. Therefore, FIFs transferred between generations behave in a significantlydifferent way from the rest of the firms.
We do not claim that this data-backed inference unequivocally defines an FB.Rather, we merely provide evidence supporting the fact that FIFs, despite theirinternal differences, make up a uniform group of firms with respect to distinctdimensions of performance and differ significantly from firms without familyinvolvement. Previous works suggest that differences could arise depending onwhether the firm has concentrated or shared ownership (McConaughy et al. 2001) oris professionally managed (Anderson and Reeb 2003). This research demonstratesthat family involvement, assumed operatively when there is a coincidence ofsurnames between internal stakeholders or there are marriage ties (an operativedefinition of family effect in both cases), is key to differentiating among firms.Family involvement is so determining that it overcomes the substantial differencesthat undoubtedly exist among several types of FBs. Moreover, this study identifiesdifferent types of FBs, which could help to explain the peculiarities of all types ofFBs, as Dyer (2006) suggests is needed.
Significant differences regarding leverage, efficiency and survival suggest thefollowing. The risk-averse behaviour of FIFs justifies their lower leverage. Thisdistaste for indebtedness reduces FIFs’ investment possibilities and thus theirefficiency. The objection to debt forces FBs to consider retained profits as a crucialfinancing resource, making them better able to cope with downturns and providingthem with a higher life expectancy. However, the lack of significant differences withregard to financial profitability may suggest that family involvement in business
Identifying and classifying family businesses 629
123
operations benefits the whole organisation, enhancing the sustainable value of thebusiness, avoiding opportunistic behaviour, building social capital and creatingprofitable relationships with stakeholders, among other advantages. Despitecompeting with fewer resources and operating with fewer assets, FIFs do notachieve significantly different returns when compared to FBs with larger resources.Nevertheless, former findings are underlined regarding leverage and efficiency, andsignificant differences regarding profitability arise when firms are groupedconsidering the trans-generational succession component together with one ormore components of family involvement. Therefore, succession can be confirmed toconstitute one of the most challenging steps in the life cycle of FBs, as, among otherreasons, they may present more risk-averse behaviour, are more vulnerable toconflicts of interest and suffer from a lack of competences and skills.
In addition, this study offers a method for identifying FBs from databases. Thetypology of firms proposed can be used when researchers conducting an FBempirical study wish to work with a large number of firms to obtain more robustresults or when the identification of FBs is a first step to be followed by the use ofsecondary data, such as questionnaires or interviews, better focused on theappropriate objective sample. There are few large reliable databases for private FBs(Sharma and Carney 2012).
This research has some limitations. The typology of firms was construedaccording to information available from the SABI database, which only allowed usto use a family-involvement-based definition and prevented us from using otherdefinitions based on self-identification or essence approaches. Although theoperationalisation of family involvement via the examination of surnames is notas easily applicable in other national contexts, numerous Spanish-speaking countriescan use this type of approach. Furthermore, the results obtained could be valuable asa benchmark for researchers in other countries. Moreover, under certain conditions,it may also be possible that FBs have homogeneous rates not specifically linked tofamily involvement but instead more dependent on contingency factors (e.g., marketregulations, competitor pressures, and institutional changes). However, the use of alarge sample, stratified by size and industry, with data for the same years anddeveloping their activity in the same context does not support this line of reasoning.A final limitation to bear in mind might be a systematic bias regarding firms that donot provide financial data to the SABI database. To make the sample morehomogeneous and trustworthy, we decided to exclude financial and insurance firmsas well as micro companies. Given that the special features of these firms requirespecific treatment and analysis, one effect of that decision is that we cannotgeneralise the findings obtained to the firms excluded from the sample.
Future research might apply the method used in this study to discover the familynature of a company in other contexts. Moreover, combining the use of primary datawith secondary data might account for the intensity of the family influence, such asthe presence of siblings and other relatives in a firm’s board, or might even helpcheck for further relationships between family involvement and firm performance.In addition, these results should be tested in other fields of FB research, such asgovernance practices, strategy and human resources. Furthermore, it may be usefulto study the differences among the typology of FBs in depth, answering such
630 J. Dieguez-Soto et al.
123
questions as which types of FBs are more homogeneous than others, taking intoaccount their different levels of ownership concentration, professionalism, gover-nance or family ties, and why these similarities or dissimilarities frequently occur.The use of an FB definition based on the essence approach is also advisable. Specialattention should be paid to the behaviour of entrepreneurial and co-preneurial firms.It would be useful to study in depth whether these firms truly have unique anddifferential characteristics with respect to the rest of the firms.
Lastly, this study has attempted to offer a better understanding of the dynamics offamily firms. In particular, when analysing new socio-political and economicdecisions, public and private sectors should take into account the special features ofFIFs. They need to identify FBs with uniform features, based on objective and easilymeasurable criteria, such as those provided by this study.
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