Did medium-sized family businesses perform better during the recent economic crisis? Empirical evidence from Italy

Cesaroni Francesca, Chamochumbi Denisse, Sentuti Annalisa

In today’s economic world, family businesses (FBs) are widely spread and they are a main actor in both industrialised and developing countries (European Family Businesses, EFB). In Italy, more than 85% of firms are FBs, and this value is in line with that of the main European countries (Spain, 83%; Germany, 90%; France, 80%; UK, 80%) (Aidaf, 2014). As a consequence, in business studies, there is a great interest in knowing the performance of these enterprises and reasons beyond them, in order to understand whether and how family ownership and control affect firms’ performance (Gallo, 2004; Allouche et al., 2008; Amann, Jaussaud, 2012; Basco, 2013; Minichilli, et al., 2015). The results from these studies, however, are not unequivocal (Enriques, Volpin, 2007; O’Boyle et al., 2012). Adopting the agency theory framework, some authors argue that FBs are more efficient than non-family business (NFBs), as in FBs few or no agency problems exist and agency costs are very low or nonexistent (Fama, Jensen, 1983). The strong involvement of family members in business ownership and management reduces the risk of opportunistic behaviour by managers and promotes the alignment of interests and objectives (Villalonga e Amit, 2006). In contrast with the more traditional view that FBs are free from agency problems, other scholars have observed that owner-manager and owner-owner problems (Villalonga and Amit, 2006) exist even in FBs and support the existence of a negative relationship between family ownership and company performance. Leading problems occurring in FBs include the pursuit of private benefits (Gómez-Mejía et al., 2001), entrenchment (Shleifer, Vishny, 1997), adverse selection (Lubatkin et al., 2005), nepotism and the consumption of unearned perks (Schulze et al., 2001). […]

Key-Words: Entrepreneurship and Family Business

Table 1 – Descriptive Statistics for Family and non Family Business

Table 2 – Comparative Performance- Family versus Non-Family Business

Table 3 – Comparative Financial Indipendence- Family versus Non-Family Business

Table 4 – Regression Analysis