Performance and Behavior of Family Firms

Abstract

Family involvement characterizes a large number of firms around the world and is thought to significantly impact their strategies, behavior, and performance. Family involvement occurs when a family exerts control over the firm through ownership and management. When family involvement leads to intentions to pursue particularistic goals and strategies, controlling families are more likely to exert a significant influence on firm strategies, behavior, and performance. As a result, family firm behavior is expected to be distinct from those in non-family firms. Despite the inherent differences between family and non-family firms and heterogeneity among family firms, family involvement is under researched in organizational studies, which limits the generalization of findings and leads to theoretical ambiguity. Financial strategic decisions and activities may be the key in understanding differences between family and non-family firms.