Family Involvement in Ownership, Management, and Firm Performance: Moderating and Direct-Effect Models

Dubai, Shehabaddin Abdullah A Al; Ismail, Ku Nor Izah Ku; Amran, Noor Afza

doi:10.5539/ass.v10n14p193

Cited by 6 publications

(5 citation statements)

References 72 publications

(103 reference statements)

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“…In contrast, firm size has a positive and significant effect on both performance dimensions. In contrast to the result found by Al-Dubai et al . (2014) who show a negative effect of firm size on the stock market performance of family firms in Saudi Arabia, our results confirm the findings of studies asserting the presence of positive effect of firm size during the COVID-19 epidemic (Golubeva, 2021; Amore et al ., 2022).…”

Section: Resultscontrasting

confidence: 99%

“…It is a variable measured by the percentage of capital held by members of the same family (Mazzi, 2011), given that in a family business at least a blocking minority is owned by this family. Regarding family involvement in the management of the firm (FAMILYMANAG), we used a dichotomous variable taking the value 1 if we found that the main manager or at least two operational managers were related to the family shareholder block and 0 otherwise (Chu, 2011; San Martin Reyna and Duran-Encalada, 2012; Al-Dubai et al ., 2014). Regarding family control of the BD (FAMILYCONTR), we measured this variable using the ratio between the number of directors who are members of the same family and the total number of members sitting on the BD (Vieira, 2020; Chu, 2011).…”

Section: Methodological Aspectsmentioning

confidence: 99%

“…A widely recognized characteristic of family firms is the influence of family members on the management of the firm. According to the premise of agency theory, the interests of managers and shareholders will be aligned when the family places one (or more) of its members in key management positions (San MartinReyna and Duran-Encalada, 2012; Al-Dubai et al ., 2014), including as chief executive officers (CEO). According to the stewardship theory perspective, when family members are in key management positions, they act as stewards and their behavior is aimed at maximizing shareholder wealth through increasing the profitability of the firm (Chu, 2011).…”

Section: Review Of the Literature And Development Of Hypothesesmentioning

confidence: 99%

Section: Family Involvement In Managementmentioning

confidence: 99%

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COVID-19 health crisis and family business performance: the moderating effect of family leadership

Sahut

Wamba

Hikkerova

2023

JOCM

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PurposeIn the context of the coronavirus disease 2019 (COVID-19) crisis, this article aims to analyze the resilience of family businesses in a developing country like Cameroon. As such, this study seeks to fill two gaps in the literature: first, by comparing the financial and social performance of family companies with those of non-family companies not listed on the stock exchange, and second, by comparing performance across family-run companies, according to the companies' mode of leadership in Cameroon, a developing country affected by COVID-19 like the rest of the world.Design/methodology/approachBased on the literature review, the authors developed empirical models to identify the variables which influence the financial and social dimensions of business performance. These models were tested with multilinear regressions, using data collected from questionnaires distributed to 466 firms, of which 212 were family firms and 254 non-family firms. The authors completed our analyses with mean comparison tests to demonstrate whether our results are significantly different between family and non-family firms.FindingsThe authors' multiple regressions and tests produced two main results – the financial and social performance of all Cameroonian firms declined sharply during the crisis, and with the firms' financial performance hit hardest, family firms have been more resilient to the crisis in terms of financial and social performance than non-family firms. The weak governance and social protection system, as well as an inefficient legal system, do not seem to negatively affect the performance of these Cameroonian firms – the effects of the COVID-19 pandemic on the performance of family firms were better managed in firms where family members are actively involved in management or control through family members' strong representation on the board of directors (BD).Research limitations/implicationsThe two main limitations of this study concern the governance of these companies included and the failure to take the characteristics of the manager into account. Investigating other governance variables, such as the composition of the BD or the participation of employees in the capital, would enable us to refine the authors' interpretations of the companies' financial and social performance. Another limitation is the fact that the characteristics of the manager were not considered, especially when the manager is a family member. Exploring this variable would make studying the generational aspect of family businesses possible.Practical implicationsFamily companies are more resilient to crisis because of the companies' long-term focus, which also encourages the companies to maintain the companies' social policy and to avoid redundancies as far as possible. Weak systems of governance and social protection, as well as an ineffective legal system, do not negatively affect the performance of Cameroonian family companies. The results also suggest that family shareholders should become more involved in the management and control of family's firms to make the firms financially and socially resilient and in so doing drastically reduce the impact of crises.Social implicationsThis study shows, in particular, how family firms are more socially resilient than other firms in times of crisis (by resorting less often to redundancies). Family firms should, therefore, arguably benefit the most from public support during crises.Originality/valueThe authors' research makes two main contributions to the literature on family businesses. The results first of all show that Cameroonian family firms have thus far performed better financially and socially during the COVID-19 period than non-family firms. Second, this research focuses on differences in performance based on family business management types during this specific crisis period. The results suggest that the most resilient family firms, in terms of performance, are those in which the family is involved in the management or control of the BD.

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Section: Resultscontrasting

confidence: 99%

Section: Methodological Aspectsmentioning

confidence: 99%

Section: Review Of the Literature And Development Of Hypothesesmentioning

confidence: 99%

Section: Family Involvement In Managementmentioning

confidence: 99%

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COVID-19 health crisis and family business performance: the moderating effect of family leadership

Sahut

Wamba

Hikkerova

2023

JOCM

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“…There are two main theories that generally explain the relationship between family involvement with firm performance: agency theory and stewardship theory [13]. Agency and stewardship theory look at two different side of perspective in terms of the relationship between family involvement with firm performance [14]. Past research on family business with agency theory, shows that family business has lower agency cost than non-family business and has the most efficient organizational form [15].…”

Section: Family Involvement In Management and Performancementioning

confidence: 99%

Does Family Longevity Goals Moderates Family Involvement Towards Business Performance?

Rachelia¹,

Yanson²,

Layman³

2021

Proceedings of the 4th International Conference on Sustainable Innovation 2020-Accounting and Management (ICoSIAMS 2020)

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Indonesia's family businesses have always had an important role to the stability and growth of the economy. Family involvement in the management of family firms is deemed as one of the key differentiators to non-family businesses. With such family involvements, family firms require trust and commitment to ensure the family's longevity and prosperity. However, such dynamics may have an influence on family firm performance. Previous studies have shown inconsistencies regarding how family involvement in management would influence firm's performance, all showing possible positive, negative, and to no significant influence. Therefore, this study seeks to gain some clarity on the influence of family involvement with family longevity goals towards family firm performance. The study includes 200 respondents, all involved within the management of family firms, located in Bandung, one of the family firm populated cities in Indonesia. The study uses quantitative methods, where data is analyzed for reliability and validity using SEM. The result of the study shows that there is no significant influence between family involvement in management to firm performance. However, when family involvement in management is in line with the family longevity goals, there is significant positive influence on firm's performance. This study seeks to contribute to Indonesia's family firm management by aligning family involvement to ensure the achievement of positive family firm performance.

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The Family Business

Ferramosca

Ghio

2018

Contributions to Management Science

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Family Involvement in Ownership, Management, and Firm Performance: Moderating and Direct-Effect Models

Cited by 6 publications

References 72 publications

COVID-19 health crisis and family business performance: the moderating effect of family leadership

COVID-19 health crisis and family business performance: the moderating effect of family leadership

Does Family Longevity Goals Moderates Family Involvement Towards Business Performance?

The Family Business

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