Financial constraints in family firms and the role of venture capital

Croce, Annalisa; Martí, José

doi:10.1007/s40812-016-0055-4

Cited by 6 publications

(4 citation statements)

References 73 publications

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“…We propose that family firms have some structural features that tend to mitigate financing constraints in the Turkish economy context. The existing literature tends to assume that family firms are financially constrained (Andres 2011;Coleman and Carsky 1999;Croce and Marti 2017;Lopez-Gracia and Sanchez-Andujar 2007;Poutziouris 2001). The present study, however, assumes they are financially unconstrained.…”

Section: Introductionmentioning

confidence: 81%

Effect of financial constraints on the growth of family and nonfamily firms in Turkey

Ergün

Doruk

2020

Financ Innov

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This study examined whether family-owned firms have advantages for accessing external financial sources for growth. Especially in developing countries with imperfect markets, firms can face difficulties accessing external financing sources; however, family-owned firms might have some advantages in this regard over nonfamily firms. Unlike previous studies, this study considered that, in the Turkish context, nonfamily firms are financially constrained while family firms are not. To examine this hypothesis, we used the generalized method of moments (GMM) approach to analyze panel data from 2006 to 2017. The findings showed that financing constraints were a significant obstacle to growth for nonfamily-owned manufacturing firms while the effect was not present for family firms since they are controlled by large, well-established family groups. These results elucidate the relationship between corporate ownership and growth among Turkish firms, especially those with strong links to large family-owned corporations. The results also revealed that reputation and network may facilitate easier access to external financing sources, especially when considering the “Big Six” family ties of firms.

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Section: Introductionmentioning

confidence: 81%

Effect of financial constraints on the growth of family and nonfamily firms in Turkey

Ergün

Doruk

2020

Financ Innov

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“…Previous research has revealed the non-financial resources, such as empirical knowledge and international resources, that venture capital brings to family businesses [ 8 ]. Venture capital has a positive effect on family business performance [ 5 ]. Venture capital firms that hold a minority stake in a family enterprise negatively affect performance [ 43 ].…”

Section: Discussionmentioning

confidence: 99%

“…Venture capital can not only ease the financing constraints of enterprises but also provide other non-capital appreciation services such as management support so as to help enterprises grow [2][3][4]. Family enterprises will embrace venture capital due to financing constraints and growth transformation [5], and venture capital investment in family enterprises has become a remarkable phenomenon [6].…”

Section: Introductionmentioning

confidence: 99%

Venture capital, control rights, and family enterprise growth

Xianjun

Liu

2021

PLoS ONE

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This research explores and explains the path of family enterprise venture capital equity financing from the perspective of endogenous family control rights. We adopted unbalanced panel data on Chinese listed companies from 2007 to 2018. Empirical research shows that there are significant differences in the impact of venture capital on the growth performance of family enterprises and non-family enterprises. Venture capital negatively affects the growth performance of family enterprises, while the negative impact of venture capital on family enterprises is not significant. In addition, family control positively moderates the negative impact of venture capital on family enterprise growth performance.

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“…Therefore, non‐family shareholder governance can have a positive capital effect on family firms' digital transformation because it provides information about the continuous improvement of internal governance mechanisms to the external capital market through shareholding reports. Such information disclosure reduces the information asymmetry between investors and enterprises and makes more R&D funds available for family firms (Croce & Martí, 2017). In addition, non‐family shareholder governance can integrate forward‐looking market information by appointing directors to capture valuable market resources (Déniz‐Déniz et al, 2018, 2020).…”

Section: Literature Review Theoretical Framework and Hypothesis Devel...mentioning

confidence: 99%

Non‐family shareholder governance and the digital transformation of family firms: Evidence from China

et al. 2023

Corporate Governance

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Research Question/IssueWe investigate the influence of non‐family shareholder governance on Chinese family firms' digital transformation strategies.Research Findings/InsightsWe use the socioemotional wealth theory to examine the impact of non‐family shareholder governance on family firms' digital transformation. We find that the influence of non‐family shareholder governance by appointing directors can significantly promote the implementation of digital transformation strategies through their capital and human effects in family firms. In contrast, non‐family shareholders only play a positive role in family firms' digital transformation when they are blockholders. In addition, non‐family shareholder governance plays a significant role in promoting the digital transformation of family firms with entrepreneurship and a high degree of industry competition. Regarding external digital development, the Broadband China policy complements family firms' digital transformation strategies. The characteristics of the appointed directors suggest that the introduction of appointed directors, an excess of appointed directors, and the inclusion of appointed directors with digital expertise can effectively promote the digital transformation of family firms. The characteristics of controlling families show that socioemotional wealth can further optimize the relationship between non‐family shareholder governance and digital transformation.Theoretical/Academic ImplicationsWe not only verify the rationality and effectiveness of non‐family shareholder governance in combination with digital transformation strategies but also further observe the impact of the heterogeneity of directors appointed by non‐family shareholders on family firms' digital transformation strategies. Thus, our study tests the influence of non‐family shareholder governance on digital transformation and enriches the literature on non‐family shareholder governance and family firms' strategies.Practitioner/Policy ImplicationsThis study offers insights to family firms regarding how to effectively promote non‐family shareholders' participation in corporate governance and help family firms to achieve the goal of “everlasting foundation.”

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Financial constraints in family firms and the role of venture capital

Cited by 6 publications

References 73 publications

Effect of financial constraints on the growth of family and nonfamily firms in Turkey

Effect of financial constraints on the growth of family and nonfamily firms in Turkey

Venture capital, control rights, and family enterprise growth

Non‐family shareholder governance and the digital transformation of family firms: Evidence from China

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