The effects of family dynamics on diversification strategy: Empirical evidence from French companies

Does concentration of ownership and family control affect specialisation/diversification business strategies?

“…The results show the importance of the ownership structure on diversifi cation strategy adopted by the business group [15], [19], [30], [31], [63], [76], [16]. We test how ownership concentration and family control have a positive impact on the decision to specialize.…”

“…The interest of family shareholders will be in line with those of minority shareholders, the agency problem type I (manager vs. shareholders) will be less important, and the employment of diversifi cation strategies will be decreased [4], [19], [55], [71].…”

“…On the other hand, when a fi rm's managers are also shareholders, the more shares they own, the more their interests are in line with those of other shareholders, so there will be less diversifi cation in the fi rm [6], [12], [17], [30]. In the specifi c case of family fi rms, the interests of family shareholders who are also managers will be in line with those of minority shareholders, so less diversifi cation is to be expected [4], [19], [30], [51], [55], [71]. Friedland, Palmer and Stenbeck [24] show that family fi rms have less incentive to diversify for social and fi nancial reasons.…”

“…Interest in diversifi cation has largely focused on three topics: the way in which business diversifi cation can be measured [19], [35], [48], [60], [69], the relationship between diversifi cation and business results and the factors that determine diversifi cation [4], [6], [11], [12], [17], [26], [27], [36], [41], [50], [58], [70], [71], [74], [72]. However, less attention has been paid to the impact of ownership structure (concentration and main shareholder) on degree of business diversifi cation [13], [14], [16], [19], [30], [31], [63], [76].…”

“…However, less attention has been paid to the impact of ownership structure (concentration and main shareholder) on degree of business diversifi cation [13], [14], [16], [19], [30], [31], [63], [76]. Although some authors mention, in theoretical terms, the importance of concentration of ownership [2], [15], [30], [44] and the type of shareholder/s that effectively control the fi rm [19], [54] [55], [71], [75], in an analysis of business diversifi cation, very few studies have analyzed empirically said impact, with exceptions focusing on the US, European and Asian corporations [3], [11], [15], [19], [25], [27], [29], [40], [58], [50], [74]. The results found in the literature regarding corporate diversifi cation strategy are not conclusive, due to differences in the concept of diversifi cation and measurements used for its study [5], [49].…”