Are family firms good employers?
Neckebrouck, Jeroen Schulze, William Zellweyer, Thomas
Neckebrouck, Jeroen
Schulze, William
Zellweyer, Thomas
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2018
Journal
Academy of Management Journal
Book
Publication Volume
61
Publication Issue
2
Publication Begin page
553
Publication End page
585
Publication NUmber of pages
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Abstract
Family firms employ about 60 percent of the global workforce. While it is widely assumed that they are good employers, data about their conduct is mixed. In this study, we extend stewardship and agency theories to test competing propositions about the impact of family on employment practices using data from 14,961 private Belgian firms over a 19-year period. Higher investments, lower dividend payout, and higher risk tolerance indicate that family firms are better financial stewards of their companies than nonfamily firms. However, family firms are worse organizational stewards than nonfamily firms: They offer lower compensation, invest less in employee training, and exhibit higher voluntary turnover and lower labor productivity. Further, and contrary to earlier research, we find that financial practices in private family firms do not change over time, and that the deleterious influence of family on employment practices rises with both firm age and with heightened family involvement. Together, our findings suggest that a more nuanced understanding of stewardship and agency theory is needed to understand the impact of family on the governance of private firms.
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Keywords
Family Business, Entrepreneurship