Family Firm Performance: Further Evidence

TLDR

Founding families constitute about one‑third of the S&P 500, forming the study’s sample. The study empirically examines how family‑owned firms perform in terms of competitiveness and stability compared to non‑family firms. Family firms show higher employment and revenue growth, greater profitability, and better performance when founding family members manage them, and they help preserve employment during recessions.

Abstract

This article empirically investigates the competitiveness and stability of family-owned firms relative to firms owned by diverse shareholders. Founding families are present in about one-third of the S&P 500—the sample of this study. Data gathered over the 1992—2002 period confirm that family firms tend to experience higher employment and revenue growth over time and are more profitable. Regression analysis also supports that firm performance improves when founding family members are involved in management. Although evidence on the relative stability in employment among family firms over the long run is tenuous, data from the most recent recession support the role that founding families play in maintaining employment stability during temporary market downturns.