Family Firm Research: The Need for a Methodological Rethink

TLDR

The study argues that bivariate comparisons of family and non‑family firms may reflect demographic sample differences rather than true performance differences, and outlines implications for future research on their management and performance. The authors measured the scale of family company activity in the United Kingdom using several family firm definitions. The study confirms that family companies are a numerically important group, but the scale of their activity is highly sensitive to the definition used, and demographic differences between family and non‑family firms were identified in both bivariate and multivariate analyses.

Abstract

The scale of family company activity in the United Kingdom was measured with regard to several family firm definitions. This study confirms that family companies are a numerically important group of businesses. Policy makers and practitioners must, however, be aware that the scale of family firm activity in any developed economy is highly sensitive to the family firm definition selected. Within a bivariate as well as multivariate statistical framework, marked demographic differences were identified between family and non-family companies with regard to several family firm definitions. We suggest that bivariate studies comparing the management practices and performance of family and non-family firms may have identified ‘demographic sample’ differences rather than ‘real’ differences. Implications for future research exploring the management and performance of family and non-family firms are discussed.