Family Owned Business Institute

Research Scholar's Abstracts 2010 - Francesco Barbera, Ken Moores

The Impact of Family Involvement on the Productivity of the Firm

Francesco Barbera, Ken Moores
2010
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This study endeavours to clarify the influence of family involvement on firm productivity. To date, similar investigations into family firm productivity have failed to consider the possibility that family firms may strategically allocate production factors differently than non-family firms in their respective production processes. Such analysis is therefore incomplete since, in addition to input and output management, how one distributes production factors is expected to have a significant impact on the productivity of the firm. From both a labour and physical capital perspective, evidence provided by family business researchers outline numerous reasons as to why family firms would indeed allocate their production factors differently to their non-family counterparts. Exploring those reasons and empirically testing for actual differences in production factor allocation is the aim of this study. First we discuss the different approaches used when attempting to define a family firm and how differences in family values and preferences lead to specific strategic behaviour in the production process. This is followed by a review of the literature which substantiates differences in family firms’ allocation of both labour and physical capital in the production process, and how such allocative differences could impact total factor productivity. Based on this review, we aim to formulate testable hypotheses and finally determine any policy implications of the results. This initiative is rooted in micro economic theory, and should strengthen the currently fragile link between seminal economic concepts and the more contemporary family business research.