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Firm ownership and productivity: a study of family and non-family SMEs

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  • Francesco Barbera
  • Ken Moores

Abstract

Motivated by a lack of consensus in the current literature, the objective of this paper is to reveal whether family firms are more or less productive than non-family firms. As a first step, this paper links family business research to the theoretical notion that family involvement has an effect on the factors of production from a productivity standpoint. Second, by using a Cobb–Douglas framework, we provide empirical evidence that family labour and capital indeed yield diverse output contributions compared with their non-family counterparts. In particular, family labour output contributions are significantly higher, and family capital output contributions significantly lower. Interestingly, differences in total factor productivity between family and non-family firms disappear when we allow for heterogeneous output contributions of family production inputs. These findings imply that the assumption of homogeneous labour and capital between family and non-family firms is inappropriate when estimating the production function. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Francesco Barbera & Ken Moores, 2013. "Firm ownership and productivity: a study of family and non-family SMEs," Small Business Economics, Springer, vol. 40(4), pages 953-976, May.
    • Handle: RePEc:kap:sbusec:v:40:y:2013:i:4:p:953-976
    DOI: 10.1007/s11187-011-9405-9
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    More about this item

    Keywords

    Heterogeneous input elasticity; Family firm; Cobb–Douglas production function; Total factor productivity; D22; D24; J24; M11; L26;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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