Does Family Control Affect Trade Performance? Evidence for Italian Firms
AbstractThis paper examines whether the export decision of firms is affected by their ownership structure, specifically it looks at whether family control is an obstacle to entering foreign markets. The underlying assumption is that family firms are risk averse. Risk aversion may be an obstacle to entering foreign markets, as far as these are perceived as more volatile and risky than the domestic one, particularly when such choice entices bearing relatively high sunk costs. We develop an illustrative theoretical model that shows how the combination between high risk aversion and low initial productivity may hinder family firms' decision to enter foreign markets, particularly distant ones. The empirical analysis, based on a detailed panel data set of Italian firms covering the years from 1995 to 2003, confirms such predictions by showing that family controlled firms do indeed export less than other type of companies even after controlling for firm heterogeneity in productivity, size, technology and access to credit.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0896.
Date of creation: Nov 2008
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firm structure; foreign markets; family firms; exports;
Other versions of this item:
- Giorgio Barba Navaretti & Riccardo Faini & Alessandra Tucci, 2013. "Does Family Control Affect Trade Performance? Evidence for Italian Firms," Annals of Economics and Finance, Society for AEF, vol. 14(3), pages 689-722, December.
- Barba Navaretti, Giorgio & Faini, Riccardo & Tucci, Alessandra, 2008. "Does Family Control Affect Trade Performance? Evidence for Italian Firms," CEPR Discussion Papers 7082, C.E.P.R. Discussion Papers.
- Giorgio Barba Navaretti & Riccardo Faini & Alessandra Tucci, 2008. "Does Family Control Affect Trade Performance? Evidence for Italian Firms," Development Working Papers 260, Centro Studi Luca d\'Agliano, University of Milano.
- F1 - International Economics - - Trade
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-03 (All new papers)
- NEP-EEC-2009-01-03 (European Economics)
- NEP-INT-2009-01-03 (International Trade)
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