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Family Firms, Paternalism and Labour Relations

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  • Mueller, Holger M
  • Philippon, Thomas

Abstract

Using firm-, industry-, and country-level data, we document a link between family ownership and labour relations. Across countries, we find that family ownership is relatively more prevalent in countries in which labour relations are difficult, consistent with firm-level evidence suggesting that family firms are particularly effective at coping with difficult labour relations. Our cross-country results are robust to controlling for minority shareholder protection and other potential determinants of family ownership. Our results also hold if we use strike data from the 1960s to predict cross-country variation in family ownership thirty years later. We address causality in two ways. First, we instrument our measure of the quality of labour relations using 'Labour Origin', a variable describing the extent to which the emerging European liberal states in the 18th and 19th centuries confronted guilds and labour organizations. Second, making use of within-country variation at the industry level, we show that - controlling for industry and country fixed effects - industries that are more labour dependent have relatively more family ownership in countries with worse labour relations.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6017.

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Date of creation: Dec 2006
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Handle: RePEc:cpr:ceprdp:6017

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Keywords: family firms; labour relations;

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References

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  1. Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2002. "Family Firms," NBER Working Papers 8776, National Bureau of Economic Research, Inc.
    • Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003. "Family Firms," Journal of Finance, American Finance Association, vol. 58(5), pages 2167-2202, October.
  2. Juan Botero & Simeon Djankov & Rafael LaPorta & Florencio López-de-Silanes & Andrei Shleifer, . "The Regulation of Labor," Working Paper 19483, Harvard University OpenScholar.
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  7. Bertrand, Marianne & Mullainathan, Sendhil, 2003. "Enjoying the Quiet Life? Corporate Governance and Managerial Preferences," Scholarly Articles 3429713, Harvard University Department of Economics.
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  14. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
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Citations

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Cited by:
  1. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2012. "Matching Firms, Managers, and Incentives," CEP Discussion Papers dp1144, Centre for Economic Performance, LSE.
  2. Rui Albuquerque & Neng Wang, 2007. "Agency Conflicts, Investment, and Asset Pricing," NBER Working Papers 13251, National Bureau of Economic Research, Inc.
  3. Marianna Belloc & Ugo Pagano, 2008. "Politics-Business Interaction Paths," Working Papers 109, University of Rome La Sapienza, Department of Public Economics.
  4. Belloc, Marianna & Pagano, Ugo, 2009. "Co-evolution of politics and corporate governance," International Review of Law and Economics, Elsevier, vol. 29(2), pages 106-114, June.
  5. Laurent Bach & Nicolas Serrano-Velarde, 2009. "The Power of Dynastic Commitment," Working Papers 0924, Oxford University Centre for Business Taxation.
  6. Muravyev, Alexander & Berezinets, Irina & Ilina, Yulia, 2012. "Корпоративные Конфликты И Политика Фирм В Области Занятости И Заработной Платы
    [Corporate Governance Conflicts and Employment and
    ," MPRA Paper 40215, University Library of Munich, Germany.
  7. Siebert, W. Stanley & Peng, Fei & Maimaiti, Yasheng, 2011. "HRM Practices and Performance of Family-Run Workplaces: Evidence from the 2004 WERS," IZA Discussion Papers 5899, Institute for the Study of Labor (IZA).

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