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Does Family Control Affect Trade Performance? Evidence for Italian Firms

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  • Giorgio Barba Navaretti

    ()
    (University of Milan and Centro Studi Luca d\'Agliano)

  • Riccardo Faini

    (University of Rome “Tor Vergata”, Centro Studi Luca d\'Agliano and CEPR)

  • Alessandra Tucci

    ()
    (Centre for Economic Performance, LSE and Centro Studi Luca d\'Agliano)

Abstract

This 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 Info

Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 260.

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Length: 36
Date of creation: 27 Oct 2008
Date of revision:
Handle: RePEc:csl:devewp:260

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  1. Luigi Guiso & Giuseppe Parigi, 1999. "Investment And Demand Uncertainty," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 185-227, February.
  2. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
  3. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
  4. Leech, D. & Leahy, J., 1989. "Ownership Structure, Control Type Classifications And The Performance Of Large British Companies," The Warwick Economics Research Paper Series (TWERPS) 345, University of Warwick, Department of Economics.
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Cited by:
  1. Marco Cucculelli, 2009. "Owner Identity and Firm Performance: Evidence from European Companies," Mo.Fi.R. Working Papers 24, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  2. Matteo Bugamelli & Luigi Cannari & Francesca Lotti & Silvia Magri, 2012. "The innovation gap of Italy’s production system: roots and possible solutions," Questioni di Economia e Finanza (Occasional Papers) 121, Bank of Italy, Economic Research and International Relations Area.
  3. Holger Breinlich & Alessandra Tucci, 2008. "Foreign Market Conditions and Export Performance: Evidence from Italian Firm-Level Data," Economics Discussion Papers 659, University of Essex, Department of Economics.
  4. Breinlich, Holger & Tucci, Alessandra, 2010. "Foreign Market Conditions and Export Performance: Does 'Crowdedness' Reduce Exports?," CEPR Discussion Papers 7975, C.E.P.R. Discussion Papers.
  5. Asso, Pier Francesco & Pipitone, Vito, 2010. "Ostacoli e determinanti dell’innovazione: un’analisi sulle imprese siciliane di successo," Working Papers Res 2/2010, Fondazione Res, revised 01 Dec 2010.
  6. Lidia Mannarino & Valeria Pupo & Fernanda Ricotta, 2011. "Family Involvement In Management And Firm Performance: Evidence From Italy," Working Papers 201103, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  7. Bianco, Madga & Golinelli, Roberto & Parigi, Giuseppe, 2009. "Family firms and investments," MPRA Paper 19247, University Library of Munich, Germany.
  8. Giorgio Barba Navaretti & Matteo Bugamelli & Riccardo Cristadoro & Daniela Maggioni, 2012. "Are firms exporting to China and India different from other exporters?," Questioni di Economia e Finanza (Occasional Papers) 112, Bank of Italy, Economic Research and International Relations Area.

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