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Comparison of family and non-family business: Financial logic and personal preferences

Author

Listed:
  • Gallo, Miguel A.

    (IESE Business School)

  • Tapies, Josep

    (IESE Business School)

  • Cappuyns, Kristin

    (IESE Business School)

Abstract

This paper documents the research carried out by the Chair of Family Business at IESE using a sample of 305 companies, consisting of 204 non-family businesses (NFBs) and 101 family businesses (FBs). The fact that the FBs in the sample were among the top FBs in Spain and that their financial directors had similar characteristics to the financial directors of the NFBs leads us to believe that the peculiarities of the «financial logic» of FBs brought to light in our study are due not to any lack of knowledge or technical and financial skills on the part of the companies' managers. Rather, they are due to the managers' personal preferences, and to the preferences of other family members who hold power in the firm. The major results indicate that aversion to risk and fear of losing control of the company lead many family businesses to seriously limit their capacity for growth by not encouraging the adoption of widely accepted financial management policies.

Suggested Citation

  • Gallo, Miguel A. & Tapies, Josep & Cappuyns, Kristin, 2000. "Comparison of family and non-family business: Financial logic and personal preferences," IESE Research Papers D/406, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0406
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    Cited by:

    1. Navaretti, Giorgio Barba & Faini, Riccardo & Tucci, Alessandra, 2008. "Does family control affect trade performance?: evidence for Italian firms," LSE Research Online Documents on Economics 28509, London School of Economics and Political Science, LSE Library.
    2. Suveera Gill & Parmjit Kaur, 2015. "Family Involvement in Business and Financial Performance: A Panel Data Analysis," Vikalpa: The Journal for Decision Makers, , vol. 40(4), pages 395-420, December.
    3. Jose B. Betancourt Ramirez & Di genes Lagos Cort s & Gonzalo G mez-Betancourt, 2020. "Ownership Governance Practices and their Influence on Family Businesses Financial Performance," International Journal of Economics and Financial Issues, Econjournals, vol. 10(2), pages 107-123.
    4. W. Gibb Dyer Jr. & David A. Whetten, 2006. "Family Firms and Social Responsibility: Preliminary Evidence from the S&P 500," Entrepreneurship Theory and Practice, , vol. 30(6), pages 785-802, November.
    5. Boon In Tan & Kee Luen Wong & Chee Keong Choong, 2013. "TQM and Family Owned Business: Performance and Sustainability," Diversity, Technology, and Innovation for Operational Competitiveness: Proceedings of the 2013 International Conference on Technology Innovation and Industrial Management,, ToKnowPress.
    6. Gallo, Miguel A. & Estape, Maria J., 2006. "Viabilidad de las empresas familiares de tamaño medio en el sector español de alimentación y bebidas," IESE Research Papers D/647, IESE Business School.

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    Keywords

    Family Business;

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