IDEAS home Printed from https://ideas.repec.org/a/eee/jbvent/v27y2012i1p1-18.html
   My bibliography  Save this article

Exploring the relation between family involvement and firms' financial performance: A meta-analysis of main and moderator effects

Author

Listed:
  • O'Boyle, Ernest H.
  • Pollack, Jeffrey M.
  • Rutherford, Matthew W.

Abstract

The present work summarizes the theoretical foundations and empirical findings regarding the relation between family involvement and firm performance. From a theory-based perspective we integrate evolutionary psychology and agency theory and describe how conflicting predictions can be made regarding the relation between family involvement and firm performance. Similarly, we describe how the empirical landscape is equally conflicted. Findings from this meta-analysis summarize the observed effects from multiple studies and provide an estimate of the relation across the entire population. Results illustrated that family involvement did not significantly impact firms' financial performance (r=.006). Based on these data, there is no relation between family involvement and a firm's financial performance. Furthermore, we examined multiple conceptual and methodologically-based potential moderating influences—none was statistically significant. Overall, these findings provide the foundation for multiple new areas of inquiry as the domain of family business studies evolves. Moving forward, we advise future research in this area to search for additional moderator effects and explore the defining characteristics, other than performance, that make family businesses distinct from non-family businesses.

Suggested Citation

  • O'Boyle, Ernest H. & Pollack, Jeffrey M. & Rutherford, Matthew W., 2012. "Exploring the relation between family involvement and firms' financial performance: A meta-analysis of main and moderator effects," Journal of Business Venturing, Elsevier, vol. 27(1), pages 1-18.
    • Handle: RePEc:eee:jbvent:v:27:y:2012:i:1:p:1-18
    DOI: 10.1016/j.jbusvent.2011.09.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0883902611000838
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusvent.2011.09.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Smith, Max, 2008. "Differences between family and non-family SMEs: A comparative study of Australia and Belgium," Journal of Management & Organization, Cambridge University Press, vol. 14(1), pages 40-58, March.
    2. Chrisman, James J. & Sharma, Pramodita & Taggar, Simon, 2007. "Family influences on firms: An introduction," Journal of Business Research, Elsevier, vol. 60(10), pages 1005-1011, October.
    3. Barclay, Michael J. & Holderness, Clifford G., 1989. "Private benefits from control of public corporations," Journal of Financial Economics, Elsevier, vol. 25(2), pages 371-395, December.
    4. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    5. Franz W. Kellermanns, 2005. "Family Firm Resource Management: Commentary and Extensions," Entrepreneurship Theory and Practice, , vol. 29(3), pages 313-319, May.
    6. Silva, Francisca & Majluf, Nicolás, 2008. "Does family ownership shape performance outcomes?," Journal of Business Research, Elsevier, vol. 61(6), pages 609-614, June.
    7. Danny Miller & Isabelle Le Breton‐Miller & Barry Scholnick, 2008. "Stewardship vs. Stagnation: An Empirical Comparison of Small Family and Non‐Family Businesses," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 51-78, January.
    8. Gregory G. Dess & Richard B. Robinson, 1984. "Measuring organizational performance in the absence of objective measures: The case of the privately‐held firm and conglomerate business unit," Strategic Management Journal, Wiley Blackwell, vol. 5(3), pages 265-273, July.
    9. McConaughy, Daniel L. & Walker, Michael C. & Henderson, Glenn Jr. & Mishra, Chandra S., 1998. "Founding family controlled firms: Efficiency and value," Review of Financial Economics, Elsevier, vol. 7(1), pages 1-19.
    10. Jacquemin, Alexis & de Ghellinck, Elisabeth, 1980. "Familial control, size and performance in the largest French firms," European Economic Review, Elsevier, vol. 13(1), pages 81-91, January.
    11. Pramodita Sharma & S. Manikutty, 2005. "Strategic Divestments in Family Firms: Role of Family Structure and Community Culture," Entrepreneurship Theory and Practice, , vol. 29(3), pages 293-311, May.
    12. Zahra, Shaker A., 2007. "Contextualizing theory building in entrepreneurship research," Journal of Business Venturing, Elsevier, vol. 22(3), pages 443-452, May.
    13. Daniel L. Mcconaughy & Charles H. Matthews & Anne S. Fialko, 2001. "Founding Family Controlled Firms: Performance, Risk, and Value," Journal of Small Business Management, Taylor & Francis Journals, vol. 39(1), pages 31-49, January.
    14. Joshua Abor, 2008. "Agency theoretic determinants of debt levels: evidence from Ghana," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 7(2), pages 183-192, May.
    15. Mike Peng & Yi Jiang, 2006. "Family Ownership And Control In Large Firms: The Good, The Bad, The Irrelevant ??? And Why," William Davidson Institute Working Papers Series wp840, William Davidson Institute at the University of Michigan.
    16. David Hillier & Patrick McColgan, 2009. "Firm Performance and Managerial Succession in Family Managed Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(3‐4), pages 461-484, April.
    17. repec:hum:wpaper:sfb649dp2007-059 is not listed on IDEAS
    18. Raghuram G. Rajan & Luigi Zingales, 2001. "Financial Systems, Industrial Structure, and Growth," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(4), pages 467-482.
    19. Daniel L. McConaughy & Michael C. Walker & Glenn V. Henderson & Chandra S. Mishra, 1998. "Founding family controlled firms: Efficiency and value," Review of Financial Economics, John Wiley & Sons, vol. 7(1), pages 1-19.
    20. Eleni Stavrou & George Kassinis & Alexis Filotheou, 2007. "Downsizing and Stakeholder Orientation Among the Fortune 500: Does Family Ownership Matter?," Journal of Business Ethics, Springer, vol. 72(2), pages 149-162, May.
    21. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    22. Zahra, Shaker A., 2003. "International expansion of U.S. manufacturing family businesses: the effect of ownership and involvement," Journal of Business Venturing, Elsevier, vol. 18(4), pages 495-512, July.
    23. Lorraine Uhlaner & Roberto Floren & Jurgen Geerlings, 2007. "Owner Commitment and Relational Governance in the Privately-Held Firm: An Empirical Study," Small Business Economics, Springer, vol. 29(3), pages 275-293, October.
    24. Chakrabarty, Subrata, 2009. "The influence of national culture and institutional voids on family ownership of large firms: A country level empirical study," Journal of International Management, Elsevier, vol. 15(1), pages 32-45, March.
    25. Mike Burkart & Denis Gromb & Fausto Panunzi, 1997. "Large Shareholders, Monitoring, and the Value of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(3), pages 693-728.
    26. Jess H. Chua & James J. Chrisman & Pramodita Sharma, 1999. "Defining the Family Business by Behavior," Entrepreneurship Theory and Practice, , vol. 23(4), pages 19-39, July.
    27. Schulze, William S. & Lubatkin, Michael H. & Dino, Richard N., 2003. "Toward a theory of agency and altruism in family firms," Journal of Business Venturing, Elsevier, vol. 18(4), pages 473-490, July.
    28. Avi Fiegenbaum & Aneel Karnani, 1991. "Output flexibility—A competitive advantage for small firms," Strategic Management Journal, Wiley Blackwell, vol. 12(2), pages 101-114, February.
    29. Alex Stewart, 2003. "Help One Another, Use One Another: Toward an Anthropology of Family Business," Entrepreneurship Theory and Practice, , vol. 27(4), pages 383-396, October.
    30. W. Gibb Dyer Jr., 2003. "The Family: The Missing Variable in Organizational Research," Entrepreneurship Theory and Practice, , vol. 27(4), pages 401-416, October.
    31. Morten Bennedsen & Kasper M. Nielsen & Francisco Pérez-González & Daniel Wolfenzon, 2006. "Inside the Family Firm: The Role of Families in Succession Decisions and Performance," NBER Working Papers 12356, National Bureau of Economic Research, Inc.
    32. repec:bla:jfinan:v:58:y:2003:i:3:p:1301-1327 is not listed on IDEAS
    33. James J. Chrisman & Jess H. Chua & Pramodita Sharma, 2005. "Trends and Directions in the Development of a Strategic Management Theory of the Family Firm," Entrepreneurship Theory and Practice, , vol. 29(5), pages 555-575, September.
    34. Pankaj Ghemawat & Tarun Khanna, 1998. "The Nature of Diversified Business Groups: A Research Design and Two Case Studies," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 35-61, March.
    35. Block, Jörn Hendrich & Thams, Andreas, 2007. "Long-term orientation in family and non-family firms: A Bayesian analysis," SFB 649 Discussion Papers 2007-059, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    36. Sabine B. Klein & Joseph H. Astrachan & Kosmas X. Smyrnios, 2005. "The F–PEC Scale of Family Influence: Construction, Validation, and Further Implication for Theory," Entrepreneurship Theory and Practice, , vol. 29(3), pages 321-339, May.
    37. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May.
    38. Joshua Abor, 2008. "Agency theoretic determinants of debt levels: evidence from Ghana," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 7(2), pages 183-192, May.
    39. Anaïs Hamelin-Schertzer & Joseph Trojman, 2007. "Family ownership and growth: the case of French SMEs," Working Papers CEB 07-024.RS, ULB -- Universite Libre de Bruxelles.
    40. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    41. Shaker A. Zahra & James C. Hayton & Carlo Salvato, 2004. "Entrepreneurship in Family vs. Non–Family Firms: A Resource–Based Analysis of the Effect of Organizational Culture," Entrepreneurship Theory and Practice, , vol. 28(4), pages 363-381, July.
    42. Randall Morck & Bernard Yeung, 2004. "Family Control and the Rent–Seeking Society," Entrepreneurship Theory and Practice, , vol. 28(4), pages 391-409, July.
    43. David G. Sirmon & Michael A. Hitt, 2003. "Managing Resources: Linking Unique Resources, Management, and Wealth Creation in Family Firms," Entrepreneurship Theory and Practice, , vol. 27(4), pages 339-358, October.
    44. Chamu Sundaramurthy & Glen E. Kreiner, 2008. "Governing by Managing Identity Boundaries: The Case of Family Businesses," Entrepreneurship Theory and Practice, , vol. 32(3), pages 415-436, May.
    45. Bertrand, Marianne & Johnson, Simon & Samphantharak, Krislert & Schoar, Antoinette, 2008. "Mixing family with business: A study of Thai business groups and the families behind them," Journal of Financial Economics, Elsevier, vol. 88(3), pages 466-498, June.
    46. Eddleston, Kimberly A. & Kellermanns, Franz W., 2007. "Destructive and productive family relationships: A stewardship theory perspective," Journal of Business Venturing, Elsevier, vol. 22(4), pages 545-565, July.
    47. Roberto Barontini & Lorenzo Caprio, 2006. "The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe," European Financial Management, European Financial Management Association, vol. 12(5), pages 689-723, November.
    48. Habbershon, Timothy G. & Williams, Mary & MacMillan, Ian C., 2003. "A unified systems perspective of family firm performance," Journal of Business Venturing, Elsevier, vol. 18(4), pages 451-465, July.
    49. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    50. Michael Lubatkin & William S. Schulze & N Dino Richard, 2003. "Toward a theory of agency and altruism in family firms," Post-Print hal-02311679, HAL.
    51. Vinay K. Garg & Bruce A. Walters & Richard L. Priem, 2003. "Chief executive scanning emphases, environmental dynamism, and manufacturing firm performance," Strategic Management Journal, Wiley Blackwell, vol. 24(8), pages 725-744, August.
    52. Bubolz, Margaret M., 2001. "Family as source, user, and builder of social capital," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(2), pages 129-131, March.
    53. Randall Morck & Bernard Yeung, 2003. "Agency Problems in Large Family Business Groups," Entrepreneurship Theory and Practice, , vol. 27(4), pages 367-382, October.
    54. Carolyny. Y. Woo & Arnold C. Cooper, 1981. "Strategies of effective low share businesses," Strategic Management Journal, Wiley Blackwell, vol. 2(3), pages 301-318, July.
    55. Reginald A. Litz, 1997. "The Family Firm's Exclusion from Business School Research: Explaining the Void; Addressing the Opportunity," Entrepreneurship Theory and Practice, , vol. 21(3), pages 55-71, April.
    56. Chandra S. Mishra & Daniel L. Mcconaughy, 1999. "Founding Family Control and Capital Structure: The Risk of Loss of Control and the Aversion to Debt," Entrepreneurship Theory and Practice, , vol. 23(4), pages 53-64, July.
    57. William S. Schulze & Michael H. Lubatkin & Richard N. Dino & Ann K. Buchholtz, 2001. "Agency Relationships in Family Firms: Theory and Evidence," Organization Science, INFORMS, vol. 12(2), pages 99-116, April.
    58. Francesco Perrini & Ginevra Rossi & Barbara Rovetta, 2008. "Does Ownership Structure Affect Performance? Evidence from the Italian Market," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(4), pages 312-325, July.
    59. Maury, Benjamin, 2006. "Family ownership and firm performance: Empirical evidence from Western European corporations," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 321-341, January.
    60. Randoy, Trond & Goel, Sanjay, 2003. "Ownership structure, founder leadership, and performance in Norwegian SMEs: implications for financing entrepreneurial opportunities," Journal of Business Venturing, Elsevier, vol. 18(5), pages 619-637, September.
    61. Rosenbusch, Nina & Brinckmann, Jan & Bausch, Andreas, 2011. "Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs," Journal of Business Venturing, Elsevier, vol. 26(4), pages 441-457, July.
    62. James G. Combs, 2008. "Commentary: The Servant, the Parasite, and the Enigma: A Tale of Three Ownership Structures and Their Affiliate Directors1," Entrepreneurship Theory and Practice, , vol. 32(6), pages 1027-1033, November.
    63. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
    64. Dawson, Alexandra, 2011. "Private equity investment decisions in family firms: The role of human resources and agency costs," Journal of Business Venturing, Elsevier, vol. 26(2), pages 189-199, March.
    65. David Hillier & Patrick McColgan, 2009. "Firm Performance and Managerial Succession in Family Managed Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(3-4), pages 461-484.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Chirico & Kimberly A. Eddleston & Pankaj C. Patel, 2025. "Does it Pay to Patent Green Innovations? Stock Market Reactions to Family and Nonfamily Firms’ Green Patents," Journal of Business Ethics, Springer, vol. 198(4), pages 947-970, May.
    2. Agnieszka Kus & Ireneusz Zuchowski & Wojciech Zbaraszewski, 2025. "Transformation of a Beekeeping Farm as a Unique Family Business Model: Insights from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 918-948.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mazzi, Chiara, 2011. "Family business and financial performance: Current state of knowledge and future research challenges," Journal of Family Business Strategy, Elsevier, vol. 2(3), pages 166-181.
    2. Astrachan, Joseph H., 2010. "Strategy in family business: Toward a multidimensional research agenda," Journal of Family Business Strategy, Elsevier, vol. 1(1), pages 6-14, March.
    3. James J. Chrisman & Jess H. Chua & Pramodita Sharma, 2005. "Trends and Directions in the Development of a Strategic Management Theory of the Family Firm," Entrepreneurship Theory and Practice, , vol. 29(5), pages 555-575, September.
    4. Audretsch, David B. & Hülsbeck, Marcel & Lehmann, Erik E., 2013. "Families as active monitors of firm performance," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 118-130.
    5. 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.
    6. Basco, Rodrigo, 2013. "The family's effect on family firm performance: A model testing the demographic and essence approaches," Journal of Family Business Strategy, Elsevier, vol. 4(1), pages 42-66.
    7. Weiping Liu & Haibin Yang & Guangxi Zhang, 2012. "Does family business excel in firm performance? An institution-based view," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 965-987, December.
    8. Ahlers, Oliver & Hack, Andreas & Kellermanns, Franz W., 2014. "“Stepping into the buyers’ shoes”: Looking at the value of family firms through the eyes of private equity investors," Journal of Family Business Strategy, Elsevier, vol. 5(4), pages 384-396.
    9. James J. Chrisman & Jess H. Chua & Allison W. Pearson & Tim Barnett, 2012. "Family Involvement, Family Influence, and Family–Centered Non–Economic Goals in Small Firms," Entrepreneurship Theory and Practice, , vol. 36(2), pages 267-293, March.
    10. Poutziouris, Panikkos & Savva, Christos S. & Hadjielias, Elias, 2015. "Family involvement and firm performance: Evidence from UK listed firms," Journal of Family Business Strategy, Elsevier, vol. 6(1), pages 14-32.
    11. McGuire, Jean & Dow, Sandra & Ibrahim, Bakr, 2012. "All in the family? Social performance and corporate governance in the family firm," Journal of Business Research, Elsevier, vol. 65(11), pages 1643-1650.
    12. David G. Sirmon & Jean–Luc Arregle & Michael A. Hitt & Justin W. Webb, 2008. "The Role of Family Influence in Firms’ Strategic Responses to Threat of Imitation," Entrepreneurship Theory and Practice, , vol. 32(6), pages 979-998, November.
    13. Garcia-Castro, Roberto & Aguilera, Ruth V., 2014. "Family involvement in business and financial performance: A set-theoretic cross-national inquiry," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 85-96.
    14. Cruz, Cristina & Justo, Rachida & De Castro, Julio O., 2012. "Does family employment enhance MSEs performance?," Journal of Business Venturing, Elsevier, vol. 27(1), pages 62-76.
    15. Erbetta, Fabrizio & Menozzi, Anna & Corbetta, Guido & Fraquelli, Giovanni, 2013. "Assessing family firm performance using frontier analysis techniques: Evidence from Italian manufacturing industries," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 106-117.
    16. Lindow, Corinna M. & Stubner, Stephan & Wulf, Torsten, 2010. "Strategic fit within family firms: The role of family influence and the effect on performance," Journal of Family Business Strategy, Elsevier, vol. 1(3), pages 167-178, September.
    17. Pieper, Torsten M., 2010. "Non solus: Toward a psychology of family business," Journal of Family Business Strategy, Elsevier, vol. 1(1), pages 26-39, March.
    18. Barontini, Roberto & Bozzi, Stefano, 2018. "Family firm heterogeneity and CEO compensation in Continental Europe," Journal of Economics and Business, Elsevier, vol. 97(C), pages 1-18.
    19. Mehmet Bağiş & Li̇ri̇don Kryeziu & Mehmet Nurullah Kurutkan & Besni̇k A. Krasniqi & Omer Yazici & Esra Memili, 2023. "Topics, trends and theories in family business research: 1996–2020," International Entrepreneurship and Management Journal, Springer, vol. 19(4), pages 1855-1891, December.
    20. San Martin-Reyna, J.M. & Duran-Encalada, Jorge A., 2012. "The relationship among family business, corporate governance and firm performance: Evidence from the Mexican stock exchange," Journal of Family Business Strategy, Elsevier, vol. 3(2), pages 106-117.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbvent:v:27:y:2012:i:1:p:1-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusvent .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.