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The Survival of Family Firms: The Importance of Control and Family Ties

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  • Enrico Santarelli
  • Francesca Lotti

Abstract

The aim of this article is to analyze the survival patterns of a group of family firms which have already spent at least 25 years in the market. To this end, we use the Kaplan-Meier product limit estimator supplemented with qualitative information gathered by direct observation and discussions with entrepreneurs. The main findings are that small family firms which have reached their 30th year in the market face a very high risk of sudden exit, increasing with firm age. Further control carried out by means of interviews with entrepreneurs identifies problems connected with succession as one of the main causes of the decision to close down.

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  • Enrico Santarelli & Francesca Lotti, 2005. "The Survival of Family Firms: The Importance of Control and Family Ties," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(2), pages 183-192.
    • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:2:p:183-192
    DOI: 10.1080/13571510500127246
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    Cited by:

    1. Cefis, Elena & Coad, Alex & Lucini-Paioni, Alessandro, 2023. "Landmarks as lighthouses: firms' innovation and modes of exit during the business cycle," Research Policy, Elsevier, vol. 52(8).
    2. Richard I.D. Harris & Qian Cher Li, "undated". "Export-market dynamics and the probability of firm closure: Evidence for the UK," Working Papers 2008_17, Business School - Economics, University of Glasgow.
    3. Aleid E. Brouwer, 2003. "An empirical study on the relationship between the spatial environment and the survival of old firms in the Netherlands," ERSA conference papers ersa03p108, European Regional Science Association.
    4. Brouwer Aleid & Pellenbarg Pieter, 2011. "The Importance of Place in Corporate Identity an Investigation on the Presence of Old Dutch Firms on the Internet," European Spatial Research and Policy, Sciendo, vol. 18(2), pages 79-94, November.
    5. Boris Rumanko & Zuzana Lušňáková & Monika Moravanská & Mária Šajbidorová, 2021. "Succession as a Risk Process in the Survival of a Family Business—Case of Slovakia," JRFM, MDPI, vol. 14(10), pages 1-20, September.
    6. Roberta Piergiovanni, 2010. "Gibrat's Law in the “Third Italy”: Firm Growth in the Veneto Region," Growth and Change, Wiley Blackwell, vol. 41(1), pages 28-58, March.
    7. Dawn DeTienne & Melissa Cardon, 2012. "Impact of founder experience on exit intentions," Small Business Economics, Springer, vol. 38(4), pages 351-374, May.
    8. Nzinga Broussard & Ralph Chami & Gregory Hess, 2015. "(Why) Do self-employed parents have more children?," Review of Economics of the Household, Springer, vol. 13(2), pages 297-321, June.
    9. Cucculelli, Marco & Micucci, Giacinto, 2008. "Family succession and firm performance: Evidence from Italian family firms," Journal of Corporate Finance, Elsevier, vol. 14(1), pages 17-31, February.
    10. Rossella Leopizzi & Simone Pizzi & Fabrizio D'Addario, 2021. "The Relationship among Family Business, Corporate Governance, and Firm Performance: An Empirical Assessment in the Tourism Sector," Administrative Sciences, MDPI, vol. 11(1), pages 1-12, January.
    11. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.
    12. Cheng-Wen Lee & Shu Hui Chen, 2022. "Contradictions between Founders and Successors in Taiwan’s Family Business Inheritance: A Qualitative Study," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 12(5), pages 1-5.
    13. Basco, Rodrigo & Suwala, Lech, 2020. "Spatial familiness: a bridge between family business and economic geography," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 185-212.

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    More about this item

    Keywords

    Succession; Survival Function; Kaplan-Meier Estimator; Hazard Function; Italy; JEL Classifications: L20; C34; C41; M13;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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