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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.

Suggested Citation

  • Mueller, Holger M & Philippon, Thomas, 2006. "Family Firms, Paternalism and Labour Relations," CEPR Discussion Papers 6017, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6017
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2015. "Matching Firms, Managers, and Incentives," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 623-681.
    3. Laurent Bach & Nicolas Serrano-Velarde, 2009. "The Power of Dynastic Commitment," Working Papers 0924, Oxford University Centre for Business Taxation.
    4. Rui Albuquerue & Neng Wang, 2008. "Agency Conflicts, Investment, and Asset Pricing," Journal of Finance, American Finance Association, vol. 63(1), pages 1-40, February.
    5. Marianna Belloc & Ugo Pagano, 2008. "Politics-Business Interaction Paths," Working Papers 109, University of Rome La Sapienza, Department of Public Economics.
    6. 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).
    7. Morck Randall, 2008. "Comment on "Family Values or Crony Capitalism?" (Harold James)," Capitalism and Society, De Gruyter, vol. 3(1), pages 1-7, June.
    8. Muravyev, Alexander & Berezinets, Irina & Ilina, Yulia, 2012. "Корпоративные Конфликты И Политика Фирм В Области Занятости И Заработной Платы
      [Corporate Governance Conflicts and Employment and Wage Policies of Companies]
      ," MPRA Paper 40215, University Library of Munich, Germany.

    More about this item

    Keywords

    family firms; labour relations;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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