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Small Business Economics

22-04-2024 | Research article

The role of culture in family firms

Authors: Mario Daniele Amore, Danny Miller

Published in: Small Business Economics

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Abstract

Although family firms are ubiquitous, their prevalence displays major geographic disparities and their performance differs across regions. We review an extensive literature showing that formal institutional factors play a key role in explaining variations in the diffusion of family firms and their performance. We also review a more neglected but rapidly emerging stream of research focusing on culture as a source of these variations. By providing a framework for current theories, findings and methods, we demonstrate how cultural elements such as trust, religion, family values and collectivism provide useful answers to where and why family firms exist, and how well they perform.

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Villalonga and Amit (2006) also distinguish between founder- and heir-led firms in their financial performance, while Miller, Le Breton-Miller, Lester and Cannella (2007) find that only founders without family members as owners or managers outperform.

By taking advantage of SEC reports of family ties among high-ranking executives Parise (2022) distinguishes family-run from blockholder-owned firms, showing it to be relevant to performance.

It is useful to keep in mind that this and subsequent figures are sensitive to how one defines family firms. See Amit and Villalonga (2014) for a discussion.

A host of cultural values also have been shown to influence entrepreneurship rates (Assenova & Amit, 2022; Barrios et al., 2021; Kleinhempel et al., 2022).

On the legacy effect of agriculture on culture, see also Ang (2019) and Ang and Fredriksson (2017).

See, e.g., Bryan, Choi and Karlan (2021), Guiso, Sapienza and Zingales (2003) and Hilary and Hui (2009) for empirical evidence linking religious beliefs and economic outcomes.

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Title: The role of culture in family firms
Authors: Mario Daniele Amore
Danny Miller
Publication date: 22-04-2024
Publisher: Springer US
Published in: Small Business Economics
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-024-00926-y

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