Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance

A meta-analytic examination of the relationship between family firm generational involvement and performance

Purpose

The purpose of this paper is to examine the relationship between family firm generational involvement and performance. Although researchers have studied this relationship extensively, a complete understanding of its true magnitude and sign is still lacking.

Design/methodology/approach

This meta-analysis sheds new light on this relationship, integrating the findings of 43 studies with 51 independent samples and 18,802 family firms.

Findings

The results reveal a small and negative relationship indicating that later-generation family firms perform worse compared to first-generation ones. The authors also show that the relationship is stronger for younger than older and for private than public firms. Finally, the measurements of both variables influence the relationship yielding critical research implications.

Research limitations/implications

This study suggests that future researchers examining the effects of generational involvement on family firm performance should conduct their analysis using multiple measures of both variables to ensure the accuracy of their results. It also highlights the need of family business scholars to converge to the use of a universal family firm definition, as findings differ significantly in strength and direction depending on which definition is used.

Practical implications

From a practitioners’ perspective, the findings imply that owners of young and private family firms should consider professionalizing and adopting a balanced top management team composition consisting of both family and non-family members as a way to mitigate the negative effects of “familiness” on performance.

Originality/value

This study empirically demonstrates the importance of adopting a generational perspective when examining differences in family firm performance.