Family Firm

In: Business and Management

Submitted By theking85ha
Words 1924
Pages 8
1. Introduction
Playing an important role in the economy and occupying a huge proportion in the whole market, family firms have been paid special attentions by scholars with a long time. However, it is scarce to find the related studies about the family impact on corporate performance especially during hard times despite its prevalence around the world. Now, many scholars have realized the importance about family firms due to their reciprocal impact (Sharma, 2004). Previous researches mainly concentrate on two topics including the strategic behavior and family influence of family firms. For example, it is easy to find that more centralized structure can be seen in family firms (Bartholomeusz and Tanewski, 2006). And as a factor that influences the performance of family firm, family business governance can be seen as one of the most important determinant of family firm success.

It is more easily to test the performance of the firm during the hard time which provides an extreme environment to clearly show the differences between the performance of family firms and non-family firms. And the latest global financial crisis in 2008 provides such an ideal setting investigating such a topic due to its magnitude and global scale (Haoyong Zhou, 2012). In this paper, whether family firms performs better during hard time especially in a financial crisis will be critically discussed based on Haoyong Zhou’s recent work. He provided that to be specific, family firms do not perform better in the crisis while it is the companies with founder presence do outperform non-family firm due to different agency cost, investment strategy and access to credit market.
Generally, in order to give a critical review to the assertion that family firms are better performers in a financial crisis, zhou’s evidence will be reviewed in the second part followed by some more discussion about…...

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