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The Views of Family Companies on Venture Capital: Empirical Evidence from the UK Small to Medium-Size Enterprising Economy
Abstract
This explorative research paper draws evidence from a database of small to medium-size unquoted private companies (n = 240) in the UK and reports on the family business and venture capital relationship from the demand side. Following the review of literature relating to financial affairs of private companies, the main research inquiries are outlined and a set of generic hypotheses is elicited based on the pecking order theory—that is, private companies, including family-controlled ventures, have a propensity to finance their operations in a hierarchical fashion, first using internally available funds, followed by debt and, finally, external equity (Petitt & Singer, 1985). Univariate statistical analyses confirm that family companies adhere strongly to the pecking order principles of financial development. The paper explores factors governing the rationale of owner-managing directors of private and family companies for considering venture capital dealings as well as main areas of concern about the deal structures. The paper then concludes with a discussion of the policy implications from the perspective of the owner-manager, financier, and enterprise policy maker. To encourage equity development of smaller privately held companies, particularly family firms, there is room for policy initiatives that respect the financial philosophy of private companies.
... One of the most relevant and growing areas in family firms concerns financial decisions (Michiels & Molly, 2017;Schickinger et al., 2022). Most previous studies have focused on the difference between family and nonfamily firms providing mixed results regarding debt levels (Ampenberger et al., 2013;L opez-Delgado & Diéguez-Soto, 2018;Mishra & McConaughy, 1999;Schmid, 2013;Setia-Atmaja, 2010), dividend policy (Attig et al., 2016;Gugler, 2003;Pindado et al., 2012;Setia-Atmaja et al., 2009), and external equity financing (Poutziouris, 2001;Wu et al., 2007). ...
... Family firms are usually risk averse and are more inclined to invest in long-term physical assets (Anderson et al., 2012) instead of intangible assets such as R&D (Chrisman & Patel, 2012;Poutziouris, 2001;Sciascia et al., 2015). Contrary to R&D investment, long-term tangible investments allow family members to preserve SEW, assure it for the next generations, and no threats to family's control (Gomez-Mejia et al., 2011. ...
... Low inventories and the fact of reducing the number of days accounts receivable are associated with increasing profitability (Deloof, 2003), whereas other studies show that profitability increases with investment in receivables. The literature is consistent with a different current financial and asset structure between private family firms and their nonfamily counterparts (Poutziouris, 2001). ...
Socioemotional wealth (SEW) refers to those family-centered goals that are likely to have a major influence on the strategic decision-making process and performance of family firms. Many studies have used indirect indicators related to family involvement in ownership and management to measure SEW; meanwhile, others have developed scales to directly measure the level and importance of SEW in family firms. Limitations of both indirect and direct measures of SEW lead empirical research on SEW to be under threat. In the current study, we use random forests to identify the important indicators related to financial and economic decisions, as well as family-related measures, for explaining the family firms' SEW and to design a good prediction model using the smallest set of nonredundant indicators. Our results show that the model that exhibits the minimum out-of-bag sample (OOB) error rate includes variables that refer to the presence of family members in the firm's management positions, long-term nonfinancial debt, personnel expenditures, long-term financial investments, short-term financial debt, average storage period, and accounts receivables. For prediction, the model with a reasonably low estimated classification error includes only three variables, which refer to the presence of family members in the firm's management positions, long-term nonfinancial debt, and accounts receivables.
... Third, Leitterstorf and Rau (2014) show that family firms have significantly higher IPO underpricing than non-family firms; consequently, selling to an external investor might be financially more attractive for family firm owner-managers. Fourth, pursuing an IPO supports a family firm merely in getting additional financing (Leitterstorf & Rau, 2014), whereas, an external investor may provide additional financing and managerial expertise and resolve potential shareholder conflicts (Poutziouris, 2001;Upton & Petty, 2000). As such family firms might prefer minority sales to investors. ...
... Despite all these advantages of selling to an external investor, such decision can be considered emotionally tough for family firms (La Porta, Lopez-De-Silanes, & Shleifer, 1999;Neckebrouck, Manigart, & Meuleman, 2016;Poutziouris, 2001;Villanueva & Sapienza, 2009) because they strive to retain control over the firm to pursue the family's interest and therefore preserve and increase the level of socioemotional wealth (SEW), defined as the non-financial value accruing to families through the association with their firms (e.g., Berrone, Cruz, & Gómez-Mejía, 2012;Gómez-Mejía et al., 2010;Gómez-Mejía, Takács Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007;Henn & Lutz, 2016). Compared to merely delegating some responsibility to externals, as is the case for professionalization (Steward & Hitt, 2012), partial sales might threaten SEW as powerful outside decision-makers come into the family firm. ...
... On the one side, family firms are characterized by several strategic advantages, such as a strong entrepreneurial spirit, long-term orientation, strong employee loyalty, and high levels of corporate independence (Poutziouris, 2001). However, on the other side, family firms often struggle with nepotism, low degree of professionalism, scarce resources, and capabilities (e.g., financial resources, human resources), preventing family firms from growing (Romano, Tanewski, & Smyrnios, 2001;Sirmon & Hitt, 2003;Upton & Petty, 2000). ...
Purpose
This study aims to extend the research in the field of external investments in family firms. It contributes to the literature by analyzing the drivers of the family firm owner-managers selling a minority stake to a strategic investor. This type of external investment might be of great interest to family firms because the family firm owner-managers can secure control over the firm and preserve socioemotional wealth while simultaneously generating additional financing and gaining strategic and managerial know-how. Likewise, minority investments in family firms might also be of high interest to strategic investors, thus enabling close collaborations (e.g. in R&D, purchasing and sales) with minor equity investments.
Design/methodology/approach
This study tests the hypotheses using a vignette study leveraging 327 observations from family firm owner-managers.
Findings
Based on the socioemotional wealth perspective, this study hypothesizes that the degree of family prominence, the degree of employee orientation and pure family management influence the willingness to sell. In addition, this study hypothesizes that the moderating effect of a below-average financial performance weakens the abovementioned direct effects. This study finds support for most hypotheses.
Originality/value
This study extends the research in the field of external investments in family firms. It contributes to the literature by analyzing the drivers of the family firm owner-managers selling a minority stake to a strategic investor.
... Além disso, Sieger et al., (2011) sugerem mais pesquisas que explorem a identificação organizacional em empresas familiares. Outra sugestão está relacionada ao comprometimento afetivo, dado que pode ser um diferencial das empresas familiares em relação as não familiares (Poutziouris, 2001). ...
... Isso também permite maior socialização entre os grupos (Postmes et al., 2001;Carmon et al., 2010). Geralmente em empresas familiares, os aspectos afetivos são bem gerenciados (Vallejo & Langa, 2010), porque beneficiam a própria organização (Poutziouris, 2001). Por isso, os controles informais (controle cultural e de pessoal) podem proporcionar um clima organizacional saudável (Donnelly et al., 2018), o que também possibilita maior apego dos funcionários à organização (Zellweger et al., 2010). ...
... Também se confirma que a identificação organizacional é antecedente do comprometimento afetivo (Becker, 1992), por isso reforça a relação entre os controles informais e o comprometimento afetivo. Compreender melhor os aspectos afetivos beneficiam as empresas familiares (Poutziouris, 2001), por isso precisam ser bem gerenciados (Vallejo & Langa, 2010 Essas evidências geram implicações teóricas. Primeiro, preenchem a lacuna inerente a compreensão de como os controles afetam o comprometimento dos funcionários. ...
O objetivo do estudo é analisar os efeitos dos controles informais e da identificação organizacional no comprometimento afetivo em empresa familiar. Uma Survey foi realizada com 102 funcionários, e as hipóteses foram analisadas por meio de modelagem de equações estruturais e Fuzzy set qualitative comparative analysis. Os resultados mostram que os controles informais influenciam positivamente na identificação organizacional e no comprometimento afetivo.Verificou-se ainda a mediação parcial da identificação organizacional na relação entre os controles informais e o comprometimento afetivo. A abordagem assimétrica aponta que os controles informais e a identificação organizacional são elementos centrais na previsão de alto comprometimento afetivo.
... Prior research has shown that family firms are less likely to use external equity as a source of financing new initiatives (e.g., Blanco-Mazagatos et al. 2007;Croci et al. 2011;Gallo et al. 2004;Wu et al. 2007). This phenomenon has frequently been explained by the socioemotional wealth model, which holds that family firm owners prefer debt over external equity financing in order to avoid losing control (e.g., Poutziouris 2001;Romano et al. 2001;Tappeiner et al. 2012). Study (4) aims to better understand how owners' need for control affects their consideration of external equity as a source of financing. ...
... In particular, studies have repeatedly shown that family firms are less likely to use external equity as a source of financing than non-family firms (Blanco-Mazagatos et al. 2007;Croci et al. 2011;Gallo et al. 2004;Wu et al. 2007). In search for explanations, academics have frequently (explicitly or implicitly) resorted to the socioemotional wealth (SEW) model (e.g., Poutziouris 2001;Romano et al. 2001;Tappeiner et al. 2012). A key tenet of this model is that family firm owners exhibit a pronounced need for maintaining influence and control over their firms (e.g., Berrone et al. 2012). ...
... A key tenet of this model is that family firm owners exhibit a pronounced need for maintaining influence and control over their firms (e.g., Berrone et al. 2012). As a result, academics have argued that family firm owners refuse access to outside investors in order to avoid losing control (e.g., Poutziouris 2001;Romano et al. 2001;Tappeiner et al. 2012) and therefore prefer debt over equity financing. ...
In today’s volatile and uncertain economic environment, family firms are facing a multitude of new challenges such as an increase in global competition and market disruption caused by technological advances and digitalization (e.g., Plötner et al. 2020). To remain competitive, they need to understand and address these challenges systematically. To support them in this endeavor, in this dissertation, I conducted four studies to examine three of these challenges: (1) mastering the digitalization of their business, (2) coping with the COVID-19 pandemic, and (3) accessing capital to finance new in-vestments and remain competitive.
... En primer lugar, en las EF los accionistas controlantes pueden hacer uso de su capacidad de control y coordinación para beneficiarse a expensas de los minoritarios (Anderson, Mansi, & Reeb, 2003;Tran, 2014;Villalonga & Amit, 2006) En segundo lugar, los intereses de la familia controlante y de la empresa pueden divergir. La principal fuente de financiamiento en las EF corresponde a recursos de los accionistas familiares (Anderson et al., 2003;Poutziouris, 2001), por lo tanto, existe una mayor propensión a integrar objetivos tanto financieros como no financieros (Adams, Manners, Astrachan, & Mazzola, 2004;Sharma, Chrisman, & Chua, 1997;Ward, 1997;Zellweger, 2006). La aparición de objetivos no financieros puede generar conflicto con los intereses empresariales (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007;Jones, Makri, & Gomez-Mejia, 2008;Voordeckers, Van Gils, & Van den Heuvel, 2007). ...
... Como la principal fuente de financiamiento en las EF familiares proviene de recursos de la familia, la evidencia sugiere que estas empresas tienen mayores incentivos para controlar la gestión dado (Anderson et al., 2003;Poutziouris, 2001;Villalonga & Amit, 2006). No obstante, esto último puede hacer que las EF no vean la necesidad de adoptar buenas prácticas de GC. ...
... Uno de los objetivos del GC es el acceso en mejores condiciones a mayores fuentes de financiamiento (Stijn Claessens & Yurtoglu, 2013). Entonces, cuando las EF cuentan con niveles altos de concentración en la propiedad, estas necesidades de acceso a financiación no son tan importantes, bien porque se financian a través de una entidad financiera perteneciente al grupo familiar (Fohlin, 2005;Morck & Nakamura, 2007), mediante accionistas miembros de la familia (Anderson et al., 2003;Poutziouris, 2001) o través de deuda (Ponnu et al., 2009). En este sentido, las EF que acceden a los mercados de renta variable representan menor proporción en comparación con las ENF (Ponnu et al., 2009). ...
Introducción.
Recientemente el estudio del gobierno corporativo en las empresas familiares ha recibido mayor atención debido al predominio, la importancia y el impacto de estas empresas y a los problemas de agencia que por su estructura se presentan. En este sentido, el gobierno corporativo puede ayudar a las empresas familiares a monitorear eficientemente la gestión para reducir comportamientos oportunistas tanto de los gerentes como de aquellos accionistas que controlan la empresa.
Objetivo.
Estudiar la relación que se presenta entre el carácter familiar y la adopción de prácticas de gobierno corporativo en empresas listadas en el mercado de valores de Colombia.
Materiales y métodos.
Se realizó un análisis cuantitativo con datos de panel. Los modelos de regresión fueron estimados mediante efectos aleatorios para tratar la heterogeneidad no observable y las variables omitidas. La muestra correspondió a 479 observaciones-año de 124 empresas listadas en el mercado de valores de Colombia entre 2015 y 2018.
Resultados.
Se encontró un menor cumplimiento en cuanto a gobierno corporativo en las empresas familiares.
Conclusión.
El menor cumplimiento en las empresas familiares puede deberse a que estas empresas tienen menores incentivos para implementar buenas prácticas de gobierno corporativo dado que los costos de dicha implementación superan a los posibles beneficios, sumado a que estos beneficios terminan diluyéndose entre todos los accionistas que hacen parte de la familia.
... Family members participate in the firms' management and governance seeking to keep the firm in the family through generations (Basu et al., 2009). Family firms pursue the goal of firm long-term survival, preserving the family reputation (Deephouse and Jaskiewicz, 2013;Sageder et al., 2018) and keeping the firm control (Neubauer and Lank, 1998;Poutziouris, 2001;Felix and Wendt, 2017). The desire to avoid the external interference in the firm management, the fear of dilution of the firm control as well as the concerns about firm succession conduct family firms to rely less on external capital sources (Croci et al., 2011;Ampenberger et al., 2013;Hamelin, 2013;Koropp et al., 2013;Ramalho et al., 2018). ...
... The unlisted small family firms, without access to the stock market, are dependent on short-term and longterm debt as external finance sources (Scherr and Hulburt, 2001;Felix and Wendt, 2017). Following various studies (Mishra and McConaughy, 1999;Shyu and Lee, 2009;Croci et al., 2011;Poutziouris, 2001;Segura and Formigoni, 2014) recommend the decomposition of the total debt ratio into short-term and long-term debt ratios for analyzing small firms capital structure decisions. Therefore, the current study examines the unlisted family firms' determinants of short-term and long-term debt ratios, as well as the speeds of adjustment towards the target of those ratios. ...
... This study contributes to research for corporate finance, in general, and particularly, for unlisted family firms' capital structure decisions: (1) various studies (Poutziouris, 2001;Romano et al., 2001;Gallo and Vilaseca, 1996;Wu et al., 2007;Blanco-Mazagatos et al., 2007;King and Santor, 2008;and Lopez-Gracia and Sanchez-Andujar, 2007;Lappalainen and Niskanen, 2013) show that family firms present peculiar characteristics, namely the involvement of family members in the firm management and on the board of directors, influencing the capital structure decisions; therefore, this study makes a contribution for family firms' capital structure decisions of using a definition of family firm that is not only based on the firm ownership but also requiring the involvement of family members on the firm management and on the board directors; (2) a second contribution is made, given that previous studies have mainly focused on listed family firms' capital structure decisions (Lappalainen and Niskanen, 2013;Acedo and Ruiz, 2017;Felix and Wendt, 2017), the current study analyses unlisted small family firms; (3) considering that, on the one hand, the transaction costs influence the speed of adjustment, and, on the other hand the transaction costs are a function of debt maturity, this study also contributes for the literature analyzing the family firms speeds of adjustment towards targets short-term and long-term debt ratios; (4) and, given that the distance, measured by the difference between the target debt ratio and the current debt ratio, can impact negatively (positively) on the speed of adjustment if the transaction costs are superior (inferior) to the deviation costs, this study makes a third contribution analyzing the effect of the distance on the speeds of adjustment towards shortterm and long-term debt ratios. Consequently, it is possible to identify which type of costs, i.e. adjustment costs or deviation costs is predominant in explaining the speed of adjustment (SOA) in family firms. ...
Purpose
This paper seeks to analyze the family firm's capital structure decisions, focusing on the speed of adjustment (SOA) as well as on the effect of distance from the target capital structure on the SOA towards target short-term and long-term debt ratios in unlisted small and medium-sized family firms.
Design/methodology/approach
Methodologically, we use dynamic panel data estimators to estimate the effects of distance on the speeds of adjustment towards those targets. Data for the period 2006–2014 were collected for two research sub-samples: one sub-sample with 398 family firms; the other sub-sample contains 217 non-family firms.
Findings
The results show that the deviation from the target debt ratios impacts negatively on the speeds of adjustment towards target short-term and long-term debt ratios in unlisted family firms. These results suggest that family firms, deviating from target debt ratios, face deviation costs, i.e. insolvency costs, inferior to the adjustment costs, i.e. transaction costs. Therefore, family firms stay away from the target debt ratios for a long time than do non-family firms.
Research limitations/implications
The research sample comprises a low number of family firms, therefore for future research we suggest increasing the size of the sample of family firms to get a deeper understanding of family firms' SOA towards capital structure. Additionally, we suggest the analysis of other potential determinants of the speed of adjustment towards target capital structure.
Practical implications
The results obtained suggest that the distance from the target short-term and long-term debt ratios can be avoided if these firms do not depend almost exclusively on internal finance to adjust towards target capital structure. Moreover, for policymakers, we suggest the creation/promotion of alternative external finance sources, allowing reduced transaction costs that contribute to a faster adjustment of small family firms towards target capital structure.
Originality/value
The most previous research focusing on capital structure decisions have focused on listed family firms. To fill this gap, this study examines the speed of adjustment towards target debt ratios in the context of unlisted family firms. Moreover, transaction costs are a function of debt maturity, therefore this study examines separately the speeds of adjustment towards target short-term and long-term debt ratios. This paper shows that the adjustment costs (i.e. transaction costs) could hold back family firms from rebalancing its capital structure.
... Bank debt remains by far the most preferred funding option for family firms (Burgstaller and Wagner, 2015;Croci et al., 2011;Koropp et al., 2014;Michiels and Molly, 2017;Poutziouris, 2001;Romano et al., 2001). Several studies have indicated that financing decisions and the resulting capital structure differ substantially when comparing private family firms to non-family firms (e.g. ...
... In the pre-deal phase research has, amongst other things, focused on the motivations for family businesses to pursue private equity. These include financing corporate growth, with private equity having an advantage over debt because it does not need to be repaid (Poutziouris, 2001); funding acquisitions, expansions, internationalization or new product/ market development (Achleitner et al., 2008;Poutziouris, 2001;Tappeiner et al., 2012); seeking liquidity to buy back shares from family members in case of family conflict or individual family members wanting to exit the firm (Achleitner et al., 2008;Howorth et al., 2016;Poutziouris, 2001;Upton and Petty, 2000). From the private equity's perspective, these investors seek opportunities to reduce agency costs and prefer family businesses that are already professionalized, through the presence of non-family managers (Dawson, 2011). ...
... In the pre-deal phase research has, amongst other things, focused on the motivations for family businesses to pursue private equity. These include financing corporate growth, with private equity having an advantage over debt because it does not need to be repaid (Poutziouris, 2001); funding acquisitions, expansions, internationalization or new product/ market development (Achleitner et al., 2008;Poutziouris, 2001;Tappeiner et al., 2012); seeking liquidity to buy back shares from family members in case of family conflict or individual family members wanting to exit the firm (Achleitner et al., 2008;Howorth et al., 2016;Poutziouris, 2001;Upton and Petty, 2000). From the private equity's perspective, these investors seek opportunities to reduce agency costs and prefer family businesses that are already professionalized, through the presence of non-family managers (Dawson, 2011). ...
... The values and attitudes of business people are shaped by the culture and society in their role as managers, employees, and consumers (Wetherly, 2011). For most developed economies, the family business sector is estimated to account for over two thirds of all enterprises and about half of the GDP economic activity (Poutziouris, 2001;Gersick, Hampton, & Lansberg, 1996), the backbone of the private economy and contributing to national socio-economic and entrepreneurial development (Connolly & Jay, 1996;Poutziouris & Chittenden, 1996;Neubauer & Lank, 1998;Leach & Bogod, 1996;Romano, Tanewski, & Smyrnios, 2000). Conflicting family and business politics can undermine strategically planned ownership, leadership and management succession which can derail the development of the family firm. ...
... Conflicting family and business politics can undermine strategically planned ownership, leadership and management succession which can derail the development of the family firm. To safeguard family ownership, controlled financial independence from outsiders, owner-managers of family firms often overlook growth opportunities (or even eschew growth) owing to heavy dependence on internally generated funds and limited access to external, long term risk equity capital options (Poutziouris, 2001). ...
... Sourcing supplementary external capital to finance liquidity and other capital requirements that must result from generational, management or ownership transitions is increasingly central to their survival and sustainable development (Poutziouris, 2001). Family businesses tend to rely on retained earnings for their survival and development and sceptical about fast-growth plans, as such plans often entail relinquishing control and become dependent on external investors (Poutziouris, 2001). ...
... Some of these options are perceived as leading to a decline in family ownership and control of the business, which is a cause for concern (Zahra, 2003). Additionally, alternatives to obtaining financing sources entail the need to share information with third parties outside the family, a practice that does not match the opacity and secrecy that characterize these businesses (Poutziouris, 2001). These difficulties faced by FBs may be persistent among firms with higher family involvement, especially if families have greater control over ownership and management, and a stronger aversion to internationalisation (Ray et al., 2018). ...
... First, the company's self-perception, as a family or nonfamily company, to differentiate between the two groups, whereas this study focuses only on the former category. Thus, given the strengths and weaknesses associated with FBs (Poutziouris, 2001), we may have committed an error by including non-FBs who self-identify as FBs so that they are associated with particular strengths (e.g., model, image, reputation, tradition, trust). At the same time, FBs that are not perceived along these lines may have been excluded so that they are not associated with certain weaknesses that are typical of FBs (e.g., nepotism, lack of professionalism, and scarcity of resources). ...
Many businesses opt to expand internationally. The reasons for international expansion have been broadly addressed in existing literature and typically reflect economic or strategic objectives. However, a myriad of family objectives must also be considered in the case of family businesses. This paper aims to determine the motivations for family business internationalisation and their influence on international commitment in the context of family involvement. This work compares the significance of economic goals with the relevance of non-economic goals (e.g., strategic and family goals) to understand which contributes the most to a firm’s international success and growth. Focusing on international Spanish wine and olive oil businesses with various levels of family involvement, our results reveal that as family involvement increases, economic motivations become less important in justifying international strategy. Strategic and family motivations become more important in this context. We further conclude that family motivations contribute the most to international success among the three types of business motivations (economic, strategic, and family).
... However, and despite the unique nature of the SMFF, the research into its leverage has in principle followed same analytical frameworks as those applied to the study of this issue in the corporate world in general, and in big/listed FF in particular (Poutziouris 2001;López-Gracia and Sánchez-Andújar 2007). This theoretical choice comes up against a problem: taking the managerial theory of the firm as the analytical framework. ...
... The FF literature has attempted to pinpoint the specific features derived from the family ownership structure in terms of the agency costs associated with information asymmetries, with the financial disclosure practices that the firms adopt to minimize these asymmetries, and with guarantees offered through the collateralization of assets in order to clear up any such uncertainty (Poutziouris 2001;López-Gracia and Sánchez-Andújar 2007). Another stream of the literature has attempted to explain the choice of leverage in terms of a trade-off between the tax savings achieved through debt and the costs of financial distress and possible bankruptcy (Romano et al. 2001). ...
Using a sample of Spanish tourism small and medium-sized firms, we have tested the impact of family control, publicly-available information and tangibility on financial structure, providing a multi-theoretical model that incorporates contributions from the classical theory of finance, inspired by agency theory, the behavioural theory of the firm and strategic theory. The results point to the need to jointly consider the effects of information transmission practices, asset investment decisions and ownership structures on debt capacity. The results show how family control is associated with propensity to take on debt, so that the desire to maintain social control and socioemotional wealth prevails over risk aversion, being the relationship between family ownership and leverage more complex and contingent than has been assumed in financial and behavioural models. In addition, this study contributes further evidence on the importance of family reputational intangibles, showing a positive indirect effect on firms’ leverage capacity and relating to the gap left by finance theory regarding the value of intangibles for debt, which has meant that their value in reducing information asymmetries in the capital market has been overlooked.
... These observations were mainly derived from and proposed to non-family businesses whose financial decisions differ from those of family businesses. Family businesses are actually known for their long-term orientation and their preferences for self-financing (Gallo et al., 2004;Poutziouris, 2001) and for lower levels of dividends (Calvi Reveyron, 2000;Hirigoyen, 1984) and financial leverage (Gallo, Tápies, & Cappuyns, 2004;Lyagoubi, 2006). Only recently and progressively, studies began investigating different types of ownership, leading to a reverse statement in family business divestitures (Wu, Xu, & Phan et al., 2011). ...
... It has been argued that the cost of equity capital is different in family businesses because family owners would have different expectations as compared to non-family owners. In particular, they might have lower expectations financially but higher expectations on the emotional side (Poutziouris, 2001;Zellweger, 2007). In line with Hirigoyen (2014), we suggest a refinement in terms of calculations by including r' as the emotional discount rate, representing the expected emotional rate of return of the owner(s). ...
Divestments have received little attention in family business research, although representing one of the most important strategic and financial decisions. Additionally, they have been insufficiently studied from the owning family's emotional perspective. This chapter contributes in filling these gaps by focusing on the core entity of the family business as object of divestment from the Real Options and Regret theoretical lenses. It suggests a characterization of the family business divestment decision and a series of propositions with case vignettes around configurations of divestment options, their valuation, and influence in different emotional family business archetypes.
... These observations were mainly derived from and proposed to non-family businesses whose financial decisions differ from those of family businesses. Family businesses are actually known for their long-term orientation and their preferences for self-financing (Gallo et al., 2004;Poutziouris, 2001) and for lower levels of dividends (Calvi Reveyron, 2000;Hirigoyen, 1984) and financial leverage (Gallo, Tápies, & Cappuyns, 2004;Lyagoubi, 2006). Only recently and progressively, studies began investigating different types of ownership, leading to a reverse statement in family business divestitures (Wu, Xu, & Phan et al., 2011). ...
... It has been argued that the cost of equity capital is different in family businesses because family owners would have different expectations as compared to non-family owners. In particular, they might have lower expectations financially but higher expectations on the emotional side (Poutziouris, 2001;Zellweger, 2007). In line with Hirigoyen (2014), we suggest a refinement in terms of calculations by including r' as the emotional discount rate, representing the expected emotional rate of return of the owner(s). ...
Divestments have received little attention in family business research, although representing one of the most important strategic and financial decisions. Additionally, they have been insufficiently studied from the owning family's emotional perspective. This chapter contributes in filling these gaps by focusing on the core entity of the family business as object of divestment from the Real Options and Regret theoretical lenses. It suggests a characterization of the family business divestment decision and a series of propositions with case vignettes around configurations of divestment options, their valuation, and influence in different emotional family business archetypes.
... Litz (1995) suggests that there are "structure-based" definitions that build on the ownership and management structure of family businesses and "intentbased" concepts that build on the values and preferences of family members that involve expressing commitment to the family. Poutziouris (2001) distinguishes between closed and open definitions, whereby closed definitions are associated with a measurable set of criteria, whereas open definitions refer to the intention to become a family business and self-definition. Rogoff and Heck (2003) associate family business with family ownership, the involvement of family members in management, the role of the family in running the business, and the full involvement of family members of different generations. ...
Family business succession research usually focuses on the problems that make many companies fail during or as a result of succession, to focus on the individual process of decision making itself is rare. In understanding the phenomenon on the personal level of reality, and understand decision-making process of succession, the decision maker’s thinking process and aspirations have to be taken in consideration. This can lead to uncertainties and errors; decisions are predetermined as being rational human limitations border them. Therefore, aspirations and search rules are adjusted over time in response to experience. Our aim was to search for the understanding of a phenomenon: the succession decision in family businesses, where, based on the survey, we attempted to order their intuitive knowledge and aspirations to surface the aspirations, intuitive knowledge of decision makers, in order to deepen our understanding of the succession decision making phenomenon.
... Failing to plan leads to planning to fail, according to Poutziouris (2001) and a PwC Global Family Business Survey (2016). They claim that the lack of planning is the main reason behind an unsuccessful family business succession. ...
The study aims to examine the ownership transmission strategies in the context of family firm succession in Hungary. The successful transfer of ownership, management and acquired experience at a family firm represents one of its greatest challenges; however, there is still a lack of understanding of the unique future strategies and succession outcomes of Hungarian family businesses. As a significant proportion of the founders of those family businesses established after the regime change (post-1989) are now reaching retirement age, a study of how such business organisations plan to survive the generational transition is highly relevant. This study applies a mixed methodology of quantitative and a qualitative analysis (e.g.,in the case of IPOs). The results show that the average age of the examined family firm CEOs is higher than the global average and the majority of them plans to keep ownership and management within the family. Other exit strategies (i.e. initial public offerings, mergers and acquisitions) are not typical of the examined sample.
... Under different family involvement modes, environmental regulation has different impacts on the green innovation efficiency in family enterprises. The main reason is that the family enterprises themselves are a contradictory unit full of different demands, which will not only make long-term investment in pursuit of lasting foundation [33], but also show preference for ownership and management rights (Zata Poutziouris P, 2001) [39]. The involvement of family ownership leads to the increase in family members' control rights. ...
The green innovation of family enterprises under environmental regulation is essentially the balance between emotional benefits and emotional costs, which manifests as the reputation incentive and risk aversion, respectively. The reputation incentive refers to inheriting extended social–emotional wealth, and risk aversion means maintaining constrained social–emotional wealth. Based on the theoretical framework of social–emotional wealth, this paper selects 3006 family enterprises in China from 2015 to 2020, establishes a panel model of fixed effects, and discusses the impact of environmental regulation on the green innovation efficiency in family enterprises from the perspective of family involvement. The findings indicate that command-based environmental regulation promotes green innovation efficiency in family enterprises, while market-based environmental regulation inhibits the green innovation efficiency of family enterprises. The involvement of family ownership strengthens the positive effect of command-based environmental regulation on green innovation efficiency, while the involvement of family management rights strengthens the negative effect of market-based environmental regulation on green innovation efficiency. Through mechanism analysis, it is found that command-based environmental regulation promotes green innovation efficiency in family enterprises through reputation incentives, while market-based environmental regulation reduces the green innovation efficiency of family enterprises by avoiding risks. Further analysis shows that high-competition and high-pollution industries are more significantly affected by the relationship between them. Therefore, this paper proposes improvements to green innovation efficiency in family enterprises based on the adjustment of four aspects: improving the risk management level, consolidating family control, increasing the shareholding ratio of nonfamily shareholders, and giving full play to the role of reputation incentives to achieve the sustainable development of family enterprises. Furthermore, we strive to contribute to the realization of the dual carbon goals and the United Nations Sustainable Development Goals (SDGs).
... Moreover, in a family firm context, family's presence in the TMT lead to peculiar performance outcomes due to the overlapping of economic and noneconomic goals, Moreover, family managers' desire to maintain their SEW might lead to a lack of professionalism in the firm, inasmuch as firm managers may be selected based on nepotism or altruism rather than on meritocracy principles (Llach & Nordqvist, 2010;Poutziouris, 2001). Problems related to self-control and altruism result in higher agency costs (Schulze, Lubatkin, Dino, & Buchholtz, 2001) while also increase the difficulty of Hypothesis 1: A higher presence of family members in the firm TMT exerts a negative influence on firm performance. ...
In recent decades there has been a burgeoning and heated debate in the family business world about how family involvement influences innovation. Despite the progress made, the current comprehension of the specific antecedents affecting family firm innovation is limited, with a plethora of contradictory and inconclusive results. Consequently, more research is required to understand the unique but complex innovative behaviour of family firms.
In line with the above, the general objective of this thesis is to study the antecedents and consequences of innovation in the context of family firms. Specifically, we are going to investigate how different issues related to corporate governance bodies affect the innovation strategies of family firms and, ultimately, the obtained performance outcomes.
This general aim is developed through four specific objectives. The first objective is to provide an overview of the family firm innovation research field through a bibliometric study. The second objective is to examine the indirect effects of technological innovation efficiency in the relationship between family management and firm performance. The third objective is to investigate the moderating role of technological collaborations on the relationship between family management and product innovation efficiency. Finally, the fourth objective is to analyse how women’s presence in different corporate governance structures affects innovation in family firms.
In order to achieve the aforementioned objectives, this thesis is structured in four chapters, plus an initial introductory section and a final section for conclusions.
The first chapter develops the first specific objective. In this regard, this chapter aims to contextualize the reader by identifying and synthesizing the key topics of the family firm innovation research field and by highlighting future research opportunities. Moreover, this chapter also proposes an integrative framework aimed at advancing the current knowledge on family firm innovation and identifying new research avenues to further develop the field.
Chapter two develops the second specific objective. Thus, this chapter analyses the mediating and moderating influence of technological innovation efficiency in the
relationship between family management and firm performance. The empirical results show that technological innovation efficiency mediates and moderates the impact of family management on firm performance.
Chapter three addresses the third specific objective. In this vein, chapter three analyses the moderating role of technological collaborations with different partners in the relationship between family management and product innovation efficiency. The findings reveal that the positive influence of family management on product innovation efficiency varies according to the type of technological partner with whom the collaboration agreement is established.
The fourth chapter corresponds to the fourth specific objective, which is to analyse how women’s presence in different corporate governance structures affects innovation in family firms. In this regard, the results reveal that women’s presence in general shareholders’ meetings and in top management teams negatively influences product innovation in family firms.
Finally, in the conclusion section, the main contributions, practical implications, limitations and future research avenues are presented.
Hence, this thesis provides valuable contributions to the family firm innovation research field, especially with regard to innovation efficiency, technological collaborations and gender, and their effect on firm performance. Furthermore, this thesis provides interesting practical insights for the development of managerial policies in family firms.
... This ratio explains how the company can finance its activity with its own resources and the degree to which it depends on external agents. There is a consensus among authors that SMEs prefer, primarily, self-financing and reinvesting profits to any other source of financing (Poutziouris, 2001). A low proportion of own resources would therefore tend to slow down the internationalization process. ...
This paper examines how participating in domestic clustered networks in the agri‐food industry affects the export status and export intensity of small and medium‐sized enterprises (SMEs). The Uppsala internationalization process model has been revisited in light of the knowledge that these networks can contribute to promoting the presence of SMEs abroad. The study uses a sample of companies in the Spanish wine industry and characterizes 76 domestic clustered business networks (Protected Designations of Origin). The value and originality of the paper reside in its contribution in terms of measuring the degree of internationalization of domestic clustered networks to which SMEs belong. It also assesses the effect of these networks on the internationalization process of the agri‐food industry, considering that domestic clustered networks with a strong international commitment generate greater internationalization opportunities. [EconLit Citations: F14, M21, Q13, Q17].
... This ratio explains how the company can finance its activity with its own resources and the degree to which it depends on external agents. There is a consensus among authors that SMEs prefer, primarily, self-financing and reinvesting profits to any other source of financing (Poutziouris, 2001). A low proportion of own resources would therefore tend to slow down the internationalization process. ...
This paper examines how participating in domestic clustered networks in the agri-food industry affects the export status and export intensity of SMEs. The Uppsala internationalisation process model has been revisited in the light of the knowledge that these networks can contribute to promoting the presence of SMEs abroad. The study uses a sample of companies in the Spanish wine industry and characterizes seventy-six domestic clustered business networks (Protected Designations of Origin). The results suggest that the domestic cluster effect is more relevant when the firm belongs to a strong and internationally committed network. They also confirm the importance of belonging to these networks in order to increase the intensity of exports. Firms have to build networks with a high degree of internationalisation in terms of both volume and scope. Policy-makers should favour agri-food networks and expand the degree of internationalisation of networks to improve the country’s competitiveness. The value and originality of the paper reside in its contribution in terms of measuring the degree of internationalisation of domestic clustered networks to which SMEs belong. It also assesses the effect of these networks on the internationalisation process of the agri-food industry, considering that domestic clustered networks with a strong international commitment generate greater internationalisation opportunities.
... This lead to that the realization of the company's investments, developments or 123 any kind of innovation will take place at a later date, thanks to the family budget. (Poutziouris, 2001) It is not uncommon that no parallel can be found from a financial perspective between the finances of the family and the business, as in many cases the two areas merge, resulting in a lack of resources in both. In terms of competitive advantage, the family is a characteristic / specific resource for the company, which can be both an advantage and a disadvantage. ...
Cieľom príspevku je návrh nových spôsobov merania výkonnosti podniku, ktoré môžu byť východiskom tvorby inovačných zámerov a zohľadňujú špecifická rodinného podnikania. Objektom skúmania je rodinný podnik drevospracujúceho priemyslu, v ktorom sú aplikované metódy merania výkonnosti zamerané na analýzu konkurencie (benchmarking) a metódy, pomocou ktorých je možné hodnotiť zlepšovanie v čase (náklady na kvalitu, BSC). V príspevku sú využité nasledovné metódy: analýza, syntéza, indukcia, dedukcia, komparácia, opytovacia metóda a matematicko-štatistické metódy. Prínosom príspevku je posúdenie významu týchto metód pre tvorbu inovačných zámerov v budúcnosti.
... Taking the component of involvement approach, Poutziouris (2001) define family business as owner-oriented and managed ventures with family members predominantly involved in the administration, operation and strategic determination of corporate destiny. In relation to generational leadership, Zahra et al. (2012) refer to family business as those businesses that report some identifiable share of ownership by at least one family member and having multiple generations in leadership positions within that firm. ...
The Federal government has put in place several measures aimed at reducing the bottle necks associated with doing business in Nigeria. In spite of these measures, family businesses in South Eastern Nigeria are still characterized by organizational and administrative inefficiencies. These inefficiencies are associated with their organizational work procedures and practices. Therefore, this study is premised on the mitigating effect of institutionalization on such inefficiencies and the commonplaceness of business network in South Eastern Nigeria. The study seeks to examine the effect of business network on the institutionalization of family businesses in South Eastern Nigeria. Survey design and proportionate stratified and simple random sampling techniques were adopted. The generated data through questionnaire were subjected to Z-test. The result shows that business network has significant effect on the institutionalization of family businesses in South Eastern Nigeria. The study brings to the fore the contribution of business network to family business institutionalization. It recommends more awareness creation and training for founder/CEOs and further researches into other causes of the inefficiencies.
... Gegenüber externen Managern/innen sind Unternehmerfamilien eher reserviert, wodurch der Zugang zu innovationsrelevantem Know-How und die Erweiterung des familieninternen Wissens erschwert wird (Garcia & Calantone, 2002). Des Weiteren wollen Unternehmerfamilien in der Regel ihre Unabhängigkeit, z.B. von externen Kapitalgebern, bewahren (Ward, 1997), was oft dazu führt, dass wichtiges Kapital für Innovationen fehlt (Poutziouris, 2001). Auf der anderen Seite können Unternehmerfamilien, welche die Ressourcen selbst aufbringen, aufgrund ihrer langfristigen Ausrichtung dem Unternehmen aber "geduldiges Kapital" zur Verfügung stellen. ...
Die Unternehmerfamilie ist eine wichtige Ressource für das Familienunternehmen. Sie kann entweder einen Wettbewerbsvorteil bringen oder, im kritischen Fall, auch zur Beeinträchtigung bis hin zur Zerstörung des Familienunternehmens führen. Gerade in der Nachfolgephase kann die Funktionsweise der Unternehmerfamilie gravierende Auswirkungen auf den Umgang mit Konflikten, die Ausgestaltung und Bewältigung der Nachfolge und die Innovations- bzw. Wandelfähigkeit des Unternehmens haben. Ziel dieses Beitrages ist die Herausarbeitung familiärer Dynamiken und deren Einfluss auf die Nachfolge sowie der Rolle der Unternehmerfamilie für die Entwicklung von Innovationen mithilfe einer Good Practice-Fallstudie.
... They found that family firms have lower levels of debt, and the decision to take loans is personal rather than logical. Comparing family and non-family businesses, Poutziouris [41] found that family firms preferred to use retained profits first for investment or to recoup business contractions, preferred short-term loans, and were averse to institutional finance and external equity. These financing preferences for short-term orientations can harm the business during economic downturns. ...
Access to quality early childhood education is a sustainable development goal towards empowering people in an emerging economy. The purpose of this study is to examine how the coronavirus disease impacted a small early childhood business in Vietnam, which experienced two waves of attacks. Previous studies have examined mainly the impact of various factors under stable environments. This study differs in that COVID-19 brought sudden, lasting, and impactful changes to the business environment. The study uses a case-study research approach that invited a small business owner to write and share the biography of the business from the start to the date of the research study and analysed the content using the theory of planned behaviour. The shared belief systems of a business to succeed led the owner to invest loan funds and join the company that became successful with planned actions. Dependence on a rental property later stalled the business growth. The owners settled into a stable way of business thinking. The two waves of coronavirus pandemic in Vietnam that affected their business location dried up cash, forcing the business into voluntary liquidation. The impact of coronavirus disease on small business in an emerging nation, Vietnam, can bring out lessons of business survival and ways policymakers can assist companies in surviving considering their capital structures under destabilising business environments. The qualitative causes found for the theory of planned behaviour can become useful for a later quantitative investigation.
... After the introduction of venture capital, when the proportion of venture capital equity is high enough to influence the enterprise's management decisions, it is possible for a venture capital firm to transform a family enterprise according to the firm's own management culture. Zata Poutziouris [21] found that growth-oriented family enterprises are more likely to benefit from the absorption of venture capital, which improves the growth performance of enterprises by optimizing management and decision-making. ...
This research explores and explains the path of family enterprise venture capital equity financing from the perspective of endogenous family control rights. We adopted unbalanced panel data on Chinese listed companies from 2007 to 2018. Empirical research shows that there are significant differences in the impact of venture capital on the growth performance of family enterprises and non-family enterprises. Venture capital negatively affects the growth performance of family enterprises, while the negative impact of venture capital on family enterprises is not significant. In addition, family control positively moderates the negative impact of venture capital on family enterprise growth performance.
... Internal funds are used by family firms to ensure their investment financing (Chrisman & Patel, 2012), which can help them to retain control and avoid resorting to external equity financing (Romano, Tanewski, & Smyrnios, 2001). In a similar vein, Poutziouris (2001) argues that firms closely held by families seeking to keep control over the business,tend to use a conservative approach to financing and opt for retaining earnings. ...
Most of the literature about dividend policy have dealt with dispersed ownership firms (Isakov & Weisskopf, 2013) while most firms around the world are controlled by large shareholders (Faccio & Lang, 2002) whose preferences undoubtedly affect dividend payouts (DeAngelo, DeAngelo, & Skinner, 2007). Particularly, as families are the most common type of large shareholders in the world (Isakov & Weisskopf, 2013), taking into account the specific characteristics of family firms would help our understanding of their behavior in terms of dividend payout. Previous research have shown that making strategic and financial decisions in family firms may be based on Socio-Emotional Wealth (SEW) and that these decisions do not necessarily follow an economic rationale (Gomez-Mejia, Makri, & Kintana, 2010; Berrone, Cruz, & Gomez-Mejia, 2012).
Therefore, this study aims at extending family business literature dealing with dividend payout in family firms (Charlier & Du Boys, 2011; González, Guzmán, Pombo, & Trujillo, 2014; Isakov & Weisskopf, 2015) by focusing on the effect of family involvement on family firms’ dividend policy. More precisely, the main goal of this study is to investigate how the importance of SEW, and more precisely how the owning family’s desire to keep control and influence on the firm’s operations explains family firms’ payout decisions.
Using a sample of 28 publicly listed Tunisian firms for the period (2007 - 2014), our results show that family firms pay out less dividends than non-family firms. More precisely, the findings show that keeping family control through high family ownership and high family involvement in management negatively affect dividend payouts in family firms. This research focuses also on the role played by governance mechanisms in reducing the SEW's negative effects on a family firms' dividend payouts. While board characteristics have no effect on dividend payments in Tunisian-listed family firms, our results show that when a second significant non-family shareholder is involved, this reduces the family firms' dividend payouts.
... For example, scholars widely agree that PE firms primarily follow the trade-off theory (Gompers et al. 2016) and raise as much debt as they can (Axelson et al. 2013, Gompers et al. 2016. In contrast, some family firm financing researchers find that families follow a pecking-order hierarchy and prefer external debt over external equity when additional financing is sought (Blanco-Mazagatos et al. 2007;Poutziouris 2001), whereas other studies indicate a negative relation between family ownership and debt financing in both public and private family firms (Gallo and Vilaseca 1996;Mishra and McConaughy 1999). The latter is explained by the fear of bankruptcy and the aim to maintain control (Gallo and Vilaseca 1996;Mishra and McConaughy 1999). ...
Despite the increasing interest in single family offices (SFOs) as an investment owned by an entrepreneurial family, research on SFOs is still in its infancy. In particular, little is known about the capital structures of SFOs or the roots of SFO heterogeneity regarding financial decisions. By drawing on a hand-collected sample of 104 SFO and private equity (PE) firms, we compare the financing choices of these two investor types in the context of direct entrepreneurial investments (DEIs). Our data thereby provide empirical evidence that SFOs are less likely to raise debt than PE firms, suggesting that SFOs follow pecking-order theory. Regarding the heterogeneity of the financial decisions of SFOs, our data indicate that the relationship between SFOs and debt financing is reinforced by the idiosyncrasies of entrepreneurial families, such as higher levels of owner management and a higher firm age. Surprisingly, our data do not support a moderating effect for the emphasis placed on socioemotional wealth (SEW).
... Having control-enhancing mechanisms in place, equity financing may furthermore become less attractive to family firms, as new shareholders are aware of potential expropriation activities and require a higher return on their investments, making equity financing more expensive (Attig, Guedhami, & Mishra, 2008;Boubakri, Guedhami, & Mishra, 2010). The control consideration view predicts a pecking order (Myers, 1984;Myers & Majluf, 1984) of family firms in the sense that they prefer debt over equity if retained earnings are not sufficient to finance new investments (Keasey et al., 2015;Poutziouris, 2001). The following hypothesis applies: ...
Research Question/Issue
In this study, we examine the impact of family firm status on publicly listed firms’ leverage ratios. Furthermore, we investigate the moderating role of a country's institutional setting, especially its shareholder and creditor rights, on this relationship.
Research Findings/Insights
Conducting a meta‐analysis on 869 effect sizes from 613 studies, we find an overall slightly negative but significant relationship between family firm status and leverage. Our results reveal a large amount of heterogeneity and considerable mean effect size differences across the 48 countries included in the study. The results of our meta‐regression analysis reveal significant moderating effects of shareholder and creditor rights on family firms’ capital structure decisions. While stronger shareholder rights have a positive impact on family firm leverage, stronger creditor rights have a negative impact.
Theoretical/Academic Implications
Our study combines the two dominating and competing views on family firm leverage. On the one hand, the overall lower leverage ratio of family firms confirms the risk aversion view of family firms. On the other hand, control considerations also have a significant impact on leverage ratios, as family firms adjust their capital structure dependent on shareholder and creditor rights in their home country. Our study highlights the importance of the institutional setting on firms’ financing patterns.
Practitioner/Policy Implications
The results suggest a significant impact of a country's institutional setting in general, and its strength on shareholder and creditor rights in particular, on family firms’ capital structure decisions. Control considerations result in a strategic use of debt financing that ensures the owner family's dominant position in the firm and prevents potentially harmful conflicts with minority shareholders or creditors.
... The results for private FFs, where the impact of the PE on the revenues is smaller than in the public ones, support the idea that FFs that avoid external influences may be reluctant to take on any form of external finance, including PE (Poutziouris, 2001;Upton & Petty, 2000) butg this could constrain their ability to grow. ...
Private equity (“PE”) is mostly invested in established firms, of which family firms (“FFs”) are the dominant form. Since the study of the PE activity in FFs is still in its infancy, the authors suggest a regression model to identify the factors determining the value creation in PE-backed FFs. This paper shows that: (i) PE participation increases public middle-market FF’s valuation, and; (ii) the quotation on stock exchanges has a positive effect on the valuation of the PE-backed FFs.
... The importance attributed to family firms results from their presence but also due to the impact they have on the macroeconomic variables. Studies, in different countries, have shown that family firms play a crucial role in terms of economic growth as well as employment generation (IFERA, 2003;Anderson & Reeb, 2003;Neubauer & Lank, 1998;Poutziouris, 2001;Gallo, 1995). Although family firms are considered the world's most predominant form of business organization (Neubauer & Lank, 1998), there is still a lack of agreement as to their definition. ...
Multinational companies (MNCs) have become a relevant and influential factor for the achievement of competitive advantage on the global market. They expand their operations outside their home countries. The assessment of the role and importance of modernMNCs in the world economy implies a good understanding of all their forms and functioning of the global market. The risks MNCs are facing in theirbusiness, in addition to the usual business risks in foreign trade, are currency, transport, insurance, credit risks. They are additionally exposed to the risks of the resident country, which include political, corruption, criminal, or war risks. Although risk is an integral part of business operations, one should know how to manage it by making informed decisions based on modern analyses of quality data. The hypothesis in this paper is that knowledge of different qualitative and quantitative risk analysis methods makes it possible to determine the vulnerability of the system due to the existence of business risks. Practical examples from the operations of the selected MNC on the global market will be considered using statistical correlation methods and trend analysis. The analysis will cover business risks MNCs are facing as well as business risk management methods appropriate for their identification and elimination. Statistical software IBM SPSS Statistics 24 and MS Excel will be used for the analysis and presentation of results.
... The importance attributed to family firms results from their presence but also due to the impact they have on the macroeconomic variables. Studies, in different countries, have shown that family firms play a crucial role in terms of economic growth as well as employment generation (IFERA, 2003;Anderson & Reeb, 2003;Neubauer & Lank, 1998;Poutziouris, 2001;Gallo, 1995). Although family firms are considered the world's most predominant form of business organization (Neubauer & Lank, 1998), there is still a lack of agreement as to their definition. ...
TThis work makes a research and analyses the periods of crisis situation on the labour market in Bulgaria in the newest history of our country. A parallel is made with the measures, which were taken in the period of active economic and political transformation at the end of the nineties of the past century and the transition to market economy and the current crisis situation caused by the pandemic COVID-19 state of affairs. The prospects for action are analysed as well as the post-crisis measures and an attempt to forecast the future action is made.
... The importance attributed to family firms results from their presence but also due to the impact they have on the macroeconomic variables. Studies, in different countries, have shown that family firms play a crucial role in terms of economic growth as well as employment generation (IFERA, 2003;Anderson & Reeb, 2003;Neubauer & Lank, 1998;Poutziouris, 2001;Gallo, 1995). Although family firms are considered the world's most predominant form of business organization (Neubauer & Lank, 1998), there is still a lack of agreement as to their definition. ...
Strategic decisions what defense capabilities our country needs in response to the dynamic changes in the security environment, have a direct relationship with the question „how much?”, what is the price that taxpayers should pay for the creation and development of these capabilities. And since security and defense are a public good the creation of which is entirely depending on the economic potential of the created GDP of the country, the manifestation of the price of that good is the budget of the Ministry of Defense. This makes necessary the implementation of an appropriate system and means for management of budgetary resources, by means of which to bring to an increase the added value of defense capabilities. It comes to financial management, which gives an answer to the sources, the planning and control of the effective spending of budgetary resources for security and defense.
... Moreover, family managers' desire to maintain their SEW might lead to a lack of professionalism in the firm, since firm managers may be selected based on nepotism or altruism rather than on meritocracy principles (Llach and Nordqvist 2010;Poutziouris 2001). Problems related to self-control and altruism result in higher agency costs (Schulze et al. 2001) while also increasing the difficulty of monitoring the firm performance (Dyer 2006). ...
Understanding the relationship between family management and firm performance has emerged as one of the most prominent issues for both scholars and professionals in the family firm research field. This chapter aims to shed light on this theme by analyzing how family members in top management teams (TMT) impact on firm performance. Moreover, this chapter adds the effect of an interaction factor that has become essential for the improvement of firms’ competitiveness: technological innovation efficiency. By conducting a panel data analysis on 1154 observations of private manufacturing firms over the period 2010–2015, the findings reveal a negative impact of family members in TMT on firm performance. The empirical analysis also reveals that technological innovation efficiency weakens the negative effect of family presence in TMT on firm performance.
... The main player in the field of communication is the development of competencies that benefit from the achievements of globalization, transformation and integration (Więcek-Janka, 2011). Poutziouris (2001) drew attention to the tendency of family businesses to take risk. In his research (n = 240), he proved that family businesses adhere to the principles of economic development. ...
Abstract: In this paper, the concept of analysing the relationship between family enter-prise internal and external communication and the types of its behaviour in market ac-tivities is discussed. Internal and external family enterprise communication are charac-terized and use the Internet for marketing communication is presented. Digital commu-nication requires the new competences, enabling to combine knowledge of marketing functions and the knowledge of instruments and technologies of information commu-nication. The sequence of specified operations, based on Grey Incidence Analysis, for identifying relationships between the degree of concentration on internal or external communication and family enterprise market attitude (such as, traditional, innovative or mixed attitude) is designed. The proposed method is tested on twenty family enter-prise companies and the efficacy of the calculation operations are confirmed. The find-ings facilitate highlighting how the degree of concentration on internal and external communication impact the family enterprise market position. The results obtained from twenty enterprises indicate that external communication has the greatest impact on the dominance of an innovative position, while the degree of concentration on internal communication has the greatest impact on the dominance of a traditional position. Di-rections for further research is to apply the mathematical modelling and optimisation function to improve the management of family enterprise external and internal commu-nication. Furthermore, to design IT software supporting computational activities in proposed method and visualizations of obtained results.
Keywords: Marketing Communication, Family Business, Uncertain System, Grey Rela-tion Analysis
... We propose that family firms have some structural features that tend to mitigate financing constraints in the Turkish economy context. The existing literature tends to assume that family firms are financially constrained (Andres 2011;Coleman and Carsky 1999;Croce and Marti 2017;Lopez-Gracia and Sanchez-Andujar 2007;Poutziouris 2001). The present study, however, assumes they are financially unconstrained. ...
This study examined whether family-owned firms have advantages for accessing external financial sources for growth. Especially in developing countries with imperfect markets, firms can face difficulties accessing external financing sources; however, family-owned firms might have some advantages in this regard over nonfamily firms. Unlike previous studies, this study considered that, in the Turkish context, nonfamily firms are financially constrained while family firms are not. To examine this hypothesis, we used the generalized method of moments (GMM) approach to analyze panel data from 2006 to 2017. The findings showed that financing constraints were a significant obstacle to growth for nonfamily-owned manufacturing firms while the effect was not present for family firms since they are controlled by large, well-established family groups. These results elucidate the relationship between corporate ownership and growth among Turkish firms, especially those with strong links to large family-owned corporations. The results also revealed that reputation and network may facilitate easier access to external financing sources, especially when considering the “Big Six” family ties of firms.
... Shareholder resistance to debt is exacerbated by the sense of loss of control when a firm opens itself up to external capital-as the suppliers of that capital demand information and even participation in strategic decisions-and by fear of financial distress. Concentrated family control of share capital can mean that the size of investments is restricted by the amount of available internal funds and the family's wealth (Poutziouris 2001). This limited financial capacity narrows the window of opportunity for innovation projects (Mishra and McConaughy 1999;Michiels and Molly 2017). ...
By combining the resource-and capabilities-based view and agency theory, this paper offers a framework within which to examine the nature of dynamic capabilities in family firms, and how they are affected by the ownership, governance and management structures. We focus on technology-based innovation capabilities, differentiating between sensing, seizing and transforming capabilities. We expand the analysis of family involvement, defined as the family firm owner's ability to influence firm behavior, identifying three distinct structures that underpin decision-making power and control capacity in family firms: the capital structure, the governance and management structure of the business; and the governance structure of the family itself. The empirical research was carried out on a sample of 748 family firms from the Spanish tourism industry. We find that the effects of these dimensions of family involvement on dynamic capabilities are asymmetric. A concentrated ownership structure with a high degree of family control and a substantial share of family wealth committed to the business are shown to have a negative effect. The management structure is shown to be the key body for fostering the accumulation of dynamic capabilities, although a high level of family involvement in the top management team and having a family member as CEO represent major barriers to this process. On the other hand, the board of directors and its composition appear not to be relevant structural elements. The most powerful structural factor in facilitating the development of innovation capabilities is the existence of an effective family board and the implementation of family management instruments. These mechanisms help to mitigate the negative effects of a family-controlled ownership and management structure. The findings represent a significant contribution to the literature on family firms, innovation management and corporate governance.
La presente investigación busca comprender la relación entre las dimensiones relevantes
de la profesionalización y el desempeño de la empresa familiar en un grupo de empresas del sector
textil.
Se escogió el estudio de empresas familiares por poseer características diferentes a las no
familiares y por tener una notoria importancia en la economía de nuestro país, ya que generan el
75 % del PBI del país (Dyer, 2013). Por otro lado, diversos autores mencionan que la
profesionalización es un elemento clave en el éxito de la empresa familiar, por ello es importante
conocer cuál sería su relación con el desempeño de la empresa. Así también, la profesionalización
es un proceso que resulta estratégico de ser desarrollado, debido a que posibilita mayores
oportunidades en el mercado.
La presente investigación tiene un alcance exploratorio descriptivo, con un enfoque
cualitativo, basado en un estudio de casos múltiple, que tiene como objetivo determinar las
dimensiones de la profesionalización en el desempeño de la empresa familiar. Se hizo uso de
entrevistas semi-estructuradas a los fundadores y administrativos de un grupo de empresas
familiares, así también a especialistas en el tema de la profesionalización, de manera que se
contrastó la teoría con la opinión de expertos y los casos de estudio. Asimismo, esta investigación
tiene como fin que sirva como referencia, para posteriores investigaciones a niveles de teorización
más profundos.
De acuerdo con la teoría, existe una relación entre la profesionalización y el desempeño
de una empresa familiar, si bien esta es financiera, no existe suficiente información sobre su
relación con el desempeño no financiero. Sin embargo, a partir de los resultados de esta
investigación se encontró que existen dimensiones de la profesionalización que también guardan
relación con el desempeño no financiero, definido como la teoría de la riqueza socioemocional.
Finalmente, se muestra las conclusiones y recomendaciones de la investigación.
Die zunehmende Relevanz immaterieller Werte für die Wertschöpfung der Unternehmen wird den Adressaten aufgrund der bestehenden Bilanzierungsnormen nicht vollumfänglich vermittelt. Zudem weisen Familienunternehmen durch das Zusammenwirken von Familie, Eigentum und Unternehmen spezifische immaterielle Werte auf. Als ein Lösungsansatz zur Abmilderung der Ansatz- und Bewertungsprobleme im Zusammenhang mit immateriellen Werten kann die Berichterstattung dienen, die durch eine mangelnde Präzisierung der normativen Anforderungen in heterogenen Qualitätsniveaus bei den Unternehmen mündet. In diesem Kontext untersucht die vorliegende Arbeit die Determinanten und regulatorischen Dimensionen in Form expliziter Wahlrechte der nichtfinanziellen Konzernerklärung der Berichterstattungsqualität immaterieller Werte. Aus den resultierenden Ergebnissen werden Handlungsempfehlungen für Familienunternehmen und Standardsetter abgeleitet, wodurch sich eine Relevanz für die Unternehmenspraxis und die Wissenschaft begründet.
Family firms (FFs) represent approximately two thirds of all firms with huge impact on global economy. Subsequently, innovation is also considered to be the key to competitive advantage, and long-term survival. Thus, research on innovation in FFs has been rising. However, there is a gap in the literature to understand how FFs’ capabilities are shaped by a constantly changing environment and how they survive in it. Since design-intensive industries reveal dynamic innovation capabilities (DICs) in emerging markets that are mostly underrepresented in the literature, they form the research context of this study. The outcomes of this paper are expected to reveal the heterogeneity of FFs’ capabilities as well as the strategies of FFs. Secondly, the findings would reveal the roles of design contributing to these capabilities in FFs, which highlight the interaction between design and innovation practices of manufacturing FFs in an emerging market.
Although past research suggests that family firms are less likely to use private equity (PE) financing, further research is required to identify the underlying reasons for such behaviour. Using the theory of planned behaviour and based on the analysis of data collected from 254 family firms, we identify the factors that explain a family firm’s intentions to use PE. Family owners are more likely to plan to use PE when they have a favourable attitude toward PE, their intended succession strategy involves relinquishing control by selling the business sometime in the future, and they have a good understanding of PE.
Purpose
There is still an ongoing debate on the value relevance of capital structure and its determinants. Recently the issue has been explored in family firms after being explored in mature firms. This paper investigates the role of institutional investors and the firm's innovation activity in influencing the firm's decision and ability to acquire debt capital.
Design/methodology/approach
A large sample of 700 privately-held family firms in Italy from 2010 to 2019. Two analysis techniques are used: panel analysis and path analysis. The value of debt and the debt ratio are used as leverage measures. The value of patent (as a proxy for innovation) and institutional investor are the explanatory variables.
Findings
The results show that institutional investors have no relationship with financial leverage measures except when controlling for an interaction variable (Institutional investors × Lombardy region). The patent value is positively correlated with debt; however, the ratio patent-to-asset is negatively related to financial leverage indicating higher risk exposure. The nonlinearity test demonstrates a turning point when the relationship between patent value and debt inverts.
Practical implications
Firms should monitor their innovation activity since excessive innovation increases risk exposure and affects financing opportunities and value. The involvement of institutional investors does not always enhance value.
Originality/value
Existing literature focuses separately on family firm innovations and financial leverage as outcome variables, emphasizing the role of institutional investors in both fields by adopting agency theory and socioemotional wealth framework. In this study, the authors go further by merging both relationships, investigating the dynamics of the institutional-family firm innovation relationship in influencing the firm's capital structure. The authors contribute to the ongoing debate by providing original findings on capital structure, governance and innovation, supported by rigorous methods to enhance family firms' decision-making.
Most farms are struggling with aggravating economic, social and ecological conditions. If family farms want to survive in the long run, they need to develop innovation strategies. In line with the resource-based view, this paper argues that market orientation and multiple family generations in management are valuable resources of a family farm, which can contribute to innovation by facilitating the development of innovative ideas. This paper also explores the role of farm performance as a moderator. Since small- and medium-sized businesses in rural areas tend to lack growth orientation, it is assumed that family farms do not feel a strong urge to make use of their innovation potentials unless their performance falls to a critically low level. A regression analysis is conducted to test the relationships with a sample of 690 Austrian family farms. The results confirm the positive effect of both market orientation and multiple generations in management on innovation. As expected, farm performance moderates this relationship negatively. The findings are discussed against the backdrop of the family business, innovation and farming literature and suggestions are made how family farms can make best use of the market and the family as two important potential innovation sources.
Das Thema Unternehmensnachfolge ist von hoher volkswirtschaftlicher Bedeutung. Auf dem Markt für Unternehmensnachfolgen herrscht jedoch Intransparenz und nur wenige quantitativ-empirische Untersuchungen existieren. Dieser Beitrag befasst sich mit dem Verkaufs- und Kaufgeschehen von KMU im Rahmen der Unternehmensnachfolge in Deutschland. Er liefert Antworten auf bislang wenig erforschte Fragen zu den beteiligten Akteuren und deren wesentliche Merkmale und Motive bei Unternehmenskäufen und -verkäufen. Zur Beantwortung unserer Forschungsfragen wurden 5.993 Nutzerdaten des KMUrechners, einem Online-Tool zur Bewertung von KMU, empirisch ausgewertet und analysiert. Diese Studie leistet einen Beitrag zur Forschung zum Thema Unternehmensnachfolge und hilft der Politik sowie Kammern und Verbänden bei der Ausgestaltung von Beratungsangeboten in der Praxis.
Purpose
The purpose of this study is to understand venture capital family businesses (VCFBs) governance of portfolio companies through the deal process.
Design/methodology/approach
This study applies a theory-developing approach. A model of VCFB governance is developed whose key aspects are illuminated by four examples (cases) of VCFBs.
Findings
Recent research suggests that a venture capital firm's corporate deal processes can be divided into the pre-deal, deal and post-deal phases. Based on the age, size and succession dimensions, propositions for how a governance trajectory develops for VCFBs, affecting the deal process of target family firms (TFFs), are presented. These propositions highlight how the family owners' actions and behavior are related to VCFB governance, which in turn, influences the three phases involved in making an investment.
Originality/value
The propositions suggest how personal and administrative VCFBs' governance of the deal process of portfolio companies is significantly affected by centrifugal and centripetal forces that drive the respective types of governance where third-generation family owners appear as changers of governance approach.
Family owners differ from other types of owners due to the presence of socioemotional wealth (SEW) concerns. We take a closer look at this distinctive aspect by examining the impact of family control and influence dimension of SEW on the cash management choices of family firms, conceptualizing it as a mixed gamble choice. Our empirical analysis of 195 Italian firms listed on the Milan Stock Exchange between 2003 and 2015 shows that family firms derive more value and incur lower costs than nonfamily firms when they increase their cash holdings. We then delve deeper into family firms’ cash management choices by exploring how different levels of family control and influence as well as types of board governance arrangements moderate this relationship. The empirical results indicate that the positive effects of family ownership are more pronounced under a high level of family control and influence and with separation of the board chair and CEO positions.
This chapter treats issues related to the succession and longevity of entrepreneurial family businesses. It discusses the succession challenges that face every family business owner. Several succession process models are provided as guidelines for the founders to deal in a better manner with the succession issues. Succession and longevity are very important for entrepreneurial family businesses. Succession is one of the most difficult decisions for entrepreneurial family businesses. If the business leadership transition is not well structured, it may cause serious difficulties that may lead to the sale or eventual loss of the business.
The scale of family company activity in the United Kingdom was measured with regard to several family firm definitions. This study confirms that family companies are a numerically important group of businesses. Policy makers and practitioners must, however, be aware that the scale of family firm activity in any developed economy is highly sensitive to the family firm definition selected. Within a bivariate as well as multivariate statistical framework, marked demographic differences were identified between family and non-family companies with regard to several family firm definitions. We suggest that bivariate studies comparing the management practices and performance of family and non-family firms may have identified ‘demographic sample’ differences rather than ‘real’ differences. Implications for future research exploring the management and performance of family and non-family firms are discussed.
Stephenson and David Monteith are with the University of Ulster at Jordanstown, Northern Ireland. A significant proportion of small firms in the United Kingdom and the United States are family businesses where one family exercises financial and/or managerial control. Differences occur between those ventures where ownership and/or control is vested in a founder and his family and those where non-owning managers are the dominant force. This paper reports on an empirical investigation carried out by the authors into more than 3,000 firms in Britain and Ireland. They examined whether demographic differences in areas such as age, size, legal status and industrial classification arose between family and non-family firms and whether distinctive ownership arrangements and management structures were found in the two groups. At the outset they suspected that family firms would be less professionally managed in terms of their strategic and day-to-day decision making, designation of roles and relationships and evalua...
This paper questions the effectiveness of economic development policies and programs which fail to differentiate family from non-family enterprises in the UK small and medium-sized firms sector. Published evidence is reviewed and findings from workshops and interviews with 10 Scottish family enterprises demonstrate that family enterprises differ, and in some economically significant ways, from non-family enterprises. It is suggested that the lack of provision for family enterprises hinders their business activity. The aim is to begin an argument for recognition of a “family business sector” in the UK in order to promote business activity in this economically significant group of firms, and to achieve a better payoff for governments from investment in economic development in small and medium-sized enterprises (SMEs).
A survey of 1,003 businesses examined the effect of estate taxes on family business behavior, including investment, employment, and strategic decisions. The results strongly suggest that estate taxes have marked effects on business behavior. These effects are more pronounced in larger firms where their potential impact is of a greater magnitude.
This paper explores the development of the family-business sector during the post-socialist era in the Balkans. It establishes the profile of family-business entrepreneurship in the emerging markets of southeastern Europe. By focusing on the Bulgarian and Romanian experience, we present and briefly contrast the transitional variant of family-business entrepreneurship with the contours of the Greek family business system. Next, we map out the growth patterns of Balkan family ventures, including businesses in the agro-industrial, manufacturing and other commercial sectors. We conclude with some tentative policy recommendations aimed at enhancing the further development of family-business entrepreneurship in the Balkans.
This article identifies the core themes and issues associated with ownership preferences in United Kingdom family firms. These themes and issues are then tested against the evidence from a variety of data collection methods used to assess the responsiveness of family enterprises to the new United Kingdom public equity market, the Alternative Investment Market, or AIM. Evidence suggests that a recognition process is emerging of family firms as a potential market segment in the United Kingdom. The introduction of AIM, as an example of this recognition process, demonstrated the need for a strong local presence on the part of service providers, and the willingness to invest time to thoroughly understand this new type of client.
Italy is characterized by a considerable presence of small-, medium-, and even large-sized family businesses. After identifying four types of family businesses, this article analyzes three patterns of development: managerialization, the rise in the number of family partners, and the opening of the capital to nonfamily partners. The article, based on empirical research involving almost seventy Italian enterprises of various sizes, aims at informing an international audience of the state of the art of family businesses in Italy.
A series of workshops were held in Scotland to help family business managers identify and overcome obstacles to success. Core themes that emerged were family values, responsiveness to change, and family dynamics. The findings suggest that family enterprises have unique developmental characteristics with implications for economic and business development frameworks such as those in Scotland, which do not differentiate family businesses. A model is presented to analyze and categorize family enterprises in order to illustrate the issues facing family enterprises. The model provides insights into the source and effect of family values and family dynamics on the business and fosters business growth and development.
The recent scandals on Wall Street in the banking and savings and loan industries have created a financial crisis for many family businesses, particularly those in smaller towns and cities. The long-standing personal relationships with financial intermediaries have been altered by the loss of these financial organizations and by heightened government intervention and regulation. To manage the finances of a family business successfully, the owners must reassess forgotten sources of capital for their businesses. This article examines these sources of capital for family businesses in the United States.
Family businesses, whether private or public, constitute a major segment of the American economic system. A conceptual framework, from a financial practitioner's perspective, is presented for simplifying the conflicting objectives of the business and its shareholders with respect to the fundamental issues of control, liquidity, and capital. The investment objectives and criteria of capital markets participants are profiled, as well as various financial alternatives available to the family business, in particular, strategies that favor family control. The investment banker's role as both a capital markets intermediary and financial adviser is also discussed.
Explores whether there are any significant performance and ambitions differences between independent family and non-family unquoted companies in the UK. To detect “real” performance and ambitions differences, rather than demographic “sample” differences between family and non-family companies, a “matched” sample methodology has been utilized. Concludes that there are strong similarities between the two groups of companies in terms of “hard” objective performance and ambition indicators. Such differences as do occur are reflected in the finding that family companies are markedly more likely to stress non-financial objectives than non-family companies. Discusses implications for future research exploring the characteristics and performance of family and non-family companies.
Attention has been drawn recently to the differences which exist between family and non‐family firms, but Ward indicates that there are different types of family firms. More specifically, as Dunn puts it, “in some families it is evident that the business serves the family, as opposed to the family serves the business”. For some families in business, economic rationality dominates decision making, yet for others a “family first” ethos is to the fore, while a third group recognises the need to respond to economic and family considerations. In this paper firms which pay attention to both family and business are not investigated. However, Ward’s model of the characteristics of family firms is discussed and data based on a Scottish and Irish sample of 234 firms which put family first when business and family objectives clash, and 830 firms which focus on business objectives, are presented. Results suggest that the former exhibit several of the characteristics defined by Ward. This suggests that a considerable number of family firms may be lifestyle – as opposed to growth‐oriented businesses. These results have major implications for policy makers. If a substantial number of family firms differ from rational economic ventures by their methods of operation, then policy makers should be flexible with regard to the methods of intervention required to support this important section of the SME community. Policy issues in connection with family firms in Britain are considered in the light of our findings.
This paper contrasts the "static tradeoff" and "pecking order" theories of capital structure choice by corporations. In the static tradeoff theory, optimal capital structure is reached when the tax advantage to borrowing is balanced, at the margin, by costs of financial distress. In the pecking order theory, firms preferinternal to external funds, and debt to equity if external funds are needed. Thus the debt ratio reflects the cumulative requirement for external financing. Pecking order behavior follows from simple asymmetric information models. The paper closes with a review of empirical evidence relevant to the two theories.
This article is an exploratory investigation of the financial issues of family business, such as capital structure, behavior towards investments and risk, and dividend policy. We also analyze the relation between these dimensions and performance. The most important findings of this research are that family businesses have low debt/equity levels, especially those family businesses that have an important market-share positions in their industry. The family businesses that have leading market-share positions have lesser financial performance than the family businesses who are followers in market share.
The aim of this paper was to explore the attitudes of owner-managers to the conflicting pressures of family and business. Five hundred and thirty-four owner-managers responded to a questionnaire that asked about their attitudes to a range of issues including, for example, succession and equity, children′s involvement in the business, and the extent to which family should expect income from the business. There was common agreement on some issues such as the fact that children should be allowed to choose whether to join the business, and that family and business affairs should be kept separate. Beyond this, there were disagreements with three clear groups, or clusters, of attitudes emerging. We called these the Family-Business Jugglers, Family Rules, and Family Out groups.
Most theoretical and empirical studies of capital structure focus on public corporations. Only a limited number of studies on capital structure have been conducted on small-to-medium size enterprises (SMEs), and this deficiency is particularly evident in investigations into factors that influence funding decisions of family business owners.Theory indicates that there is a complex array of factors that influence SME owner-managers' financing decisions. Recent family business literature suggests that these processes are influenced by firm owners' attitudes toward the utility of debt as a form of funding as moderated by external environmental conditions (e.g., financial and market considerations).A number of other factors have been shown to influence financing decisions including culture; entrepreneurial characteristics; entrepreneurs' prior experiences in capital structure; business goals; business life-cycle issues; preferred ownership structures; views regarding control, debt–equity ratios, and short- vs. long-term debt; age and size of the firm; sources of funding for growth; attitudes toward debt financing; issues relating to independence and control; and perceived risk and attitudes toward personal risk.Although these factors have been identified, until now there does not appear to have been any attempts to develop empirically-based models that show relationships between these factors and family business owners' financing decisions. Utilizing theories derived from divergent disciplines, this study develops an empirically tested structural equation model of financing antecedents of family businesses. Participants of our study involved a random sample of 5000 business owners who were mailed a 250-item Australian Family and Private Business questionnaire developed specifically for this investigation.Notably, our findings reveal that firm size, family control, business planning, and business objectives are significantly associated with debt. Small family businesses and owners who do not have formal planning processes in place tend to rely on family loans as a source of finance. However, family businesses in the service industry (e.g., retailers and wholesalers) are less likely to use family loans as are those owners who are planning to achieve growth through new products or process development. Use of capital and retained profits is likely for family businesses planning to achieve growth through an increase in sales but less is likely for family businesses in the manufacturing sector and lifestyle firms. In addition, debt and family loans are negatively related to capital and retained profits. Equity is a consideration for owners of large businesses, young firms, and owners who plan to achieve growth through increasing profit margins. However, equity is less likely to be a consideration for older family business owners and owners who have a preference for retaining family control.Our findings suggest that the interplay between multiple social, family, and financial factors is complex. In addition, our findings indicate the importance of utilizing theories that also help to explain behavioral factors (e.g., owners' needs to be in control) that affect financial structure decision-making processes. Practitioners and researchers should consider the dynamic interplay among business characteristics (e.g., size or industry), behavioral aspects of business financing (e.g., business objectives), and financial factors (e.g., gearing levels) when working with and researching family enterprises.
the conculsions presented in the paper summarise the ideas of the a conference which aim was to to compare the situation of stock markets dedicated to innovative high-growth companies in Europe to the situation in the USA and to draw some lessons on what should be done to create an appropriate framework for the development of a true European Market.
I modify the uniform-price auction rules in allowing the seller to ration bidders. This allows me to provide a strategic foundation for underpricing when the seller has an interest in ownership dispersion. Moreover, many of the so-called "collusive-seeming" equilibria disappear.
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