Roots to Grow: Family Firms and Local Embeddedness in Rural and Urban Contexts

Abstract

The present study analyzes the nexus among business growth, ownership structure, and local embeddedness—that is, the involvement of economic actors in a geographically bound social structure—in rural and urban contexts. This work combines regional economics with studies on family business and firm growth and uses a coarsened matched sample of privately held Swedish firms. The findings indicate that family firms benefit more than nonfamily firms from local embeddedness and as such they achieve higher levels of growth and that this effect is more pronounced in rural areas. Research implications are shared in the Conclusion section.

Full text

Article
Roots to Grow: Family Firms
and Local Embeddedness in
Rural and Urban Contexts
Massimo Bau
`
1
, Francesco Chirico
1,2
, Daniel Pittino
1
,
Mikaela Backman
4
, and Johan Klaesson
3,4
Abstract
The present study analyzes the nexus among business growth, ownership structure, and local
embeddedness—that is, the involvement of economic actors in a geographically bound social
structure—in rural and urban contexts. This work combines regional economics with studies on
family business and firm growth and uses a coarsened matched sample of privately held Swedish
firms. The findings indicate that family firms benefit more than nonfamily firms from local embed-
dedness and as such they achieve higher levels of growth and that this effect is more pronounced in
rural areas. Research implications are shared in the Conclusion section.
Keywords
business growth, local embeddedness, urban–rural contexts, family firms
Previous research—particularly within the field of regional studies—has addressed the influ-
ence of local embeddedness, which is the involvement of economic actors in a geographically
bound social structure (Granovetter, 1973; Hess, 2004), on a number of firm-level outcomes
(e.g., Huggins, 2010; Johannisson, Ramirez-Pasillas, & Karlsson, 2002; Watts, Wood, &
Wardle, 2006; Welter, 2011), such as innovation (Huggins & Thompson, 2014), knowledge
sharing (Huggins & Johnston, 2009), new venture creation (Breitenecker, Harms, Weyh,
Maresch, & Kraus, 2017) and firm growth (Audretsch & Dohse, 2007; Dahl & Sorenson, 2012).
However, until recently (e.g., Backman & Palmberg, 2015; Bird & Wennberg, 2014), there
has been little cross-fertilization between regional studies and the family business literature.
Thus, our understanding of the link between family firms—characterized by some degree of
family involvement in ownership and management (Miller, Le Breton-Miller, Lester, &
Entrepreneurship Theory and Practice
1–26
!The Author(s) 2018
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/1042258718796089
journals.sagepub.com/home/etp
1
Centre for Family Enterprise and Ownership (CeFEO), Jo
¨nko
¨ping International Business School—Jo
¨nko
¨ping University,
Jo
¨nko
¨ping, Sweden
2
Tecnolo
´gico de Monterrey, EGADE Business School, Mexico
3
Centre for Entrepreneurship and Spatial Economics (CEnSE), Jo
¨nko
¨ping International Business School—Jo
¨nko
¨ping
University, Jo
¨nko
¨ping, Sweden
4
Research Institute of Industrial Economics, Stockholm, Sweden
Corresponding Author:
Francesco Chirico, Centre for Family Enterprise and Ownership (CeFEO), Jo
¨nko
¨ping International Business
School—Jo
¨nko
¨ping University, P.O. Box 1026 SE-551 11 Jo
¨nko
¨ping, Sweden.
Email: francesco.chirico@ju.se

Cannella, 2007) —and the regional economic context remains quite limited (Stough, Welter,
Block, Wennberg, & Basco, 2015). This research gap is not a trivial issue, given the impor-
tance and potentially crucial role of local embeddedness in family firms’ behavior (e.g.,
Berrone, Cruz, & Go
´mez-Mejia, 2012; Bird & Wennberg, 2014; Zellweger, Nason,
Nordqvist, & Brush, 2013) and the key contribution of family firms to GDP and job creation
in different regional contexts worldwide (e.g., Astrachan & Shanker, 2003; Basco, 2015;
Bjuggren, Johansson, & Sjogren, 2011; Memili, Fang, Chrisman, & De Massis, 2015).
This article aims to fill this gap by investigating local embeddedness and family firm
growth in rural and urban contexts. We focus on business growth because it has been
proven to be among the key drivers of macroeconomic regional development (e.g.,
Carree & Thurik, 2003; Huggins & Thompson, 2014). Moreover, family firms’ attitude
toward growth is subject to a recent ongoing debate (e.g., Backman & Palmberg, 2015;
Bird & Wennberg, 2014; Bjuggren, Daunfeldt, & Johansson, 2013) that deserves
further attention from the family business research community (e.g., Miller, Steier, & Le
Breton-Miller, 2016). Using data covering privately held firms in Sweden in the 2004–2013
period, we assess family firms’ growth compared to that of nonfamily firms and how
this difference is contingent on the local embeddedness of the firm and the rural–urban
context in which the firm operates. Our findings indicate that family firms benefit from
local embeddedness more than nonfamily firms and that this effect is more pronounced in
rural areas.
Thus, our study makes several contributions. First, our work focuses on business growth,
which, although important, is a relatively new research topic in relation to family firms (see,
e.g., Casillas, Moreno, & Barbero, 2010). In particular, our results provide insights into the
theoretical mechanisms underlying the phenomenon of growth in family companies. Second,
we contribute to the ongoing debate about the family’s effect on firm outcomes by considering
local embeddedness as a further intervening factor that helps explain the mixed findings in the
previous literature (e.g., Miller, Minichilli, & Corbetta, 2013; Wagner, Block, Miller,
Schwens, & Xi, 2015). Third, combining regional studies with the family business literature,
we answer the call for a deeper understanding of the contribution of family firms to regional
economic development and of the effects of the regional context on firm behavior and out-
comes (Stough et al., 2015). Fourth, we contribute to the field of regional economics by
detailing the importance of considering the impact of the spatial dimension (i.e., the urban
versus rural context) jointly with firm-level variables that account for family involvement and
territorial embeddedness. More specifically, we contribute to the literature on urban versus
rural firm growth (Tunberg, 2014) by investigating whether a rural context, properly leveraged
by firm-level behaviors, can maximize the benefits of local embeddedness in specific organiza-
tional forms. Fifth, we contribute to the empirical studies on firm-level growth in family firms
using a comprehensive dataset that includes both micro and small firms, whereas most pre-
vious studies have tended to exclude smaller companies due to identification constraints
(Backman & Palmberg, 2015).
Theoretical Framework
The existing literature on embeddedness (Granovetter, 1973) suggests that economic activities
can be properly understood only if we consider the involvement of business organizations in
systems of interpersonal relationships and broader social structures. Various forms of
embeddedness can be identified according to the prevailing dimension in the formation of
relationships and social structures (Grabher, 1993; Granovetter, 1973). In particular,
2Entrepreneurship Theory and Practice 00(0)

economists and economic geographers have long been interested in the spatial distribution of
economic activity and in factors that can explain location patterns. The relationship between
location and economic activity can be interpreted using the specific concept of local embedd-
edness, which is defined as the involvement of economic actors in a geographically delimited
network and/or institutional setting (Granovetter, 1973; Hess, 2004).
Local embeddedness is particularly important for business growth (see e.g., Davidsson &
Wiklund, 2006) because it shapes the basic conditions that support productivity and competi-
tiveness (Jacobs, 1969; Thompson, 1965). The crucial role of local embeddedness has been
highlighted with respect to firm outcomes at the local and regional/domestic levels (e.g.,
Cooke, 2007; Cooke, Clifton, & Oleaga, 2005) and competitiveness at the international
scale (e.g., Al-Laham & Souitaris, 2008). In particular, local embeddedness favors contacts
with customers and suppliers in a geographic area (e.g., Cooke, 2007) and facilitates access to
tangible assets, such as technology and a skilled labor force, and intangible assets, such as
localized knowledge. Localized knowledge is characterized largely by being tacit; thus, it is
difficult to codify, transfer and replicate. Therefore, localized knowledge can play a central
role in building a firm’s competitive advantage (Grant, 1991; Nonaka, 2008; Spender, 1993).
The local context may also favor the pursuit of expansion strategies in international markets,
as local institutions and linkages often help to develop legitimacy and capabilities that can
sustain firms’ international competitiveness (e.g., Al-Laham & Souitaris, 2008; Peng, Lee, &
Wang, 2005).
The translation of localized knowledge and resources into competitive advantage
depends crucially on the capacity of the firm to assimilate, utilize, and exchange such
resources, and this, in turn is related to the firm’s preexisting knowledge, organizational
processes and strategies (Cohen & Levinthal, 1990). The implications of local embedded-
ness vary also according to the type of region in which a firm is located. Regions are
heterogeneous, and the levels of economic activity, development and resources differ sub-
stantially within a given region. Economic activities and resources are indeed unevenly
distributed across space within a country. This uneven distribution leads some locations to
be characterized by an abundance of resources and others by a scarcity of resources, as
reflected in the urban–rural spatial context. Urban regions are larger and denser than rural
regions, and they present advantages in terms of (a) a diversified supply of various pro-
ducer services; (b) a regional network for information flows regarding new production
techniques, products, customers, and suppliers; and (c) a large and differentiated labor
supply (Norton, 1992).
Local embeddedness is a particularly important feature of family firms. As shown, for
example, by Bird and Wennberg (2014: 424), ‘‘family businesses are more embedded within
the regional community than their non-family counterparts,’’ which in turn affects their
strategic choices. Family firms are organizations in which ownership is concentrated
within a family, with multiple family members involved in business operations while striving
to maintain intraorganizational family-based relatedness (Arregle, Hitt, Sirmon, & Very,
2007; Miller, et al., 2007). Given these features, family business owners are particularly
sensitive to organizational longevity, and therefore, they often emphasize the preservation
of durable relationships with local stakeholders both through the establishment of cohesive
internal communities involving employees (e.g., Miller, Lee, Chang, & Le Breton-Miller,
2009; Pittino, Visintin, Sternad, & Lenger, 2016) and through the creation of connections
with external actors (Arregle et al., 2007). Family firms’ higher local embeddedness is linked
to family owners’ noneconomic goals (Chrisman, Chua, Pearson, & Barnett, 2012). These
goals are often related to strengthening a firm’s community citizenship, to the preservation
Bau
`et al. 3

of binding and long-term ties with local stakeholders and to the contribution to the eco-
nomic and social development of the area in which the company is located (e.g., Berrone
et al., 2012; Berrone, Cruz, Go
´mez-Mejia, & Larraza-Kintana, 2010; Deephouse &
Jaskiewicz, 2013).
Next, we argue that whereas certain features of family firms inhibit firm growth in com-
parison to nonfamily firms, local embeddedness and the rural context positively moderate and
thus counterbalance this negative effect.
Hypotheses Development
Family Firms and Business Growth
Business growth is considered a key factor of the creation of wealth and employment
(Davidsson & Wiklund, 2006). As several reviews highlight (e.g., Davidsson, Achtenhagen,
& Naldi, 2010; Delmar, 1997; Gilbert, McDougall, & Audretsch, 2006; Shepherd & Wiklund,
2009; Wiklund, 1998), research on this topic has focused on both the antecedents and out-
comes of growth, yet empirical evidence is somehow conflicting (Achtenhagen, Naldi, &
Melin, 2013; Davidsson & Wiklund, 2006; Shepherd & Wiklund, 2009). However, one
rather established fact in this area of research is that growth outcomes are affected by firm
owners’ preferences (e.g., Cliff, 1998; Wiklund, Davidsson, & Delmar, 2003; Wiklund, Patzelt,
& Shepherd, 2009).
In particular, previous studies have suggested that in the pursuit of nonfinancial goals
(Chrisman et al., 2012), family owners tend to be more risk averse than nonfamily firms
with regard to growth opportunities (e.g., Bjuggren et al., 2013; Daily & Dollinger, 1992;
Hamelin, 2013). For instance, Go
´mez-Mejı
´a, Haynes, Nu´ n
˜ez-Nickel, Jacobson, and Moyano-
Fuentes (2007) find that family owners are loss averse in terms of threats to their socioemo-
tional wealth, even if this aversion means accepting a greater probability of below-target
performance. Put differently, avoiding nonfinancial losses has a greater weight than pursuing
financial gains. Additionally, growth often implies the participation of external investors or a
reliance on debt financing or equity funding, which are likely to diminish the capacity of the
family to exert control over the business (Chrisman & Patel, 2012; Go
´mez-Mejia et al., 2014).
For instance, although obtaining debt financing does not dilute the family’s ownership of a
firm, lenders often impose restrictive covenants and reporting requirements (Smith & Warner,
1979), which again reduce the family’s decision-making discretion and, overall, the family’s
nonfinancial wealth endowment, such as family identity and the potential perpetuation of the
family dynasty (Go
´mez-Mejia, Cruz, Berrone, & De Castro, 2011; Hoskisson, Chirico, Zyung,
& Gambeta, 2017).
In contrast, nonfinancial considerations are less pronounced among nonfamily firms—for
example, in firms dominated by an entrepreneurial team with no family ties in the business—
which are less likely to face the nonfinancial-financial trade-offs related to growth (Chrisman
& Patel, 2012). These firms may find nonfinancial considerations to be less salient and frame
their strategic choices around financial criteria, which in turn may affect growth. Indeed,
existing research suggests that compared to family firms, nonfamily firms are less emotionally
attached to the business and more financially motivated (Miller, Le Breton-Miller, &
Scholnick, 2008). Thus, they favor strategies of rapid growth in sales through quick expansion
by using leverage, building up cash reserves, and attracting external equity investors (Miller
et al., 2011). Thus, we propose the following:
Hypothesis 1: Family firms exhibit lower business growth than non-family firms.
4Entrepreneurship Theory and Practice 00(0)

Local Embeddedness and Business Growth
We also predict that as local embeddedness increases, family firms are more likely than their
nonfamily counterparts to take advantage of localized knowledge and resources and further
enhance them through training and socialization processes supported by their rich tacit
knowledge and (family) firm-specific assets (Block & Spiegel, 2013). As argued by Bird and
Wennberg (2014) and Chirico, Ireland, and Sirmon (2011), family firms indeed possess a
superior capacity to leverage local resources and networks. In fact, they often build their
competitive advantage by relying not only on tacit knowledge and the network-embedded
resources available within the business (Carnes & Ireland, 2013; Habbershon & Williams,
1999; Sirmon & Hitt, 2003) but also and most importantly on those outside of the business
(Bird & Wennberg, 2014; Chirico et al., 2011; Miller & Le-Breton Miller, 2005).
First, we argue that the superior capacity of family versus nonfamily firms to exploit the
benefits of higher local embeddedness derives from the fact that the utilization of social capital
is often a distinctive component of a family firm’s strategy (e.g. Zahra, 2010). In family firms,
social relationships are indeed the building blocks of the family organizational structure
(Arregle et al., 2007) and are characterized by long-term generalized reciprocity and trust
among firm members (Long & Mathews, 2011; Pearson & Marler, 2010). In this context, the
family is a source of competitive advantage because of the uniqueness that it offers to the firm
in terms of interactions between individual family members and the business. These features
tend to be replicated outside of the firm, thus creating an environment that facilitates the use
and exchange of knowledge and resources with the external network of local stakeholders on
the basis of informal and trust-based interactions (Miller, Lee, Chang, & Le Breton-Miller,
2009; Lester & Cannella, 2006; Peake, Cooper, Fitzgerald, & Muske, 2017) sustained by
family members’ personal commitment and personalized business relationships (Carney,
2005; Gedajlovic & Carney, 2010) and through the dissemination of the family business’
values and norms in the local community (Arregle et al. 2007; Benavides-Velasco,
Quintana-Garcı
´a, & Guzma
´n-Parra, 2013; Danes et al., 2009).
Second, family firms are more likely than nonfamily firms to exploit the benefits of higher
local embeddedness because they obtain both financial and nonfinancial utilities from such
behavior. More specifically, increasing levels of local embeddedness may help family firms to
reconcile the trade-off between the pursuit of financial and noneconomic goals, thus sustain-
ing business growth at a higher rate than the growth of nonfamily firms—whose focus is on
financial utilities only. For instance, in the context of increasing local embeddedness the
preservation of nonfinancial goals of family firms may motivate future-oriented financial
strategies that prioritize the business’ long-term continuity in the community by maximizing
current growth opportunities (e.g., Zahra, Hayton, & Salvato, 2004; Miller et al., 2009). That
is, when local embeddedness is high, the pursuit of business growth helps family firms to
achieve not only higher financial returns but also help them to fulfill their noneconomic
preferences, for instance, in terms of family reputational concerns, a feeling of responsibility
towards local stakeholders and the economic development of the territorial community, and
the desire for a long-term presence in the local community (Berrone et al., 2012). As such,
although we expect that family firms exhibit lower business growth than nonfamily firms, we
contend that as local embeddedness increases, family firms achieve higher levels of growth.
Formally:
Hypothesis 2: Local embeddedness positively moderates the relationship between family involvement
and business growth in such a way that as local embeddedness increases, the growth of family firms
increases at a higher rate than the growth of non-family firms.
Bau
`et al. 5

Local Embeddedness in Urban Versus Rural Contexts
In rural areas, knowledge externalities are less frequent, and firms face less demand for their
products in both their immediate surrounding environment and in adjacent non-metropolitan
regions (e.g., Duranton & Puga, 2004). Moreover, rural areas often lack important resources
needed for firm growth, such as skilled labor and/or financial capital, or at least the supply of
these production factors is less diversified in rural regions than in larger and denser urban
regions, which often offer the most favorable conditions (Backman, 2013). These factors may
tend to lower the average firm growth in rural areas relative to that of firms located in more
urban settings (Tunberg, 2014).
The firm-region nexus is further influenced by the level of firm linkage—that is, the extent
to which a firm depends on and interacts with its rural–urban surroundings—and what the
local community can offer in terms of economic opportunities (Dicken & Malmberg, 2001).
Davidsson and Honig (2003) find that small firms located in a rural context are heavily reliant
on the resources and knowledge that can be accessed through friends and family. Consistent
with that result, Meccheri and Pelloni (2006) establish that in rural areas, firm outcomes
depend strongly on the firm’s human capital and social local anchoring. Thus, especially in
rural areas where resources are scarcer (Uzzi, 1999), local embeddedness may become more
relevant for the identification and exploitation of growth opportunities.
Extending this argument to the comparison between a family and nonfamily firm, we
postulate that in rural areas the advantage of family firms in leveraging locally embedded
knowledge and resources for growth is particularly pronounced. Arregle et al. (2007) explain
that family firms are characterized by ‘‘network closure’’; that is, a family firm’s network is
characterized by densely rather than sparsely connected ties. As discussed above, compared to
nonfamily firms, family firms tend to build stronger and more durable relationships with the
local community, which can provide them with critical knowledge and resources for firm
growth. This phenomenon is particularly valid for rural areas, ‘‘where families have the
possibility to form alliances and build close connections with the community and are exposed
less to the anonymity of urban areas’’ (Bird & Wennberg, 2014: p. 425).
Additionally, given that rural firms often rely on informal relationships (Felzensztein,
Gimmon, & Carter, 2010) and on financing through friends and family who are in close
proximity (Davidsson & Honig, 2003; Meccheri & Pelloni, 2006) while emphasizing commu-
nity-level shared values and norms as a platform for knowledge exchange (Falk & Kilpatrick,
2000; Summers, 1986), family firms have an important advantage over nonfamily firms in this
regard because of their informal and trust-based relationships and their strong local roots in
the region (Astrachan, 1988; Block, 2010; Fitzgerald, Haynes, Schrank, & Danes, 2010).
Hence, we predict that the positive moderating effect of local embeddedness on the relation-
ship between family involvement and business growth is further enhanced in rural areas
compared to urban areas. In formal terms:
Hypothesis 3: The positive moderating effect of local embeddedness on the relationship between family
involvement and business growth will be more pronounced in rural contexts than in urban contexts.
Methods
Research Design
To test our hypotheses, we use detailed micro-data from Statistics Sweden. The data cover
individuals and privately held firms for the years 2004 to 2013 and are structured as matched
6Entrepreneurship Theory and Practice 00(0)

employee–employer longitudinal data. We excluded firms with only one employee (i.e., indi-
viduals who are self-employed) during the period considered. We further limited our sample
to independent companies (by excluding firms controlled by other organizations) of which the
information of who are the owners of the companies was available. We also excluded firms
established in 2004 (i.e., the matching year) given that we could not calculate business growth
in the first year of existence of a firm. Finally, we considered companies with complete
information in the studied period. Thus, by utilizing this dataset, we cover a population of
over 40,000 privately held companies.
Variables and Measures
Business growth. Following previous studies (e.g., Delmar, Davidsson, & Gartner, 2003), we
measured business growth as relative (percentage) sales growth (i.e., [sales
t
– sales
t1
]/
sales
t1
)
1
. There is a 1-year lag between the measure of the dependent variable and all inde-
pendent and control variables.
Family firm measure. We adopt a binary measure of family firms. We define family firms as
those in which two or more family members own and manage the company
2
(Miller et al.,
2007), either in a household (spousal couple) or in a biologically linked family (i.e., father,
mother, and children who live in the same or another household) (see also Wennberg,
Wiklund, Hellerstedt, & Nordqvist, 2011; Wiklund, Nordqvist, Hellerstedt, & Bird, 2013).
Thus, the variable is coded as ‘‘1’’ when the company is a family firm and ‘‘0’’ otherwise.
Local embeddedness. We focus on capturing owners’ embeddedness within a location.
Following Dahl and Sorenson (2012), we measure local embeddedness as the log of the
average number of years that the owners have lived in the municipality in which the firm is
located.
Firm context—rural versus urban. Following the work of Westlund, Larsson, and Olsson (2014)
and Nilsson (2015), Swedish municipalities are separated into two categories. The first cate-
gory is the urban context, which includes both metropolitan and urban municipalities that
supply a large variety of services to the individuals and firms that are based in the location.
The second category is the rural context, which includes rural and sparsely populated rural
municipalities that host a limited range of services. The variable takes the value of 1 for the
rural context and 0 for the urban context.
Covariate Controls
First, because owners’ age may affect firm growth (Hambrick & Mason, 1984), we controlled
for the average age of all owners.Second, we controlled for the human capital within the firm,
calculated as the ratio of employees with a graduate education, given that the intensity of
high-human-capital workers leads to stronger firm outcomes (Colombo & Grilli, 2005;
Ganotakis, 2012; Moretti, 2004; Pennings, Lee, & Witteloostuijn, 1998). Third, we controlled
for the log of total assets as the amount of prior investments might effect firm growth (Anand
& Singh, 1997). Fourth, we controlled for high- and low-discretion slack, given their potential
effects on firm growth (George, 2005). High-discretion slack was measured as the level of cash
reserves, whereas low-discretion slack was measured as the debt-to-equity ratio (George,
2005). Following Chen (2008), we standardized these two measures and summed them to
obtain a general slack index. Fifth, we controlled for firm performance in terms of Return on
Bau
`et al. 7

Assets (ROA)
3
(Wales, Parida, & Patel, 2013). Sixth, we controlled for environmental dyna-
mism and munificence (Keats & Hitt, 1988), which may influence firm growth (Bradley,
Shepherd, & Wiklund, 2011). Munificence is measured by averaging the regression coefficients
of a given industry’s (four-digit NACE code) sales over a 5-year period. Dynamism is calcu-
lated as the average of the standard errors of the regression slopes for the sales regression
equations used in calculating industry munificence over a 5-year period (see Keats & Hitt,
1988). Seventh, we controlled for the log of the population living in each Swedish municipality,
as it captures the potential agglomeration benefits that may increase firm growth (Audretsch
& Dohse, 2007; Baptista & Preto, 2011; Raspe & Oort, 2008). Eight, we calculated the
location quotients (LQ) to control for the match between the firm’s specialization at the
two-digit SIC code level and the specialization of the municipality in which the firm is located
(Boix & Trulle
´n, 2007). LQ measures the relative specialization for a municipality in relation
to the reference unit, in this case, the rest of Sweden. The LQ compares the employment share
of a specific sector in the municipality to the rest of the country, as described in Equation 1.
Thus, a value of one indicates that the municipality has the same share of industry employ-
ment as the rest of the country. A value above one indicates a higher industry share compared
to the rest of the country (overrepresentation), and a value below one indicates a lower share
compared to the rest of the country (underrepresentation). A higher value indicates a higher
level of specialization and has been confirmed in previous studies to correlate with higher firm
outcomes (Gabe & Kraybill, 2002; Wennberg & Lindqvist, 2010). Finally, to control for time
dependency, the log of time was also incorporated into the analyses (Box-Steffensmeier &
Jones, 2004)
4
.
LQ ¼
Employment in sector j in municipality kEmployment in municipality k
Total employment in sector j Total employment
ð1Þ
Data Analysis
We relied on coarsened exact matching (CEM) to improve the balance between the treated
(family) and control (nonfamily) groups (Blackwell, Iacus, King, & Porro, 2009; Iacus, King,
& Porro, 2011). CEM improves the estimation of causal effects using a monotonic, imbalance-
reducing matching method that mitigates selection bias, causal estimation error, inefficiency
and model dependence (Blackwell et al., 2009). We used the ‘‘k2k’’ matching technique, which
prunes observations from a CEM solution within each stratum until the solution contains the
same number of treated and control units within all strata, enabling compensation for the
differential strata sizes.
Specifically, we matched on four variables capturing the age of a firm
5
, firm size in terms of
number of full time employees, the municipality in which the firm is located and the industry in
which the firm operates (at the two-digit SIC level) in the year 2004 and followed the com-
panies in the subsequent years. Young and small firms can be affected by the liability of
newness and smallness, which can affect firm growth (Hannan & Freeman, 1977). In addition,
different municipality locations and industries may encourage companies to be more or less
positioned for growth (Eisenhardt & Schoonhoven, 1990; Hoover & Vernon, 1959). Given
that coarser matching may reduce the value of matching when adjusting for differences across
the case and control groups, we opted for a finer-grained exact matching for number of
employees and industry in which Stata forces CEM to avoid coarsening the matching
8Entrepreneurship Theory and Practice 00(0)

variables (Blackwell et al., 2009; Iacus et al., 2011). The treatment variable is a binary variable
that distinguishes family firms from nonfamily firms. The matching procedure yielded a final
matched sample of 15,658 companies (7,829 family firms and 7,829 nonfamily firms). The
means (M), standard deviations (SD), minimum (Min) and maximum (Max) of the matching
variables and dependent and independent variables of the study before the matching and in
the year of the matching are presented in Table 1 for family (FF) and nonfamily firms (NFF).
Additionally, Table 2 shows a breakdown of the family and nonfamily firms by industry (SNI
2002 codes).
Empirical Results
To test the proposed hypotheses, we used panel data analysis with a random effect specifica-
tion. The descriptive statistics and the Pearson correlation coefficients of the study’s variables
are presented in Table 3. Inspection of the variance inflation factors (VIFs) and tolerance
showed that multicollinearity was not a concern. Indeed, all VIF coefficients were below the
cutoff of 5 (O’Brien, 2007).
Table 1. Matching Variables, Dependent and Independent Variables Before the Match and in the Year of
the Match (2004).
Pre-match (N¼45,282) Post-match (N¼15,658)
Nonfamily firms Family firms Nonfamily firms Family firms
Firm age M: 6.41 M: 7.76 M: 6.31 M: 6.64
SD: 3.54 SD: 3.79 SD: 3.54 SD: 3.55
Min: 2 Min: 2 Min: 2 Min: 2
Max: 14 Max: 14 Max: 14 Max: 14
Firm size (number of employees) M: 7.72 M: 9.23 M: 5.86 M: 5.86
SD: 12.33 SD: 13.26 SD: 5.55 SD: 5.55
Min: 2 Min: 2 Min: 2 Min: 2
Max: 335 Max: 547 Max: 119 Max: 119
Local embeddedness M: 9.39 M: 10.45 M: 9.49 M: 10.25
SD: 5.92 SD: 5.66 SD: 5.90 SD: 5.68
Min: 0 Min: 0 Min: 0 Min: 0
Max: 15 Max: 15 Max: 15 Max: 15
Firm context (rural ¼1) M: 0.32 M: 0.41 M: 0.33 M: 0.37
SD: 0.47 SD: 0.49 SD: 0.47 SD: 0.48
Min: 0 Min: 0 Min: 0 Min: 0
Max: 1 Max: 1 Max: 1 Max: 1
Business growth
(relative sales growth)
M: 0.13 M: 0.09 M: 0.14 M: 0.12
SD: 0.39 SD: 0.31 SD: 0.50 SD: 0.45
Min: 0.92 Min: 0.94 Min: 0.92 Min: 0.94
Max: 3.75 Max: 3.77 Max: 3.75 Max: 3.77
Bau
`et al. 9

Table 2. Distribution of the Firms Per Each Industry (SNI 2002) in the Year of the Match (2004).
Nonfamily firms Family firms
A Agriculture, hunting and forestry 350 350 4.47%
B Fishing 0 0
C Mining and quarrying 2 2 0.03%
D Manufacturing
DA Manufacture of food products; beverages and
tobacco
80 80 1.02%
DC Manufacture of leather and leather products 0 0
DD Manufacture of wood and wood products 81 81 1.03%
DE Manufacture of pulp, paper; publishing and
printing
113 113 1.44%
DF Manufacture of coke, refined petroleum products
and nuclear fuel
00
DG Manufacture of chemicals, chemical products and
fibres
5 5 0.06%
DH Manufacture of rubber and plastic products 12 12 0.15%
DI Manufacture of other nonmetallic mineral
products
12 12 0.15%
DJ Manufacture of basic metals and fabricated metal
products
217 217 2.77%
DK Manufacture of machinery and equipment n.e.c. 93 93 1.19%
DL Manufacture of electrical and optical equipment 50 50 0.64%
DM Manufacture of transport equipment 18 18 0.23%
DN Manufacturing n.e.c. 46 46 0.59%
E Electricity, gas and water supply 0 0
F Construction 1,050 1,050 13.41%
G Wholesale and retail trade; repair of motor vehi-
cles, and personal goods
2,198 2,198 28.08%
H Hotels 588 588 7.51%
I Transport, storage and communication 503 503 6.42%
J Financial intermediation 0 0
K Real estate, renting and business activities 1,734 1,734 22.15%
L Public administration and defence; compulsory
social security
00
M Education 65 65 0.83%
N Health and social work 275 275 3.51%
O Other community, social and personal service
activities
337 337 4.30%
P Activities of households 0 0
Q Extra-territorial organizations and bodies 0 0
7,829 7,829
10 Entrepreneurship Theory and Practice 00(0)

Table 3. Correlation Matrix and Summary Statistics (2004–2013).
Mean SD 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.
1. Business growth
(sales)
0.07 0.32
2. Family firm
(dummy)
0.60 0.49 0.00
3. Local
embeddedness
12.75 7.51 0.04 0.08
4. Firm context
(rural ¼1)
0.36 0.48 0.02 0.04 0.20
5. Owners’ age 48.85 9.19 0.12 0.05 0.18 0.05
6. Firm human
capital
0.11 0.22 0.04 0.04 0.10 0.20 0.04
7. Firm total assets 4,384.87 5,568.54 0.06 0.07 0.02 0.01 0.04 0.06
8. Firm slack 0.01 0.11 0.06 0.03 0.01 0.03 0.02 0.01 0.43
9. Firm performance 2.61 18.95 0.16 0.15 0.06 0.06 0.04 0.13 0.16 0.12
10. Industry
dynamism
1.00 0.00 0.00 0.02 0.05 0.01 0.04 0.01 0.12 0.10 0.03
11. Industry
munificence
0.98 0.03 0.04 0.00 0.02 0.01 0.03 0.07 0.05 0.04 0.01 0.02
12. Municipality size 177,124.88 262,129.80 0.02 0.07 0.20 0.44 0.05 0.28 0.01 0.03 0.06 0.01 0.04
13. Location quotients 1.44 2.35 0.00 0.01 0.04 0.10 0.01 0.02 0.07 0.03 0.02 0.04 0.02 0.05
14. Firm age 10.42 4.63 0.16 0.10 0.22 0.05 0.38 0.04 0.14 0.05 0.06 0.01 0.12 0.03 0.04
15. Firm size (#
employees)
6.69 7.50 0.08 0.06 0.07 0.07 0.07 0.07 0.45 0.35 0.15 0.00 0.06 0.09 0.01 0.05
16. Time (log) 1.35 0.74 0.12 0.12 0.27 0.02 0.21 0.01 0.11 0.04 0.04 0.03 0.06 0.00 0.02 0.60 0.06
17. Business growth
(employees)
0.06 0.29 0.27 0.00 0.03 0.01 0.09 0.01 0.01 0.01 0.01 0.00 0.02 0.00 0.01 0.03 0.11 0.01
18. Sales 8,798.27 13,053.17 0.10 0.05 0.08 0.05 0.04 0.02 0.67 0.32 0.19 0.10 0.04 0.06 0.00 0.04 0.60 0.00 0.01
19. Family involve-
ment (continuous)
0.00 1.89 0.00 0.82 0.02 0.01 0.00 0.02 0.12 0.07 0.17 0.02 0.00 0.02 0.01 0.13 0.14 0.18 0.00 0.11
20. Top managers’
embeddedness
8.27 8.95 0.03 0.04 0.54 0.10 0.10 0.06 0.11 0.04 0.02 0.06 0.02 0.10 0.02 0.08 0.09 0.05 0.01 0.13 0.00
(continued)

Table 3. Continued
Mean SD 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.
21. # years of a firm in
the same
municipality
11.74 5.70 0.14 0.06 0.34 0.09 0.40 0.07 0.11 0.06 0.01 0.03 0.11 0.03 0.04 0.08 0.00 0.06 0.12 0.03 0.04 0.18
22. Household
income (log)
8.07 0.54 0.00 0.15 0.06 0.11 0.12 0.23 0.25 0.10 0.23 0.06 0.04 0.10 0.01 0.11 0.14 0.40 0.03 0.19 0.16 0.06 0.02
23. Household size 2.12 0.63 0.01 0.23 0.09 0.02 0.10 0.00 0.02 0.00 0.01 0.02 0.01 0.06 0.02 0.90 0.02 1.00 0.01 0.00 0.18 0.05 0.06 0.40
Note. Values greater than j0.02jare significant at p<.05.

First Stage: Controlling for Endogeneity
Firm growth may also be endogenous to the unique features of family firms. In other words,
factors that might influence firm growth could also influence the desirability of keeping the
firm as a family business. Although we lagged the independent and control variables by 1 year
and the matching approach addresses the most pressing endogeneity concerns (De Figueiredo,
Meyer-Doyle, & Rawley, 2013; Wooldridge, 2012), we further identified two instrumental
variables correlated with the family firm variable but not with the dependent variable: (a)
household size (average number of family members living with the owner) and (b) household
income (log of the average of the total incomes of family members living with the owner). In
fact, a family may be more likely to maintain control of their firm when many family members
are part of their household (e.g., Miller, Fitzgerald, Winter, & Paul, 1999) and when their
income is high (Haynes, Walker, Rowe, & Hong, 1999). However, these two factors may not
directly affect firm growth (Heck, Owen, & Rowe, 1995).
We employed a two-stage residual inclusion (2SRI) model (see Terza, Basu, & Rathouz,
2008) to control for endogeneity. In linear models, 2SRI is similar to the popular two-stage
least squares (2SLS) method and is, therefore, consistent in terms of results (Terza et al., 2008:
534). Empirically a 2SRI estimator is like the linear 2SLS, except that in the second-stage
regression, the endogenous variables are not replaced by the first-stage predictors. Instead,
first-stage residuals are included as additional regressors (endogeneity score in Table 4). Thus,
we controlled for the endogeneity score in the final analyses to mitigate any potential endo-
geneity issues (Terza et al., 2008). Table 4 (Model 1) presents the results of our first stage
model.
Second Stage: Hypotheses Test
We report the findings of our analyses in Table 4. Hypothesis 1 (Table 4, Model 3) is not
supported. In fact, the family firm coefficient is positive and significant, suggesting that family
firms achieve higher levels of business growth than nonfamily firms do. Hypotheses 2 and 3
consider the moderation effects of local embeddedness and firm location, respectively. To test
Hypothesis 2, we employed a two-way interaction (Aiken & West, 1991) between the family
firm and local embeddedness. The interaction term is positive and significant (Table 4, Model
4). To interpret this result, we plotted the two-way interaction in Figure 1. In support of
Hypothesis 2, the figure shows that as local embeddedness increases, the growth of family
firms increases at a higher rate than the growth of nonfamily firms. As expected, this differ-
ence is largest when local embeddedness is high. Interestingly, Figure 1 also shows that when
embeddedness is low nonfamily firms achieve higher levels of growth than family firms.
Finally, to test Hypothesis 3, we employed a three-way interaction (Dawson & Richter,
2006) among the family firm, local embeddedness and the rural/urban context. The interac-
tion effect is significant (see Table 4, Model 5), and the plot of the interaction (Figure 2)
confirms that the highest effect of local embeddedness on business growth occurs among
family firms that operate in a rural context.
Robustness Tests
First, to test the sensitivity of our results to our matching procedure, we included the obser-
vations dropped by CEM into the sample. Second, following previous studies (Backman &
Palmberg, 2015; McKelvie & Wiklund, 2010; Shepherd & Wiklund, 2009), we used an alter-
native measure of business growth in terms of relative employment growth. Additionally,
Bau
`et al. 13

Table 4. 2SRI. Family Firm, Local Embeddedness, Firm Context and Business Growth (2004–2013).
First stage Second stage
1. 2. 3. 4. 5.
Firm owner’s age 0.863*** 0.170*** 0.173*** 0.174*** 0.174***
(0.184) (0.009) (0.009) (0.009) (0.009)
Firm human capital 1.193*** 0.017* 0.018* 0.018* 0.018*
(0.174) (0.008) (0.008) (0.008) (0.008)
Firm total assets 0.233*** 0.018*** 0.018*** 0.018*** 0.018***
(0.030) (0.001) (0.001) (0.001) (0.001)
Firm slack 0.148 0.098*** 0.097*** 0.097*** 0.097***
(0.218) (0.013) (0.013) (0.013) (0.013)
Firm performance 0.011*** 0.004*** 0.004*** 0.004*** 0.004***
(0.001) (0.000) (0.000) (0.000) (0.000)
Industry dynamism 19.878þ0.392 0.287 0.289 0.291
(11.224) (0.548) (0.548) (0.548) (0.548)
Industry munificence 1.887** 0.185*** 0.185*** 0.186*** 0.187***
(0.646) (0.041) (0.041) (0.041) (0.041)
Municipality size 0.373*** 0.000 0.001 0.001 0.001
(0.034) (0.001) (0.002) (0.002) (0.002)
Location quotients 0.001 0.001 0.001 0.001 0.001
(0.014) (0.001) (0.001) (0.001) (0.001)
Log of time 0.944*** 0.048*** 0.049*** 0.049*** 0.049***
(0.024) (0.002) (0.002) (0.002) (0.002)
Family firm 0.007* 0.003 0.002
(0.003) (0.006) (0.007)
Local embeddedness 0.009*** 0.004 0.005*
(0.001) (0.002) (0.002)
Firm context (rural) 0.006 0.006 0.010
(0.005) (0.010) (0.013)
Family firm Local
embeddedness
0.007** 0.005þ
(0.002) (0.003)
Family firm Firm context 0.015* 0.043**
(0.006) (0.015)
Local embeddedness Firm
context
0.004 0.003
(0.003) (0.005)
Family firm Local
embeddedness Firm
context
0.012*
(0.006)
Household income
(Instrumental variable)
1.026***
(0.110)
Instrument Household size
(Instrumental variable)
3.302***
(0.096)
(continued)
14 Entrepreneurship Theory and Practice 00(0)

we ran our analyses using absolute measures of sales and employees with a fixed effect
specification (Backman & Palmberg, 2015). Third, we adopted a continuous measure of
family involvement (Chrisman & Patel, 2012) in terms of (a) the total number of family
owners, that is, family members who declared partial ownership to tax authorities, and (b)
the total number of family managers (e.g., Le Breton-Miller, Miller, & Lester, 2011). Given
that these measures converged by loading together as a single factor, we built a composite
measure of family involvement by summing the standardized values of the two measures (see
Finkelstein, 1992; Martin, Go
´mez-Mejia, & Wiseman, 2013 for a similar procedure). Fourth,
we used an alternative measure of local embeddedness that captures top managers’ embedded-
ness within a location (that is, the number of years that managers have lived in the munici-
pality in which the firm is located). In all the above cases, the results were substantially similar
to those reported in the main analyses. Yet, the three interaction effect with the top managers’
Figure 1. Local embeddedness and business growth among family and non-family firms.
Table 4. Continued
First stage Second stage
1. 2. 3. 4. 5.
Endogeneity score 0.002* 0.002** 0.002** 0.002**
(0.001) (0.001) (0.001) (0.001)
Wald 
2
4,557.00 7,005.13 7,049.88 7,056.16 7,065.42
Prob >
2
0.000 0.000 0.000 0.000 0.000
N15,658 15,658 15,658 15,658 15,658
Note. þp<.1. *p<.05. **p<.01. ***p<.001.
Bau
`et al. 15

embeddedness measure was significant at p¼.081. Additionally, as an alternative proxy for
embeddedness, we counted the number of years a firm has spent in the same municipality
since 1990 (first data available on this variable). As expected, the plot showed that within
highly embedded companies, family firms operating in rural areas are those that achieve the
highest level of growth. Finally, we tested for nonlinear relationships and found no empirical
support.
Discussion
Our results highlight the importance of the local context for the growth of family versus
nonfamily firms. Regarding family firms’ general attitude towards business growth, the lack
of support for the first hypothesis suggests that family firms may instead opt to preserve future
nonfinancial wealth through increasing current revenues (e.g., Go
´mez-Mejia et al., 2014;
Hoskisson et al., 2017). Additionally, as the level of embeddedness increases, family firms
may be further motivated to grow because of their commitment to local stakeholders and
communities. Family firms appear to be more capable than nonfamily firms to translate
spatially embedded resource endowments into growth performance, suggesting their superior
ability to benefit from ‘‘favorable community attitudes’’ (Bird & Wennberg, 2014; p. 433).
Family firms better use locally embedded knowledge and resources to build a competitive
advantage based on tacit knowledge and firm-specific capital, which in turn translates into
superior growth. In particular, Figure 1 shows that the positive effect of increasing local
embeddedness on business growth is higher among family firms in comparison to nonfamily
firms. Nonfamily firms seem thus to derive lower benefits than family firms from increased
local embeddedness (see Figure 1). One possible explanation for this result could be related
with the quality of relationships established at the local level. For example, it might be that
nonfamily firms are less able to develop valuable social capital from the relationships with
Figure 2. Local embeddedness, rural and urban contexts and business growth among family and nonfamily
firms.
16 Entrepreneurship Theory and Practice 00(0)

their stakeholders. For example, if exchanges are restricted, as opposed to generalized (e.g.,
Daspit, Holt, Chrisman, & Long, 2016) —that is, they privilege the transactional/market
dimension over the relational one, the embeddedness might be less beneficial to achieve
positive firm outcomes. However, our measure of embeddedness does not allow to capture
the quality of the relationships, and this represents a limitation of the present study, which is
further discussed in the concluding section.
Finally, we find support for Hypothesis 3, which predicts that locally embedded connec-
tions and bonds are particularly important for family firms versus nonfamily firms in rural
contexts, where weak infrastructure and the low density of the population and of economic
activities make it more difficult for all types of firms to attract resources, find inputs, and
access information and knowledge. In such conditions, it becomes even more important to
effectively leverage the available resources. Figure 2 shows that the positive effect of local
embeddedness on business growth is strongest among family firms operating in a rural con-
text. This evidence suggests that the ‘roots to grow’ are important and family firms gain
‘‘localized’’ competitive advantages in rural contexts, using their local social connections
and networks to attract human capital, knowledge-based assets and financial capital
(Backman & Palmberg, 2015).
Contributions
Our study has relevant theoretical implications for family business research. First, our work
represents one of the first recent attempts to study business growth and the contextual con-
ditions affecting business growth in family firms (e.g., Casillas & Moreno, 2010; Casillas et al.,
2010; Eddleston, Kellermanns, Floyd, Crittenden, & Crittenden, 2013). In contrast to our
predictions and the existing literature (e.g., Arregle, Batjargal, Hitt, Webb, & Tsui, 2013;
Colombo, De Massis, Piva, Rossi-Lamastra, & Wright, 2014), our results show that family
firms grow more than nonfamily firms. Additionally, in terms of growth, family firms benefit
more from the embeddedness within the local community than nonfamily firms (Backman &
Palmberg, 2015; Bird & Wennberg, 2014). As such, our work furthers the idea that family
firms strongly leverage tacit knowledge and firm-specific resources in their strategic conduct
(e.g., Chirico et al., 2011) and rely on external social relationships to address resource scarcity
and resource deployment issues (Kim, Im, & Slater, 2013; Sirmon & Hitt, 2003). Thus, we
offer interesting insights for future studies exploring the family, business and environmental
mechanisms that lead to positive outcomes for family firms.
Second, we contribute to the literature on noneconomic goals in family firms (e.g.,
Chrisman et al., 2012; Go
´mez-Mejia, et al., 2007) by theorizing that the level of local embedd-
edness may be a dimension that affects the trade-off between economic and noneconomic
goals, with this trade-off waning when the pursuit of community-related noneconomic goals is
also a way to build resources that support the family business’s competitive advantage. Third,
we add to the field of regional economics by investigating whether local embeddedness in a
rural context can function as a substitute for external economies, such as the agglomeration
benefits and positive externalities that are present in an urban context. In an urban region of
sufficient size, spatially bounded markets function more effectively. One reason for this effect
is the sheer size of the market, and another is the diversity of resources in a large market as a
result of different fixed costs and indivisibilities. Thus, markets for labor, ideas and fixed
resources give rise to matching, learning, and sharing effects, all of which benefit firms that
can obtain these positive externalities in a larger urban market. In a smaller, more rural
region, the above effects are much more limited. One way to achieve similar effects in a smaller
rural location is by relying not on the market process to the same extent but instead on locally
Bau
`et al. 17

embedded network exchanges. The value added of greater local embeddedness is that actions
can be coordinated and result in efficiency gains that offset the lack of agglomeration gains
that can be obtained in a larger market. The observed effects provide interesting extensions to
both theoretical arguments and empirical evidence in favor of the prevalence of family firms in
low-resource-intensive environments (Carney, 2005) and in regions that are economically
depressed or that feature lower levels of development (Chang, Chrisman, Chua, &
Kellermanns, 2008).
Finally, by combining regional studies and the family business literature, we answered the
call for further research to combine the two fields (e.g., Stough et al., 2015) and provided a
way to (a) better understand the contribution of family businesses to growth in various types
of local contexts (e.g., Welter, 2011) and (b) investigate the issue of firm-level heterogeneity
and behavior in the context of regional studies (e.g., Block & Spiegel, 2013; Maskell, 2001).
Limitations and Directions for Future Research
The present study has also several limitations that indicate important directions for future
research. First, an aspect that is not fully explored in the present study is how local embedd-
edness differs across industries. In this study, we match for industry; however, to understand
the differences in a more profound way, firms of different industries should be analyzed
separately. This separate analysis can certainly be combined with the regional context,
where, for example, knowledge-intensive firms may be more reliant on being located in a
urban setting. Second, due to data limitations, we did not measure local embeddedness
through actual owners’ network contacts in a region. However, we agree with Dahl and
Sorenson (2012: 1063), who note that although embeddedness may be measured by directly
observing whether owners have close personal contacts in a region, owners’ tenure in the
region represents a better measure of embeddedness. Specifically,
one must worry about the meaning of relationships. At issue is the fact that people select into
them. Differences in the quality or number of connections available to individuals might therefore
reflect individual-level heterogeneity rather than random variation in their relationships.
Measuring these connections directly raises a reflection problem that could bias the estimates.
Yet, future research may assess local embeddedness utilizing also measures accounting for the
quality of the relationships (e.g. restricted versus generalized social exchanges between a firm
and its community; Daspit et al., 2016). A further limitation of our measure of local embedd-
edness is that it may not account for the network that previous family generations may pass
down to current owners. This topic may represent a promising area of future research in
connection to family business succession, given the need to transfer social networks across
generations and since embeddedness in a community is considered an important factor of
successor selection (see Cabrera-Sua
´rez, Saa-Pe
´rez, & Garcı
´a-Almeida, 2001; Steier, 2001).
Third, our measure of family firms does not take into account the amount (percentage) of
family ownership of the firm. As such, our family firm sample might include firms where the
majority of owners are nonfamily investors or exclude firms where family mangers are not
present due to the fact that the firm is in later generations of family control. Fourth, another
underexplored issue is related to the potential shifts in localizations of family and nonfamily
firms over time and whether such shifts may be affected by the level of local embeddedness. By
analyzing localization patterns and their determinants, future studies may contribute to the
existing literature on firm localization. Fifth, this study is conducted in a sample of Swedish
firms; it would be interesting to observe whether similarities or differences exist across specific
18 Entrepreneurship Theory and Practice 00(0)

countries. Finally, an interesting finding that may deserve future investigation is the positive
relationship between local embeddedness and owners’ age and their effects on
business growth. In particular, the negative effect of owners’ age on growth is in line with
previous evidence that family firms with long-tenured family owners exhibit lower growth
propensity (e.g., Zahra, 2005). Yet, future research may explore whether local embeddedness
has a diminishing or increasing effect on growth over time, thus suggesting a nonlinear
relationship.
In summary, we believe that our study provides important insights and has the potential to
stimulate further work on the interesting but underexplored topic of local embeddedness and
rural–urban contexts for business growth in family versus nonfamily firms.
Acknowledgments
We are indebted to the editor, James Chrisman, and the two anonymous reviewers as well as the
organizers and participants of the TOFE Conference at the University of St. Gallen for their insightful
and developmental feedback. We would also like to thank Jo
¨nko
¨ping International Business School, the
Centre for Family Enterprise and Ownership (CeFEO) and the related CeFEO workshop and partici-
pants for their support and valuable suggestions received during the development of the present
manuscript.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or
publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this
article.
Notes
1. To avoid outliers, the sale values are trimmed at the 1st and 99th percentiles.
2. Family members working part-time were also considered.
3. To avoid outliers, the ROA values are trimmed at the 1st and 99th percentiles (winsor2; trim replace).
4. Due to the high correlation between generational involvement and the family firm dummy, we did not
control for the number of family generations involved in the business (Sciascia, Mazzola, & Chirico,
2013).
5. Information on firm age is not available for all firms. CEM offers an approach to address missing
values through ‘‘matching on missingness,’’ that is, CEM treats the missing values as an additional
category on which to match (Blackwell et al., 2009).
ORCID iD
Francesco Chirico http://orcid.org/0000-0002-7778-4849
References
Achtenhagen, L., Melin, L., & Naldi, L. (2013). Dynamics of business models–strategizing, critical
capabilities and activities for sustained value creation. Long Range Planning,46(6), 427–442.
Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury
Park, CA: Sage Publications.
Al-Laham, A., & Souitaris, V. (2008). Network embeddedness and new-venture internationalization:
Analyzing international linkages in the German biotech industry. Journal of Business Venturing,
23(5), 567–586.
Bau
`et al. 19

Anand, J., & Singh, H. (1997). Asset redeployment, acquisitions and corporate strategy in declining
industries. Strategic Management Journal,18(S1), 99–118.
Arregle, J. L., Batjargal, B., Hitt, M. A., Webb, J. W., & Tsui, A. S. (2013). Family ties in entrepreneurs’
social networks and new venture growth. Entrepreneurship Theory and Practice,39(2), 313–344.
Arregle, J. L., Hitt, M. A., Sirmon, D. G., & Very, P. (2007). The development of organizational social
capital: Attributes of family firms. Journal of Management Studies,44(1), 73–95.
Astrachan, J. H., & Shanker, M. C. (2003). Family businesses’ contribution to the US economy: A closer
look. Family Business Review,16(3), 211–219.
Astrachan, J. H. (1988). Family firm and community culture. Family Business Review,1(2), 165–189.
Audretsch, D. B., & Dohse, D. (2007). Location: A neglected determinant of firm growth. Review of
World Economics,143(1), 79–107.
Backman, M. (2013). Regions, human capital and new firm formation (JIBS dissertation series No. 086).
Jo
¨nko
¨ping: Jo
¨nko
¨ping International Business School.
Backman, M., & Palmberg, J. (2015). Contextualizing small family firms: How does the urban–rural
context affect firm employment growth? Journal of Family Business Strategy,6(4), 247–258.
Baptista, R., & Preto, M. T. (2011). New firm formation and employment growth: Regional and busi-
ness dynamics. Small Business Economics,36(4), 419–442.
Basco, R. (2015). Family business and regional development—A theoretical model of regional famili-
ness. Journal of Family Business Strategy,6(4), 259–271.
Benavides-Velasco, C. A., Quintana-Garcı
´a, C., & Guzma
´n-Parra, V. F. (2013). Trends in family busi-
ness research. Small Business Economics,40(1), 41–57.
Berrone, P., Cruz, C., & Go
´mez-Mejia, L. R. (2012). Socioemotional wealth in family firms: Theoretical
dimensions, assessment approaches, and agenda for future research. Family Business Review,25(3),
258–279.
Berrone, P., Cruz, C., Go
´mez-Mejia, L. R., & Larraza-Kintana, M. (2010). Socioemotional wealth and
corporate responses to institutional pressures: Do family-controlled firms pollute less? Administrative
Science Quarterly,55(1), 82–113.
Bird, M., & Wennberg, K. (2014). Regional influences on the prevalence of family versus non-family
start-ups. Journal of Business Venturing,29(3), 421–436.
Bjuggren, C. M., Daunfeldt, S. O., & Johansson, D. (2013). High-growth firms and family ownership.
Journal of Small Business & Entrepreneurship,26(4), 365–385.
Bjuggren, C. M., Johansson, D., & Sjo
¨gren, H. (2011). A note on employment and gross domestic
product in Swedish family-owned businesses: A descriptive analysis. Family Business Review,24(4),
362–371.
Blackwell, M., Iacus, S., King, G., & Porro, G. (2009). Cem: Coarsened exact matching in Stata. Stata
Journal,9(4), 524.
Block, J. (2010). Family management, family ownership, and downsizing: Evidence from S&P 500 firms.
Family Business Review,23, 109–130.
Block, J. H., & Spiegel, F. (2013). Family firm density and regional innovation output: An exploratory
analysis. Journal of Family Business Strategy,4(4), 270–280.
Boix, R., & Trulle
´n, J. (2007). Knowledge, networks of cities and growth in regional urban systems.
Papers in Regional Science,86(4), 551–574.
Box-Steffensmeier, J. M., & Jones, B. S. (2004). Event history modeling: A guide for social scientists.
Cambridge: Cambridge University Press.
Bradley, S. W., Shepherd, D. A., & Wiklund, J. (2011). The importance of slack for new organizations
facing ‘tough’ environments. Journal of Management Studies,48(5), 1071–1097.
Breitenecker, R. J., Harms, R., Weyh, A., Maresch, D., & Kraus, S. (2017). When the difference makes a
difference–the regional embeddedness of entrepreneurship. Entrepreneurship & Regional
Development,29(1–2), 71–93.
Cabrera-Sua
´rez, K., De Saa
´-Pe
´rez, P., & Garcı
´a-Almeida, D. (2001). The succession process from a
resource-and knowledge-based view of the family firm. Family Business Review,14(1), 37–46.
Carnes, C. M., & Ireland, R. D. (2013). Familiness and innovation: Resource bundling as the missing
link. Entrepreneurship Theory and Practice,37(6), 1399–1419.
20 Entrepreneurship Theory and Practice 00(0)

Carney, M. (2005). Corporate governance and competitive advantage in family-controlled firms.
Entrepreneurship Theory and Practice,29(3), 249–265.
Carree, M. A., & Thurik, A. R. (2003). The impact of entrepreneurship on economic growth. In Z. J. Acs
& D. B. Audretsch (Eds.), Handbook of entrepreneurship research (pp. 437–471). New York, NY:
Springer US.
Casillas, J. C., & Moreno, A. M. (2010). The relationship between entrepreneurial orientation and
growth: The moderating role of family involvement. Entrepreneurship and Regional Development,
22(3–4), 265–291.
Casillas, J. C., Moreno, A. M., & Barbero, J. L. (2010). A configurational approach of the relationship
between entrepreneurial orientation and growth of family firms. Family Business Review,23(1),
27–44.
Chang, E. P., Chrisman, J. J., Chua, J. H., & Kellermanns, F. W. (2008). Regional economy as a
determinant of the prevalence of family firms in the United States: A preliminary report.
Entrepreneurship Theory and Practice,32(3), 559–573.
Chen, W.-R. (2008). Determinants of firms’ backward- and forward-looking R&D search behavior.
Organization Science,19(4), 609–622.
Chirico, F., Ireland, R. D., & Sirmon, D. G. (2011). Franchising and the family firm: Creating
unique sources of advantage through ‘‘familiness’’. Entrepreneurship Theory and Practice,35(3),
483–501.
Chrisman, J. J., Chua, J. H., Pearson, A. W., & Barnett, T. (2012). Family involvement, family influence,
and family-centered non-economic goals in small firms. Entrepreneurship Theory and Practice,36(2),
267–293.
Cliff, J. E. (1998). Does one size fit all? Exploring the relationship between attitudes towards growth,
gender, and business size. Journal of Business Venturing,13(6), 523–542.
Cohen, W. M., & Levinthal, D. (1990). Absorptive capacity: A new perspective on learning and innova-
tion. Administration Science Quarterly,35, 128–152.
Colombo, M. G., De Massis, A., Piva, E., Rossi-Lamastra, C., & Wright, M. (2014). Sales and employ-
ment changes in entrepreneurial ventures with family ownership: Empirical evidence from high-tech
industries. Journal of Small Business Management,52(2), 226–245.
Colombo, M. G., & Grilli, L. (2005). Founders’ human capital and the growth of new technology-based
firms: A competence-based view. Research Policy,34(6), 795–816.
Cooke, P. (2007). Social capital, embeddedness, and market interactions: An analysis of firm perfor-
mance in UK regions. Review of Social Economy,65(1), 79–106.
Cooke, P., Clifton, N., & Oleaga, M. (2005). Social capital, firm embeddedness and regional develop-
ment. Regional Studies,39(8), 1065–1077.
Dahl, M. S., & Sorenson, O. (2012). Home sweet home: Entrepreneurs’ location choices and the per-
formance of their ventures. Management Science,58(6), 1059–1071.
Daily, C. M., & Dollinger, M. J. (1992). An empirical examination of ownership structure in family and
professionally managed firms. Family Business Review,5(2), 117–136.
Danes, S. M., Lee, J., Amarapurkar, S., Stafford, K., Haynes, G., & Brewton, K. E. (2009).
Determinants of family business resilience after a natural disaster by gender of business owner.
Journal of Developmental Entrepreneurship,14(04), 333–354.
Daspit, J. J., Holt, D. T., Chrisman, J. J., & Long, R. G. (2016). Examining family firm succession from
a social exchange perspective: A multiphase, multistakeholder review. Family Business Review,29(1),
44–64.
Davidsson, P., Achtenhagen, L., & Naldi, L. (2010). Small firm growth. Foundations and Trends in
Entrepreneurship,6(2), 69–166.
Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs.
Journal of Business Venturing,18(3), 301–331.
Davidsson, P., & Wiklund, J. (2006). Conceptual and empirical challenges in the study of firm growth.
Entrepreneurship and the Growth of Firms,1(1), 39–61.
Dawson, J. F., & Richter, A. W. (2006). Probing three-way interactions in moderated multiple regression:
Development and application of a slope difference test. Journal of Applied Psychology,91(4), 917.
Bau
`et al. 21

Deephouse, D. L., & Jaskiewicz, P. (2013). Do family firms have better reputations than non-family
firms? An integration of socioemotional wealth and social identity theories. Journal of Management
Studies,50(3), 337–360.
De Figueiredo, R. J. P., Meyer-Doyle, P., & Rawley, E. (2013). Inherited agglomeration effects in hedge
fund spawns. Strategic Management Journal,34(7), 843–862.
Delmar, F. (1997). Measuring growth: Methodological considerations and empirical results.
In R. Donckels & A. Miettinen (Eds.), Entrepreneurship and SME research: On its way to the next
millennium (pp. 190–216). Aldershot & Brookfield, VA: Ashgate.
Delmar, F., Davidsson, P., & Gartner, W. B. (2003). Arriving at the high-growth firm. Journal of
Business Venturing,18(2), 189–216.
Dicken, P., & Malmberg, A. (2001). Firms in territories: A relational perspective. Economic Geography,
77(4), 345–363.
Duranton, G., & Puga, D. (2004). Micro-foundations of urban agglomeration economies. In J.
V. Henderson & J.-F. Thisse (Eds.), Handbook of regional and urban economics (Vol. 4,
pp. 2063–2117). Amsterdam: Elsevier.
Eddleston, K. A., Kellermanns, F. W., Floyd, S. W., Crittenden, V. L., & Crittenden, W. F. (2013).
Planning for growth: Life stage differences in family firms. Entrepreneurship Theory and Practice,
37(5), 1177–1202.
Eisenhardt, K. M., & Schoonhoven, C. B. (1990). Organizational growth: Linking founding team,
strategy, environment, and growth among US semiconductor ventures, 1978–1988. Administrative
Science Quarterly,35(3), 504–529.
Falk, I., & Kilpatrick, S. (2000). What is social capital? A study of interaction in a rural community.
Sociologia Ruralis,40(1), 87–110.
Felzensztein, C., Gimmon, E., & Carter, S. (2010). Geographical co-location, social networks and inter-
firm marketing co-operation: The case of the salmon industry. Long Range Planning,43(5–6), 675–690.
Finkelstein, S. (1992). Power in top management teams: Dimensions, measurement, and validation.
Academy of Management Journal,35(3), 505–538.
Fitzgerald, M. A., Haynes, G. W., Schrank, H. L., & Danes, S. M. (2010). Socially responsible processes
of small family business owners: Exploratory evidence from the national family business survey.
Journal of Small Business Management,48(4), 524–551.
Gabe, T. M., & Kraybill, D. S. (2002). The effect of state economic development incentives on employ-
ment growth of establishments. Journal of Regional Science,42(4), 703–730.
Ganotakis, P. (2012). Founders’ human capital and the performance of UK new technology based firms.
Small Business Economics,39(2), 495–515.
Gedajlovic, E., & Carney, M. (2010). Markets, hierarchies, and families: Toward a transaction cost
theory of the family firm. Entrepreneurship Theory and Practice,34(6), 1145–1172.
George, G. (2005). Slack resources and the performance of privately held firms. Academy of
Management Journal,48(4), 661–676.
Gilbert, B. A., McDougall, P. P., & Audretsch, D. B. (2006). New venture growth: A review and
extension. Journal of Management,32(6), 926–950.
Go
´mez-Mejia, L. R., Cruz, C., Berrone, P., De, & Castro, J. (2011). The bind that ties: Socioemotional
wealth preservation in family firms. The Academy of Management Annals,5, 653–707.
Go
´mez-Mejı
´a, L. R., Haynes, K. T., Nu´ n
˜ez-Nickel, M., Jacobson, K. J., & Moyano-Fuentes, J. (2007).
Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil
mills. Administrative Science Quarterly,52(1), 106–137.
Go
´mez-Mejia, L. R., Campbell, J. T., Martin, G., Hoskisson, R. E., Makri, M., & Sirmon, D. G. (2014).
Socioemotional wealth as a mixed gamble: Revisiting family firm R&D investments with the beha-
vioral agency model. Entrepreneurship Theory and Practice,38(6), 1351–1374.
Grabher, G. (1993). The weakness of strong ties: The lock-in of regional development in Ruhr area.
In G. Grabher (Ed.), The embedded firm: On the socioeconomics of industrial networks (pp. 255–277).
London: Routledge.
Granovetter, M. S. (1973). The strength of weak ties. American Journal of Sociology,78(6), 1360–1380.
22 Entrepreneurship Theory and Practice 00(0)

Grant, R. M. (1991). The resource-based theory of competitive advantage: Implications for strategy
formulation. California Management Review,33(3), 114–135.
Habbershon, T. G., & Williams, M. L. (1999). A resource-based framework for assessing the strategic
advantages of family firms. Family Business Review,12(1), 1–25.
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top
managers. Academy of Management Review,9(2), 193–206.
Hamelin, A. (2013). Influence of family ownership on small business growth. Evidence from French
SMEs. Small Business Economics,41(3), 563–579.
Hannan, M. T., & Freeman, J. (1977). The population ecology of organizations. American Journal of
Sociology,82(5), 929–964.
Haynes, G. W., Walker, R., Rowe, B. R., & Hong, G. S. (1999). The intermingling of business and
family finances in family-owned businesses. Family Business Review,12(3), 225–239.
Heck, R. K. Z., Owen, A. J., & Rowe, B. R. (1995). Home-based employment and family life. Westport,
CT: Auburn House.
Hess, M. (2004). ‘Spatial’ relationships? Towards a reconceptualization of embedded ness. Progress in
Human Geography,28(2), 165–186.
Hoover, E. M., & Vernon, R. (1959). Anatomy of a metropolis. Cambridge, MA: Harvard University
Press.
Hoskisson, R. E., Chirico, F., Zyung, J., & Gambeta, E. (2017). Managerial risk taking: A multitheore-
tical review and future research agenda. Journal of Management,43(1), 137–169.
Huggins, R., & Johnston, A. (2009). Knowledge networks in an uncompetitive region: SME innovation
and growth. Growth and Change,40(2), 227–259.
Huggins, R., & Thompson, P. (2014). A network-based view of regional growth. Journal of Economic
Geography,14(3), 511–545.
Huggins, R. (2010). Regional competitive intelligence: Benchmarking and policy-making. Regional
Studies,44(5), 639–658.
Iacus, S. M., King, G., & Porro, G. (2011). Causal inference without balance checking: Coarsened exact
matching. Political Analysis,20(1), 1–24.
Jacobs, J. (1969). The economy of cities. New York, NY: Random House.
Johannisson, B., Ramı
´rez-Pasillas, M., & Karlsson, G. (2002). The institutional embeddedness of local
inter-firm networks: A leverage for business creation. Entrepreneurship & Regional Development,
14(4), 297–315.
Keats, B. W., & Hitt, M. A. (1988). A causal model of linkages among environmental dimensions, macro
organizational characteristics, and performance. Academy of Management Journal,31(3), 570–598.
Kim, N., Im, S., & Slater, S. F. (2013). Impact of knowledge type and strategic orientation on new
product creativity and advantage in high-technology firms. Journal of Product Innovation
Management,30(1), 136–153.
Le, Breton-Miller, I., Miller, D., & Lester, R. H. (2011). Stewardship or agency? A social embeddedness
reconciliation of conduct and performance in public family businesses. Organization Science,22(3),
704–721.
Lester, R. H., & Cannella, A. A. (2006). Interorganizational familiness: How family firms use interlock-
ing directorates to build community-level social capital1. Entrepreneurship Theory and Practice,30(6),
755–775.
Long, R. G., & Mathews, K. M. (2011). Ethics in the family firm: Cohesion through reciprocity and
exchange. Business Ethics Quarterly,21(2), 287–308.
Martin, G. P., Gomez-Mejia, L. R., & Wiseman, R. M. (2013). Executive stock options as mixed
gambles: Revisiting the behavioral agency model. Academy of Management Journal,56(2), 451–472.
Maskell, P. (2001). The firm in economic geography. Economic Geography,77(4), 329–344.
McKelvie, A., & Wiklund, J. (2010). Advancing firm growth research: A focus on growth mode instead
of growth rate. Entrepreneurship Theory and Practice,34(2), 261–288.
Meccheri, N., & Pelloni, G. (2006). Rural entrepreneurs and institutional assistance: An empirical study
from mountainous Italy. Entrepreneurship and Regional Development,18(5), 371–392.
Bau
`et al. 23

Memili, E., Fang, H., Chrisman, J. J., De, & Massis, A. (2015). The impact of small-and medium-sized
family firms on economic growth. Small Business Economics,45(4), 771–785.
Miller, D., Breton-Miller, L., & Lester, R. H. (2011). Family and lone founder ownership and strategic
behaviour: Social context, identity, and institutional logics. Journal of Management Studies,48(1),
1–25.
Miller, N. J., Fitzgerald, M. A., Winter, M., & Paul, J. (1999). Exploring the overlap of family and
business demands: Household and family business managers’ adjustment strategies. Family Business
Review,12(3), 253–268.
Miller, D., & Le Breton-Miller, I. (2005). Management insights from great and struggling family busi-
nesses. Long Range Planning,38(6), 517–530.
Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella, A. A. (2007). Are family firms really superior
performers? Journal of Corporate Finance,13(5), 829–858.
Miller, D., Le Breton-Miller, I., & Scholnick, B. (2008). Stewardship vs. stagnation: An empirical
comparison of small family and non-family businesses. Journal of Management Studies,45(1), 51–78.
Miller, D., Lee, J., Chang, S., Le, & Breton-Miller, I. (2009). Filling the institutional void: The social
behavior and performance of family vs non-family technology firms in emerging markets. Journal of
International Business Studies,40(5), 802–817.
Miller, D., Minichilli, A., & Corbetta, G. (2013). Is family leadership always beneficial? Strategic
Management Journal,34(5), 553–571.
Miller, D., Steier, L., & Breton-Miller, L. (2016). What can scholars of entrepreneurship learn from
sound family businesses? Entrepreneurship Theory and Practice,40(3), 445–455.
Moretti, E. (2004). Human capital externalities in cities. In J. V. Henderson & J. F. Thisse (Eds.),
Handbook of regional and urban economics (Vol. 4, pp. 2243–2291). Amsterdam: Elsevier.
Nilsson, P. (2015). The influence of urban and natural amenities on second home prices. Journal of
Housing and the Built Environment,30(3), 427–450.
Nonaka, I.(2008). The knowledge-creating companyHarvard Business Review Press,69, 96–104.
Norton, R. D. (1992). Agglomeration and competitiveness: From Marshall to Chinitz. Urban Studies,
29(2), 155–170.
O’Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality &
Quantity,41, 673–690.
Peake, W. O., Cooper, D., Fitzgerald, M. A., & Muske, G. (2017). Family business participation in
community social responsibility: The moderating effect of gender. Journal of Business Ethics,142(2),
1–19.
Pearson, A. W., & Marler, L. E. (2010). A leadership perspective of reciprocal stewardship in family
firms. Entrepreneurship Theory and Practice,34(6), 1117–1124.
Peng, M. W., Lee, S. H., & Wang, D. Y. (2005). What determines the scope of the firm over time? A
focus on institutional relatedness. Academy of Management Review,30(3), 622–633.
Pennings, J. M., Lee, K., & Witteloostuijn, A. V. (1998). Human capital, social capital, and firm
dissolution. Academy of Management Journal,41(4), 425–440.
Pittino, D., Visintin, F., Lenger, T., & Sternad, D. (2016). Are high performance work practices really
necessary in family SMEs? An analysis of the impact on employee retention. Journal of Family
Business Strategy,7(2), 75–89.
Raspe, O., & Oort, F. V. (2008). Firm growth and localized knowledge externalities. The Journal of
Regional Analysis & Policy,38(2), 100–116.
Sciascia, S., Mazzola, P., & Chirico, F. (2013). Generational involvement in the top management team of
family firms: Exploring nonlinear effects on entrepreneurial orientation. Entrepreneurship Theory and
Practice,37(1), 69–85.
Shepherd, D., & Wiklund, J. (2009). Are we comparing apples with apples or apples with oranges?
Appropriateness of knowledge accumulation across growth studies. Entrepreneurship Theory and
Practice,33(1), 105–123.
Sirmon, D. G., & Hitt, M. A. (2003). Managing resources: Linking unique resources, management, and
wealth creation in family firms. Entrepreneurship Theory and Practice,27(4), 339–358.
24 Entrepreneurship Theory and Practice 00(0)

Smith, C. W., & Warner, J. B. (1979). On financial contracting: An analysis of bond covenants. Journal
of Financial Economics,7, 117–161.
Spender, J. C. (1993, August). Competitive advantage from tacit knowledge? Unpacking the concept and
its strategic implications. Academy of Management Proceedings (Vol. 1993, No. 1, pp. 37–41).
Briarcliff Manor, NY: Academy of Management.
Steier, L. (2001). Next-generation entrepreneurs and succession: An exploratory study of modes and
means of managing social capital. Family Business Review,14(3), 259–276.
Stough, R., Welter, F., Block, J., Wennberg, K., & Basco, R. (2015). Family business and regional
science: ‘‘Bridging the gap. Journal of Family Business Strategy,6(4), 208–218.
Summers, G. F. (1986). Rural community development. Annual Review of Sociology,12(1), 347–371.
Terza, J. V., Basu, A., & Rathouz, P. J. (2008). Two-stage residual inclusion estimation: Addressing
endogeneity in health econometric modeling. Journal of Health Economics,27(3), 531–543.
Thompson, W. R. (1965). A preface to urban economics. Baltimore, MD: Johns Hopkins University
Press.
Tunberg, M. (2014). Approaching rural firm growth: A literature review. Journal of Enterprising
Communities: People and Places in the Global Economy,8(4), 261–286.
Uzzi, B. (1999). Embeddedness in the making of financial capital: How social relations and networks
benefit firms seeking financing. American Sociological Review,64(4), 481–505.
Wagner, D., Block, J. H., Miller, D., Schwens, C., & Xi, G. (2015). A meta-analysis of the
financial performance of family firms: Another attempt. Journal of Family Business Strategy,6(1),
3–13.
Wales, W. J., Parida, V., & Patel, P. C. (2013). Too much of a good thing? Absorptive capacity, firm
performance, and the moderating role of entrepreneurial orientation. Strategic Management Journal,
34(5), 622–633.
Watts, H. D., Wood, A. M., & Wardle, P. (2006). Owner-managers, clusters and local embeddedness:
Small firms in the Sheffield (UK) metal-working cluster. Entrepreneurship and Regional Development,
18(3), 185–205.
Welter, F. (2011). Contextualizing entrepreneurship—conceptual challenges and ways forward.
Entrepreneurship Theory and Practice,35(1), 165–184.
Wennberg, K., & Lindqvist, G. (2010). The effect of clusters on the survival and performance of new
firms. Small Business Economics,34(3), 221–241.
Wennberg, K., Wiklund, J., Hellerstedt, K., & Nordqvist, M. (2011). Implications of intra-family and
external ownership transfer of family firms: Short-term and long-term performance differences.
Strategic Entrepreneurship Journal,5(4), 352–372.
Westlund, H., Larsson, J. P., & Olsson, A. R. (2014). Start-ups and local entrepreneurial social capital in
the municipalities of Sweden. Regional Studies,48(6), 974–994.
Wiklund, J. (1998). Small firm growth and performance: Entrepreneurship and beyond (Doctoral disserta-
tion). Jo
¨nko
¨ping International Business School, Jo
¨nko
¨ping.
Wiklund, J., Davidsson, P., & Delmar, F. (2003). What do they think and feel about growth? An
expectancy-value approach to small business managers’ attitudes toward growth. Entrepreneurship
Theory and Practice,27(3), 247–270.
Wiklund, J., Nordqvist, M., Hellerstedt, K., & Bird, M. (2013). Internal versus external ownership
transition in family firms: An embeddedness perspective. Entrepreneurship Theory and Practice,
37(6), 1319–1340.
Wiklund, J., Patzelt, H., & Shepherd, D. A. (2009). Building an integrative model of small business
growth. Small Business Economics,32(4), 351–374.
Wooldridge, J. (2012). Introductory econometrics: A modern approach. Mason, OH: Cengage Learning.
Zahra, S. A. (2005). Entrepreneurial risk taking in family firms. Family business review,18(1), 23–40.
Zahra, S. A., Hayton, J. C., & Salvato, C. (2004). Entrepreneurship in family vs. non-family firms: A
resource-based analysis of the effect of organizational culture. Entrepreneurship Theory and Practice,
28(4), 363–381.
Bau
`et al. 25

Zahra, S. A. (2010). Harvesting family firms’ organizational social capital: A relational perspective.
Journal of Management Studies,47(2), 345–366.
Zellweger, T. M., Nason, R. S., Nordqvist, M., & Brush, C. G. (2013). Why do family firms strive for
nonfinancial goals? An organizational identity perspective. Entrepreneurship Theory and Practice,
37(2), 229–248.
Author Biographies
Massimo Bau
`is Assistant Professor at Jonkoping International Business School, Centre for
Family Enterprise and Ownership–CeFEO, Sweden.
Francesco Chirico is Professor at Jonkoping International Business School and Co-Director of
the Centre for Family Enterprise and Ownership–CeFEO, Sweden. He is also a Star Professor
at Tecnologico de Monterrey, EGADE Business School, Mexico.
Daniel Pittino is Associate Professor at Jonkoping International Business School, Centre for
Family Enterprise and Ownership–CeFEO, Sweden.
Mikaela Backman is an assistant professor in Economics at Jo
¨nko
¨ping International Business
School and affiliated to Centre for Entrepreneurship and Spatial Economics.
Johan Klaesson is Professor of Economics and director of the Center for Entrepreneurship
and Spatial Economics, Jo
¨nko
¨ping International Business School, Jo
¨nko
¨ping University and
affiliated researcher at The Research Institute of Industrial Economics, Stockholm, Sweden.
26 Entrepreneurship Theory and Practice 00(0)