Married to the firm? A large scale investigation of the social context of ownership

Belenzon, Sharon, Patacconi, Andrea and Zarutskie, Rebecca (2016) Married to the firm? A large scale investigation of the social context of ownership. Strategic Management Journal, 37 (13). 2611–2638. ISSN 1097-0266

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Abstract

Research summary: Using a large sample of private firms across Europe, we examine how the social context of owners affects firm strategy and performance. Drawing on embeddedness theory and the institutional logics perspective, we argue that embeddedness in a family, in particular the nuclear family, can strengthen identification and commitment to the firm, but can also induce owners to behave more conservatively. Consistent with this argument, we find that family-owned firms have higher profit margins, returns on assets, and survival rates compared to single-owner or unrelated-owners' firms, but also invest and grow more slowly, hold greater reserves of cash, and rely less on external debt. These differences are most pronounced when the two largest shareholders are married. Our results highlight the key role of marital ties in explaining differences in behavior and performance among firms. Managerial summary: Despite the prevalence of the married-couple ownership structure in firms, little research has been dedicated to understanding how these firms are managed and perform. We examine the behavior and performance of firms owned by married couples in a large panel of closely held Western European firms. We find that married-owner family firms are managed more conservatively relative to firms with unrelated owners and even to other family-owned firms. In particular, married-owner family firms invest and grow more slowly and rely less on external finance. However, they also exhibit greater performance stability and higher profitability. Our findings suggest that social relationships among owners have a large impact on firm strategy and performance, and highlight some potential trade-offs to performance when married couples control firms. Copyright © 2015 John Wiley & Sons, Ltd.

Item Type:	Article
Uncontrolled Keywords:	social context,institutional logics,family ownership,marital ties,conservatism
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Responsible Business Regulation Group Faculty of Social Sciences > Research Groups > Strategy and Entrepreneurship
Depositing User:	Pure Connector
Date Deposited:	22 Mar 2016 09:14
Last Modified:	22 Oct 2022 00:24
URI:	https://ueaeprints.uea.ac.uk/id/eprint/57671
DOI:	10.1002/smj.2441

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