Special Issue – “Family Business and Regional Development”

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Journal of Family Business Strategy – Volume 6, Issue 4

 

Editorial

Abstract. The purpose of this special issue is to stimulate research on the interaction between the fields of family business and regional science. Despite their overlapping themes and the high relevance of family firms for many regions, the two academic fields have emerged independently from each other, and little exchange exists. We discuss not only the role family firms play within the region in order to enhance our understanding of the ways family firms may (or may not) contribute to regional economic development but also the effect of socio-spatial and institutional context on firm behavior and performance. The set of empirical and theoretical articles included in this special issue represents an important early step bridging insights between the two fields.

 

Articles

Abstract. This article investigates the effect of corruption on the export share of family firms in Eastern European countries. Using the Business Environment and Enterprise Performance Survey and panel data methods, we find that, in contrast to non-family firms, family firms are rather sensitive to corruption. In particular, the export share of family firms is positively associated with informal payments that aim to facilitate business operations. There are at least three compelling explanations for these results. First, if family firms are more risk averse than non-family firms, informal payments may represent additional export risk insurance. Second, informal payments may help family firms compensate for the lack of managerial capabilities to export. Finally, when institutional inefficiencies obstruct business, corruption may be a tool for family firms to protect their socioemotional wealth.

Abstract. Family firms and industrial districts represent the pillars of the Italian manufacturing industry. Yet, the interplay between corporate ownership and the districtual organization of the industry has been basically overlooked. This paper reports preliminary evidence on the joint contribution of family firms and industrial districts to the competitive performance of Italian manufacturing firms. Descriptive and econometric analysis shows a positive effect of family ownership on firm profitability, as measured by the industry-adjusted Return on Sale (ROS), whereas the advantage of being located in an industrial district is less evident. Empirical evidence shows that the comparative advantages of family ownership change along the firm size distribution and according to the nature and relevance of the external (districtual) economies. Specifically, the performance impact of the interaction between the “district effect” and the “family effect” changes significantly across firm size classes: while these two effects operate as a substitute in smaller sized classes, they are complements in medium-sized firms. In particular, medium-sized firms (100–250 employees) are the best at leveraging the benefits of districtual organization, but only in the case of family ownership.

Abstract. This paper studies the effects of family governance and ownership on firm employment growth, extending existing knowledge by including in the analysis the regional context in which firms are located. We create a regional taxonomy to capture the urban–rural dimension and combine this with the corporate governance structure of the firm. Our results show that, being a family firm per se does not influence employment growth. However, when corporate governance structure and regional context are combined, the urban–rural context influences family firm and nonfamily firm employment growth differently, with family firms exhibiting greater employment growth, compared with nonfamily firms, in rural areas.

Abstract. A key issue for regional development studies is to determine the exogenous and endogenous factors and the processes that occur within the territory and favor sustainable regional growth and development. Despite theoretical and empirical advances in understanding the mechanisms behind regional development, one dimension has been neglected: family business. To address this gap, I aim to link the family business and regional development literatures by developing a theoretical model that attempts to serve as a framework for interpreting the potential role that family firms play in regional development. The model is based on the concept of regional familiness, suggesting that the embeddedness of family businesses in regional productive structures affects regional factors, regional processes, and regional proximity dimensions and thus alters external economies of agglomeration and regional externalities. Theoretical and practical implications are discussed.

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