Small Business Economics

, Volume 40, Issue 4, pp 953–976 | Cite as

Firm ownership and productivity: a study of family and non-family SMEs

Article

Abstract

Motivated by a lack of consensus in the current literature, the objective of this paper is to reveal whether family firms are more or less productive than non-family firms. As a first step, this paper links family business research to the theoretical notion that family involvement has an effect on the factors of production from a productivity standpoint. Second, by using a Cobb–Douglas framework, we provide empirical evidence that family labour and capital indeed yield diverse output contributions compared with their non-family counterparts. In particular, family labour output contributions are significantly higher, and family capital output contributions significantly lower. Interestingly, differences in total factor productivity between family and non-family firms disappear when we allow for heterogeneous output contributions of family production inputs. These findings imply that the assumption of homogeneous labour and capital between family and non-family firms is inappropriate when estimating the production function.

Keywords

Heterogeneous input elasticity Family firm Cobb–Douglas production function Total factor productivity 

JEL Classifications

D22 D24 J24 M11 L26 

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Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  1. 1.Department of Economics, School of Business, Technology and Sustainable DevelopmentBond UniversityGold CoastAustralia
  2. 2.Australian Centre for Family Business, School of Business, Technology and Sustainable DevelopmentBond UniversityGold CoastAustralia

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