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Founding family leadership and industry profitability

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Abstract

In this article, we argue that firms in high-margin industries can benefit from founding family influence. Specifically, in more profitable markets, the influence of the founding family provides an additional corporate governance-monitoring function. The sample consists of 294 firm-year observations from 98 publicly traded companies headquartered in Sweden, representing approximately half of all non-financial traded firms. Our support that the effect of family leadership in publicly held firms should be assessed in relation to the intensity of industry competition.

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Notes

  1. This dimension often only becomes of interest during crisis or conflict (e.g., the Hewlett and Packard families involvement in the HP-Compaq merger [see, Carlock and Florent-Treacy 2003]).

  2. A potential weakness of family business research is the lack of distinction between family ownership and blockholder ownership. There is naturally a level of overlap between the two—as any block of family ownership also is a blockholder. However, most blockholders are not family owners in this study—as shown by the fact that the correlation between the two concepts is 0.417. This also implies that the two concepts of ownership are sufficiently independent that they can be put in the same regression model.

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Authors and Affiliations

  1. Agder University College, School of Management, Serviceboks 422, Bygg H, Kristiansand, N-4604, Norway

    Trond Randøy

  2. Oregon State University, Corvallis, Oregon, USA

    Clay Dibrell

  3. School of Business, Bond University, Brisbane, QLD, Australia

    Justin B. Craig

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  1. Trond Randøy
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  2. Clay Dibrell
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  3. Justin B. Craig
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Correspondence to Trond Randøy.

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Randøy, T., Dibrell, C. & Craig, J.B. Founding family leadership and industry profitability. Small Bus Econ 32, 397–407 (2009). https://doi.org/10.1007/s11187-008-9099-9

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