Stability of family firms during economic downturn and recovery

Author:

Machek Ondřej,Hnilica Jiří,Lukeš Martin

Abstract

Family firms are often associated with the notion of greater stability. The goal of this article is to explore the differences in privately held family and nonfamily firms in various types of stability, including stability in the number of employees, revenue, earnings and assets. Using multiple linear regression analysis in a sample of 384 family and 1 795 nonfamily firms from the Czech Republic, we found that family firms tend to be more stable in terms of revenue and number of employees, but only during times of crisis. However, their greater employment stability results in worse labour productivity and their earnings become more volatile. During the post-crisis period, there are no significant differences in stability between family and nonfamily firms. Moreover, family firms have been found to grow less during both the economic downturn and the recovery. We suggest that the feature of stability that is so often attributed to family firms by popular, but also academic papers, should be used with caution.

Publisher

Nomos Verlag

Subject

Strategy and Management,Industrial relations,Business and International Management

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