Productivity, innovation and wage policies in family firms: Empirical evidence from Belgium and the Netherlands
Empirical evidence regarding the relationship between ownership structure and productivity is contradictory. In the first part of this doctoral dissertation, we revisit this question by focusing on the heterogeneous effect of family ownership, considering social-emotional wealth (SEW) as an important factor in determining the risk behavior of family firms. The least productive family firms at lower quantiles (most productive family firms at higher quantiles) show higher (lower) average labor productivity compared to non-family firms. Family firms tend to be more resilient in times of economic crisis due to their conservative financing, their solid financial buffers, their long-term focus, and the trust of their (loyal) employees. Family firms do not earn as much money as firms with a more dispersed ownership structure when the economy is doing well. However, when the economy takes a turn for the worse, family firms outperform non-family firms. Family firms seem to have found a way of reconciling tradition and modernity and can fall back on a strong governance model in complex and changing environments, making them a stabilizing factor in the economy.
The second part of this doctoral research discusses the role of wage policies in family and non-family firms. We confirm that, on average, family firms pay their workers 15 percent less when controlling for (un)observable worker and firm characteristics. The bargaining power of unions is found to be lower in family firms.
The third part of this dissertation studies the role of innovation because we know that innovation is an important determinant of productivity. On average, family firms introduce fewer new or significantly improved products and/or services than non-family firms. We find no evidence for the moderating role of financial constraints. It is essential for researchers and policy makers to stop viewing family firms as a form of organization that does not innovate. More in-depth analyses show the importance of taking into account the multidimensional aspect of socioemotional wealth.
This doctoral study contributes to the emerging family business literature stream by examining, on the one hand, whether a family firm is an effective business structure for delivering higher productivity than non-family firms and, on the other hand, what characteristics may explain productivity differences between family and non-family firms.
Creemers, S. (2017). Productivity, innovation and wage policies in family firms: Empirical evidence from Belgium and the Netherlands. Dissertation, Hasselt University, handle:1942/25000.
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