| Abstract: |
Family firms are often considered characteristically different from non-family
firms, and the economic implications of these differences have generated
significant academic debate. However, our understanding of family firms
suffers from an inability to identify them in total population data, as this
requires information on owners, their kinship and involvement in firm
governance, which is rarely available. We present a method for identifying
domiciled family firms using register data that offers greater accuracy than
previous methods. We then apply it to data from Statistics Sweden concerning
firm ownership, governance and kinship over the years 2004-2010. Next, we use
Swedish data to estimate these firms’ economic contribution to total
employment and gross domestic product (GDP) and compare them to private
domiciled non-family firms in terms of their characteristics and economic
performance. We find that the family firm is the prevalent organizational
form, contributing to over one-third of all employment and GDP. Family firms
are common across industries and sizes, ranging from the smallest producers to
the largest multinational firms. However, their characteristics differ across
sizes and legal forms, thereby indicating that the seemingly contradictory
findings among previous studies on family firms may be due to unobserved
heterogeneity. We furthermore find that they are smaller than private
non-family firms in employment and sales and carry higher solidity, although
they are more profitable. These differences diminish with firm size, however.
We conclude that the term ‘family firm’ contains great diversity and call for
increased attention to their heterogeneity. |