Financial culture in family firms

Antonio Duréndez Gómez-Guillamón, Teresa Mariño Garrido

Abstract


Previous studies have shown that family businesses are different from non-family firms, since family firms have particular characteristics due to the relationship between the family and the business, that give place to a unique culture. In that sense, the identification of a peculiar financial structure and financial preferences in the case of family businesses leads us to research on the existence of a different financial culture. With this aim, we have conducted a cross-sectional analysis using a survey with a representative sample of 837 companies. The results confirm that the character of the company is a distinguishing factor of financial culture. We have found that family firms present a lesser degree of financial culture than non-family firms. Furthermore, family firms rely to a lesser extent than non-family firms in the decisions of their financial managers, personnel is less skilled regarding alternative financial sources and the importance they concede to financial management training is also lower.

Keywords


family firms; financial culture; financial skills; financing

References


Amat, O. (2002). El reto de la profesionalización en la empresa familiar. Comunicación presentada X Congreso de AECA, septiembre 26-29, Setúbal-Portugal.

Anderson, R.C. & Reeb, D.M. (2003). Founding-family ownership and firm performance: evidence from the S&P 500. Journal of Finance, 58 (pp.1301-1328), http://dx.doi.org/10.1111/1540-6261.00567

Barton, S.L. & Matthews, C.H. (1989). Small firm financing: implications from a strategic management perspective. Journal of Small Business Management 27(1), (pp. 1-7).

Bhattacharya, U. & Ravikumar, B. (2001). Capital markets and the evolution of family businesses. Journal of Business 74, (pp.187-219), http://dx.doi.org/10.1086/209670

Cañadas Osinski, I. y Sánchez Bruno, A. (1998). Categorías de respuesta en escalas tipo Likert. Psicothema 10(3), (pp. 623-631).

Carney, M. & Gedajlovic, E. (2002). The coupling of ownership and control and the allocation of financial resources: evidence from Hong Kong. Journal of Management Studies, 39(1), (pp. 123-146), http://dx.doi.org/10.1111/1467-6486.00285

Chua, J.H., Chrisman, J.J. & Steier, L.P. (2003). Extending the theoretical horizons of family business research. Entrepreneurship: Theory & Practice 27(4), (pp. 331-338), http://dx.doi.org/10.1111/1540-8520.00012

Cromie, S., Stephenson, B. & Montieth, D. (1995). The management of family firms: an empirical investigation. International Small Business Journal 13, (pp. 11-34), http://dx.doi.org/10.1177/0266242695134001

Cromie, S., Dunn, B., Sproull, A. & Chalmers, D. (2001). Small firms with a family focus in the Scottish Highlands and Islands. The Irish Journal of Management 22(2) (pp. 45-66).

Daily, C.M. & Dollinger, M.J. (1991). Family firms are different. Review of Business 13, (pp. 3-5).

Daily, C.M. & Dollinger, M.J. (1992). An empirical examination of ownership structure in family and professionally managed firms. Family Business Review 5(2), (pp. 117-137), http://dx.doi.org/10.1111/j.1741-6248.1992.00117.x

Discua Cruz, Hamilton E. & Jack, S.L. (2012). Understanding entrepreneurial cultures in family businesses: A study of family entrepreneurial teams in Honduras. Journal of Family Business Strategy 3, (pp. 147–161), http://dx.doi.org/10.1016/j.jfbs.2012.05.002

Dorta, J.A. y Pérez, J. (2001). Análisis financiero de la empresa familiar. Actualidad Financiera 9, (pp. 3-16).

Fama, E.F. (1980). Agency problems and the theory of the firm. Journal of Political Economy 88, (pp. 288-307), http://dx.doi.org/10.1086/260866

Fletcher, D. Melin, L. & Gimeno, A. (2012). Culture and values in family business—A review and suggestions for future research. Journal of Family Business Strategy 3, (pp. 127–131), http://dx.doi.org/10.1016/j.jfbs.2012.06.001

Gallo, M. & Vilaseca, A. (1996). Finance in family business. Family Business Review, 9(4), pp. (pp. 287–305), http://dx.doi.org/10.1111/j.1741-6248.1996.00387.x

Gallo, M.A., Tápies, J. y Cappuyns, K. (2000). Comparación entre empresas familiares y no familiares: lógicas financieras y preferencias personales. Documento de Investigación 406. Barcelona, España: IESE, Universidad de Navarra.

Gersick, K.E., Davis, J.A., Hampton, M. & Lansberg, I. (1997). Gene-ration to generation: life cycles of the family business. Boston, EUA: Harvard Business School Press.

Giuli, A., Caselli, S. & Gatti, S. (2011). Are small family firms financially sophisticated? Journal of Banking & Finance 35(11), (pp. 2931-2944), http://dx.doi.org/10.1016/j.jbankfin.2011.03.021

Goffee, R. (1996). Understanding family businesses: issues for further research. International Journal of Entrepreneurial Behaviour & Research 2(1) (pp. 36-48), http://dx.doi.org/10.1108/13552559610110709

Gupta, V. & Levenburg, N. (2010). A thematic analysis of cultural variations in family businesses: the CASE Project. Family Business Review 23(2), (pp. 155–69), http://dx.doi.org/10.1177/0894486510366255

Habbershon, T.G., Williams, M. & MacMillan, I.C. (2003). A unified systems perspective of family firm performance. Journal of Business Venturing 18, (pp. 451-465), http://dx.doi.org/10.1016/S0883-9026(03)00053-3

Hamilton, R.T. & Fox, M.A. (1998). The financing preferences of small firm owners. International Journal of Entrepreneurial Behaviour & Research 4(3), (pp. 239-248), http://dx.doi.org/10.1108/13552559810235529

Hoy, F. & Verser, T.G. (1994). Emerging business, emerging field: entrepreneurship and the family firm. Entrepreneurship Theory & Practice 19(1) (pp. 9-23).

Jorissen, A., Laveren, E., Martens, R. & Reheul, A. (2001). Differences between family and non-family firms. Antwerp, Belgium: University of Antwerp, Faculty of Applied Economics.

López-Gracia, J. & Sánchez-Andújar, S. (2007). Financial Structure of the Family Business: Evidence From a Group of Small Spanish Firms. Family Business Review 20, (pp. 269-287), http://dx.doi.org/10.1111/j.1741-6248.2007.00094.x

Lubatkin, M.H., Schulze, W.S., Ling, Y. & Dino, R.N. (2005). The effects of parental altruism on the governance of family-managed firms. Journal of Organizational Behavior 26, (pp. 313-330), http://dx.doi.org/10.1002/job.307

Matlay, H. (2002). Training and HRD strategies in family and non-family owned small businesses: a comparative approach. Education and Training 44(8/9), (pp. 357-369), http://dx.doi.org/10.1108/00400910210449196

McConaughy, D.L., Matthews, C. H. & Fialko, A.S. (2001). Founding family controlled firms: performance, risk, and value. Journal of Small Business Management 39(1), (pp. 31-49), http://dx.doi.org/10.1111/0447-2778.00004

McMahon, R.G.P. & Davies, L.G. (1994). Financial reporting and analysis practices in small enterprises: their association with growth rate and financial performance. Journal of Small Business Management 32(1), (pp. 9-17).

Mishra, C.S. & McConaughy, D.L. (1999). Founding family control and capital structure: the risk of loss of control and the aversion to debt. Entrepreneurship: Theory & Practice 23(4), (pp. 53-64).

Monreal, J., Calvo-Fllores, A., García, D., Meroño, A., Ortiz, P. y Sabater, R. (2002). La empresa familiar: realidad económica y cultura empresarial. Madrid, España: Civitas

Myers, S. & Majluf N.S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13 (pp. 187-221), http://dx.doi.org/10.1016/0304-405X(84)90023-0

Peteraf, M.A. (1993). The cornestone of competitive advantage. A source-based view. Strategic Management Journal 14, (pp. 179-191), http://dx.doi.org/10.1002/smj.4250140303

Randøy, T. & S. Goel, (2003). Ownership structure, founder leadership and performance in Norwegian SME's: implications for financing entrepreneurial opportunities. Journal of Business Venturing 18, (pp. 619-637), http://dx.doi.org/10.1016/S0883-9026(03)00013-2

Reid, R., Morrow, T., Kelly, B., Adams, J. & McCartan, P. (2000). Human resource management practices in SMEs: a comparative analysis of family and non-family businesses. Journal of the Irish Academy of Management 21(2), (pp. 157-181).

Romano, C.A., Tanewski, G.A. & Smyrnios, K.X. (2000). Capital structure decision making: a model for family business. Journal of Business Venturing 16, (pp. 285-310), http://dx.doi.org/10.1016/S0883-9026(99)00053-1

Schulze, W.S., Lubatkin, M.H. & Dino, R.N. (2003). Toward a theory of Agency and altruism in family firms. Journal of Business Venturing, 18 (pp. 473-490), http://dx.doi.org/10.1016/S0883-9026(03)00054-5

Sharma, P., Chrisman, J. & Chua, J. (1997). Strategic management of the family business: past research and future challenges. Family Business Review 10(1), (pp. 1-35), http://dx.doi.org/10.1111/j.1741-6248.1997.00001.x

Stoy, H. (1992). Managing the family business in the UK: a Stoy Hayward survey in conjunction with the London Business School. London, UK: Stoy Hayward, PMid:1430085

Trostel, A.O. & Nichols, M.L. (1982). Privately-held and publicly-held companies: A comparison of strategic choices and management processes. Academy of Management Journal 25, (pp. 47-62), http://dx.doi.org/10.2307/256023

Upton, N. & Petty, W. (2000). Venture Capital Investment and US Family Business. Venture Capital 2(1), (pp. 27-39), http://dx.doi.org/10.1080/136910600295792

Vallejo, M.C. (2011). A model to study the organizational culture of the family firm. Small Business Economics 36, (pp.47–64), http://dx.doi.org/10.1007/s11187-009-9175-9

Westhead, P. & Cowling, M. (1998). Family firm research: the need for a methodological rethink. Entrepreneurship: Theory and Practice 23(1), (pp. 31-57).

Winter, M., Danes, S.M., Koh, S., Fredericks, K. & Paul, J.J. (2004). Tracking family businesses and their owners over time: panel attrition, manager departure and business demise. Journal of Business Venturing 19, (pp. 535-559), http://dx.doi.org/10.1016/S0883-9026(03)00061-2

Wu, Z., Chua, J. & Chrisman, J. (2007). Effects of family ownership and management on small business equity financing. Journal of Business Venturing, 22, (pp. 875–895), http://dx.doi.org/10.1016/j.jbusvent.2006.07.002

Zellweger, T., Kellermanns, F.W., Eddleston, K. H., & Memili, E. (2012). Building a Family Firm Image: How Family Firms capitalize on their Family Ties. Journal of Family Business Strategy 3, (pp. 239-250), http://dx.doi.org/10.1016/j.jfbs.2012.10.001


Refbacks

  • There are currently no refbacks.


e-ISSN: 2255-078X

FIR. Faedpyme International Review is an e-journal edited by FAEDPYME (La Fundación para el análisis estratégico y desarrollo de la Pequeña y Mediana Empresa)

Licencia de Creative CommonsThis work is licensed – unless indicated otherwise – under a "Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License". The full text of the licence can be consulted here http://creativecommons.org/licenses/by-nc-sa/4.0/.