Impact of informal institutions on the prevalence, strategy, and performance of family firms: A meta-analysis
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Impact of informal institutions on the prevalence, strategy, and performance of family firms: A meta-analysis Pascual Berrone1, Patricio Duran2, Luis Go´mez-Mejı´a3,4, Pursey P M A R Heugens5, Tatiana Kostova6 and Marc van Essen6 1
IESE Business School, Universidad of Navarra, Camino del Cerro del Aguila 3, Madrid, Spain; 2 Chaifetz School of Business, Boeing Institute of International Business, Saint Louis University, 3674 Lindell Boulevard, St. Louis, MO, USA; 3 WP Carey School, WP College of Business, Arizona State University, Tempe, AZ, USA; 4 Universidad Carlos III de Madrid, Getafe, Spain; 5 Rotterdam School of Management, Erasmus University, PO Box 1739, Rotterdam, The Netherlands; 6 Sonoco International Business Department, Darla Moore School of Business, University of South Carolina, 1014 Green Street, Columbia, SC, USA Correspondence: P Duran, Chaifetz School of Business, Boeing Institute of International Business, Saint Louis University, 3674 Lindell Boulevard, St. Louis, MO, USA e-mail: [email protected]
Electronic supplementary material The online version of this article (https://doi.org/10.1057/s41267-020-003626) contains supplementary material, which is available to authorized users. Received: 29 August 2018 Revised: 21 July 2020 Accepted: 7 August 2020
Abstract Family-controlled firms (FCFs)’ prevalence, strategies, and performance differ across countries. We explain these differences through the lens of informal institutions, suggesting that different countries have different levels of appreciation for family business. To capture this effect, we introduce the construct of family business legitimacy (FBL) and an associated index (FBLI). We empirically measure FBLI scores for 83 countries spanning both developed and emerging economies. By combining meta-analytic and archival data, we show that FCFs prevail, follow unique strategies, and outperform non-FCFs in countries with high FBLI scores. As a new contingency variable, FBL advances the literature on the informal institutional embeddedness of organizations and family business. Journal of International Business Studies (2020). https://doi.org/10.1057/s41267-020-00362-6 Keywords: family-controlled firms; family firm prevalence; firm performance; informal institutions; meta-analysis; strategic decisions
INTRODUCTION In the last two decades, strategy and international business scholars have been increasingly interested in studying family-controlled firms (FCFs). FCFs are enterprises that are ‘‘governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families’’ (Chua, Chrisman, & Sharma, 1999: 25). The most important findings in this prior research are: the FCF is the most common organizational form in the majority of national contexts (Burkart, Panunzi, & Shleifer, 2003); FCFs follow distinct strategies that differentiate them from non
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