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The growth and performance of family businesses during the global financial crisis: The role of the generation in control

Rubén Arrondo-García, Carlos Fernández-Méndez and Susana Menéndez-Requejo

Journal of Family Business Strategy, 2016, vol. 7, issue 4, 227-237

Abstract: This article analyses whether the Global Financial Crisis (GFC) has differentially affected the growth, risk taking and performance of family businesses depending on the generation in control. Adopting a socioemotional wealth approach, we expect that stronger emotional attachment to the firm in first-generation family businesses leads these businesses to commit more resources and take greater risks than multi-generational family businesses during crisis periods. Nevertheless, their special interest in non-financial goals leads us to predict that first-generation family businesses will perform worse during crises. Evidence from a data sample of private, unlisted and large Spanish firms (6,315) throughout Spain’s particularly deep crisis over the 2006–2011 period shows that first-generation family firms grew more and increased their debt ratios significantly more than multi-generational family firms during the global financial crisis. However, based on return on equity, and consistent with our conjecture, first-generation family businesses performed worse than multi-generational family businesses during this period.

Keywords: Family business; Socioemotional wealth; Growth; Family firm generation; Global financial crisis; Performance (search for similar items in EconPapers)
Date: 2016
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