The cultural origins of family firms

Jian Xie and Song Yuan

Journal of Comparative Economics, 2025, vol. 53, issue 1, 1-24

Abstract: What determines the prevalence of family firms? In this project, we investigate the role of historical family culture in the spatial distribution of family firms. Using detailed firm-level data from China, we find that there is a larger share of family firms in regions with a stronger historical family culture, as measured by genealogy density. The results are further confirmed by an instrumental variables approach and a matching approach. Examining mechanisms, we find that entrepreneurs in regions with a stronger historical family culture: (i) tend to have family members engage more in firms; (ii) are more likely to raise initial capital from family members; (iii) are more willing to pass on the firms to their children. Historical family culture predicts better firm performance partly due to a lower leverage ratio.

Keywords: Capital; China; Cultural origins; Entrepreneurship; Family culture; Family firms; Firm ownership; Firm performance; Genealogy; Kinship networks (search for similar items in EconPapers)
JEL-codes: D02 D2 G3 L2 M1 Z1 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:53:y:2025:i:1:p:1-24

DOI: 10.1016/j.jce.2024.12.003

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