Management summary: Research study „Stability of family firms during economic downturn and recovery“
Family firms are often associated with the notion of greater stability. The goal of this study was to explore the differences in family and nonfamily firms in various types of stability, including stability in the number of employees, revenue, earnings and assets. The results, which are based on the Amadeus database, suggest that family firms tend to be more stable in terms of revenue and number of employees, but only during times of crisis. It also seems that their greater employment stability results in worse labor productivity and their earnings become more volatile. During the post-crisis period, there are no significant differences in stability between family and nonfamily firms.
The results suggest that the feature of stability that is so often attributed to family firms should be used with caution, since they only proved to be more stable during times of recession. On the other hand, it turns out that family firms may serve as catalysts of employment during bad economic times. Family firms may emphasize the greater job security during recruitment campaigns. Investors should, however, consider the risk that investing in a family business does not necessarily lead to a more stable profitability.
Citation: Machek, O., Hnilica, J., & Lukeš, M. (2019). Stability of family firms during economic downturn and recovery. Journal of East European Management Studies, 24(4), 566-388.