What is special about family firms?
Family-owned firms are the oldest and most prevalent type of business in the world.
The special aspect of a family firm is that it is owned, and is also often managed, by a group of people with strong preexisting and ongoing personal (family) relationships. These social ties may have both advantages and disadvantages in relation to running a business.
Research on family firms fundamentally asks the question of whether the integration of production and personal ties matters for corporate governance and performance. Companies are generally run in accordance with the preferences of its owners and managers, and may differ in family firms because family owners pursue other objectives than the maximization of profits. For example, they are often believed to have a longer horizon than non-family owners and to prioritize passing the firm on to the next generation. Family owners are also often believed to manage the business with the aim of preserving the family's control of it. Research-based evidence can help us understand to what extent such beliefs have merit.