Family Management, Family Ownership and Downsizing: Evidence from S&P 500 Firms

Little is known about the relationship between family firms and their employees. This paper aims to close this gap. We distinguish between family management and family ownership as two dimensions of family firms and analyze their respective influence on downsizing. Our findings show that family management decreases the likelihood of downsizing, whereas the extent of family ownership decreases the likelihood of downsizing only with regard to deep job cuts (above 6%). We conclude that family managers have a strong long-term perspective, which is in line with both agency and stewardship theory. Yet, the idea that reputation concerns lead family owners to shy away from downsizing is only partially supported.Family firms, family management, family ownership, job cuts, downsizing; layoffs

Are CEOs in Family Firms Paid Like Bureaucrats? Evidence from Bayesian and Frequentist Analyses

The relationship between CEO pay and performance has been much analyzed in the management and economics literature. This study analyzes the structure of executive compensation in family and non-family firms. In line with predictions of agency theory, it is found that the share of base salary is higher with family-member CEOs than it is with nonfamily member CEOs. Furthermore, family-member CEOs receive a lower share of option pay. The paper’s findings have implications for family business research and the executive compensation literature. To make the findings robust, the statistical analysis is performed with both Bayesian and classical frequentist methods.Executive compensation, family firms, stock options, agency theory, Bayesian analysis

Necessity and Opportunity Entrepreneurs and Their Duration in Self-employment: Evidence from German Micro Data

Using data from the German Socio-Economic Panel Study (GSOEP), we analyze whether necessity entrepreneurs differ from opportunity entrepreneurs in terms of self-employment duration. Using univariate statistics, we find that opportunity entrepreneurs remain in self-employment longer than necessity entrepreneurs. However, after controlling for the entrepreneurs' education in the professional area where they start their venture, this effect is no longer significant. We therefore conclude that the difference observed is not an original effect but rather is due to selection. We then go on to discuss the implications of our findings for entrepreneurship-policy making, and give suggestions to improve governmental start-up programs.Self-employment, Firm survival, Necessity entrepreneurs, Opportunity entrepreneurs, Hazard rates, GSOEP

Necessity and Opportunity Entrepreneurs and their Duration in Self-employment: Evidence from German Micro Data

Using data from the German Socio-Economic Panel Study (GSOEP), we analyze whether necessity entrepreneurs differ from opportunity entrepreneurs in terms of self-employment duration. Using univariate statistics, we find that opportunity entrepreneurs remain in self-employment longer than necessity entrepreneurs. However, after controlling for the entrepreneurs’ education in the professional area where they start their venture, this effect is no longer significant. We therefore conclude that the difference observed is not an original effect but rather is due to selection. We then go on to discuss the implications of our findings for entrepreneurship-policy making, and give suggestions to improve governmental start-up programs

LONG-TERM ORIENTATION IN FAMILY AND NON-FAMILY FIRMS: A BAYESIAN ANALYSIS

A stronger long-term orientation is considered a competitive advantage of family firms relative to non-family firms. In this study, we use panel data of U.S. firms and analyze this proposition. Our findings are surprising. Only in when the family is involved in the management of the firm is the firm found to invest more in long-term projects relative to a non-family firm. We also find that investment in long-term projects in family firms is determined less by cash flow variations than for non-family firms. Managerial implications of our findings are discussed. Our hypotheses are tested using Bayesian methods.Family Firm, Long-term Orientation, Myopia, Bayesian Analysis, Agency Theory, Stewardship Theory, Investment Policy

Are Education and Entrepreneurial Income Endogenous and Do Family Background Variables Make Sense as Instruments?: A Bayesian Analysis

Education is a well-known driver of (entrepreneurial) income. The measurement of its influence, however, suffers from endogeneity suspicion. For instance, ability and occupational choice are mentioned as driving both the level of (entrepreneurial) income and of education. Using instrumental variables can provide a way out. However, three questions remain: whether endogeneity is really present, whether it matters and whether the selected instruments make sense. Using Bayesian methods, we find that the relationship between education and entrepreneurial income is indeed endogenous and that the impact of endogeneity on the estimated relationship between education and income is sizeable. We do so using family background variables and show that relaxing the strict validity assumption of these instruments does not lead to strongly different results. This is an important finding because family background variables are generally strongly correlated with education and are available in most datasets. Our approach is applicable beyond the field of returns to education for income. It applies wherever endogeneity suspicion arises and the three questions become relevant.Education, income, entrepreneurship, self-employment, endogeneity, instrumental variables, Bayesian analysis, family background variables

Attractive Supervisors: How Does the Gender of the Supervisor Influence the Performance of the Supervisees?

A series of field and laboratory experiments were conducted in which single-sex groups of male or female students competed in different intellectual tasks to earn money or university grades (N = 291). The supervisor of these groups was one of several youn

Peer Influence in Network Markets: An Empirical Investigation

We analyze the effect of peer influence on the diffusion of an innovative network good. We argue that the adopters of a network good have an incentive to convince others to purchase the same product because their ut

Corporate Social Responsibility in Large Family and Founder Firms

Based on arguments about long-term orientation and corporate reputation, we argue that family and founder firms differ from other firms with regard to corporate social responsibility. Using Bayesian analysis, we then show that family and founder ownership are associated with a lower level of corporate social responsibility concerns, whereas ownership by institutional investors is associated with a higher level of corporate social responsibility concerns and a lower level of corporate social responsibility initiatives. We conclude that it makes sense to distinguish between family, founder and institutional investors and their roles as owners or managers when analyzing the effects of corporate governance on corporate social responsibility

I Can’t Get No Satisfaction - Necessity Entrepreneurship and Procedural Utility

We study a unique sample of 1,547 nascent entrepreneurs in Germany and analyze which factors are associated with their start-up satisfaction. Our results identify a group of nascent entrepreneurs that “cannot get