Does Family Involvement in Management Reduce the Risk of Business Failure? The Moderating Role of Entrepreneurial Orientation Articles uri icon

publication date

  • October 2016

start page

  • 365

end page

  • 379

issue

  • 29

volume

  • 4

international standard serial number (ISSN)

  • 0894-4865

electronic international standard serial number (EISSN)

  • 1741-6248

abstract

  • This study explores the question of whether—and under which circumstances—family involvement helps avoid business failure. We hypothesize that it is family involvement in management, rather than ownership, which reduces the risk of failure during economic downturns; however, this effect is negatively affected by the firm's entrepreneurial orientation (EO). We argue that EO hinders reaching consensuses on and commitment to family-centered goals, which are focused on long-term survival. We analyze 369 manufacturing firms in Spain from 2007 to 2013, and find that family involvement in management reduces the risk of business failure, but this effect decreases as EO increases.

keywords

  • family business, family involvement in management, entrepreneurial orientation, business failure, survival analysis