Family Control, Political Risk and Employment Security: A Cross-National Study Articles uri icon

publication date

  • July 2023

start page

  • 1

end page

  • 35

International Standard Serial Number (ISSN)

  • 0022-2380

Electronic International Standard Serial Number (EISSN)

  • 1467-6486

abstract

  • Combining insights from the socioemotional wealth and institutional perspectives, we hypothesize that firms controlled by families offer greater job security to employees relative to non-family firms, and this positive employment effect is amplified in riskier institutional environ-ments around the world. Using an unbalanced panel of 3181 listed firms from 33 countries over a 10-year period, we provide strong support for our hypotheses: family-controlled firms on aver-age are less likely to reduce their workforce compared to their non-family counterparts, and this differential effect is magnified in weak institutional environments characterized by high political risk. These findings indicate that socioemotional wealth in family firms has a positive impact on employee welfare and that the use of a cross-country design serves to bridge discrepancies or inconsistencies in single country studies that have been done in the past. From a practical perspec-tive we conclude that the beneficial role of socioemotional wealth on employment relations is more evident when it is needed the most, namely under a dysfunctional institutional environment

subjects

  • Business
  • Economics

keywords

  • employment security; institutional voids; family firms; socioemotional wealth