Family ownership and firm performance: The net effect of productive efficiency and growth constraints

This paper investigates differences in the behaviour and performance of listed Spanish family and non-family firms resulting from the interaction of differences in productive efficiency and in preferences for control between the two groups of firms. We find that family firms grow at a smaller rate, choose less capital-intensive productive technologies and are more efficient in production than non-family firms are. The evidence is consistent with institutional theories of the firm that predict competition among governance forms for the transactions to be governed to minimize production and transaction costs. The results of the paper highlight the relevance of using measures of productive efficiency, instead of measures of profitability, to test the effect of ownership in the performance of firms