Does Family Control Affect Trade Performance? Evidence for Italian Firms

38 Pages Posted: 17 Feb 2009

See all articles by Giorgio Barba Navaretti

Giorgio Barba Navaretti

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM); University of Milan - Centro Studi Luca d'Agliano (LdA)

Riccardo Faini

affiliation not provided to SSRN (deceased)

Alessandra Tucci

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN); affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: December 2008

Abstract

This paper examines whether the export decision of firms is affected by their ownership structure, specifically it looks at whether family control is an obstacle to entering foreign markets. The underlying assumption is that family firms are risk averse. Risk aversion may be an obstacle to entering foreign markets, as far as these are perceived as more volatile and risky than the domestic one, particularly when such choice entices bearing relatively high sunk costs. We develop an illustrative theoretical model that shows how the combination between high risk aversion and low initial productivity may hinder family firms' decision to enter foreign markets, particularly distant ones. The empirical analysis, based on a detailed panel data set of Italian firms covering the years from 1995 to 2003, confirms such predictions by showing that family controlled firms do indeed export less than other type of companies even after controlling for firm heterogeneity in productivity, size, technology and access to credit.

Keywords: exports, family firms, firm structure, foreign markets

JEL Classification: F1, F14, L2

Suggested Citation

Barba Navaretti, Giorgio and Faini (deceased), Riccardo and Tucci, Alessandra and Tucci, Alessandra, Does Family Control Affect Trade Performance? Evidence for Italian Firms (December 2008). CEPR Discussion Paper No. DP7082, Available at SSRN: https://ssrn.com/abstract=1344641

Giorgio Barba Navaretti (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy
+390250321521 (Phone)

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via Donizzatti 38
Milano, Mi 20122
Italy
+39 02 36683850 (Phone)

Riccardo Faini (deceased)

affiliation not provided to SSRN (deceased)

Alessandra Tucci

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium

affiliation not provided to SSRN ( email )

No Address Available

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