Production Functions and Productivity of Family Firms: Evidence from the S&P 500

Posted: 16 Jan 2011

See all articles by Minna Martikainen

Minna Martikainen

Hanken School of Economics

Jussi Nikkinen

University of Vaasa - Department of Accounting and Finance

Sami Vähämaa

University of Vaasa

Date Written: May 1, 2009

Abstract

This paper examines whether the higher profitability and valuation of family firms is related to differences in production technologies and production efficiency. Using data on S&P 500 manufacturing firms, we find that family firms are more productive than comparable non-family firms. Furthermore, our results show that the production technologies of family and non-family firms do not differ per se, thereby suggesting that the differences in the level of production output are caused by higher production efficiency of family firms. These findings indicate that the superior performance of family firms is related to their more efficient use of labor and capital resources.

Keywords: founding-family ownership, Cobb-Douglas production function, productivity, efficiency

JEL Classification: G30, G32, G35

Suggested Citation

Martikainen, Minna and Nikkinen, Jussi and Vähämaa, Sami, Production Functions and Productivity of Family Firms: Evidence from the S&P 500 (May 1, 2009). Quarterly Review of Economics and Finance, Vol. 49, No. 2, 2009. Available at SSRN: https://ssrn.com/abstract=1740671

Minna Martikainen

Hanken School of Economics ( email )

PoBox 479
Helsinki, 00100
Finland

Jussi Nikkinen

University of Vaasa - Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland
+358 6 3248541 (Phone)

Sami Vähämaa (Contact Author)

University of Vaasa ( email )

P.O. Box 700
Vaasa, FI-65101
Finland
+358 29 449 8455 (Phone)

HOME PAGE: http://www.uva.fi/~sami

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