Family Firms and the Great Recession: Out of Sight, Out of Mind?
Bank of Italy
Confederation of Italian Industries - Economic Research Department
June 28, 2012
This paper studies how family firms reacted to the 2008 economic crisis in terms of employment adjustment. By using a difference-in-difference approach, we provide empirical evidence that divergent paths of adjustment between family and non-family firms exist, with family firms systematically preferring to safeguard workplaces close to the firm's headquarters, compared to other plants. We offer a new theoretical framework consistent with these findings, that we define the social recognition motive, based on the psychological relation linking the family owner with his/her community of reference. We investigate possible alternative explanations for the results, most of which can be ruled out in our setting. Finally, we test more directly for the validity of the social recognition theory, finding encouraging results in line with the predictions.
Number of Pages in PDF File: 32
Keywords: Family Firms, Great Recession, Employment, Social Pressure
JEL Classification: C81, D22, J60, M14
Date posted: July 2, 2012 ; Last revised: July 24, 2012