Family Firms and Labor Market Regulation

48 Pages Posted: 18 Oct 2014 Last revised: 30 Sep 2015

See all articles by Morten Bennedsen

Morten Bennedsen

INSEAD - Economics and Political Sciences; University of Copenhagen - Department of Economics

Sterling Huang

Singapore Management University - School of Accountancy

Hannes F. Wagner

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Stefan Zeume

University of Illinois at Urbana-Champaign

Date Written: September 28, 2015

Abstract

In a panel of more than 6,900 firms in 28 countries over 10 years we provide evidence that family control and labor market regulation are substitute governance mechanisms. First, family firms have performance advantages over non-family firms in countries with less regulated labor markets. This is robust to matching and using survey-based instruments for family control. Second, in less regulated labor markets, family firms have lower employment level variations supporting the claim that labor relations drive family firms’ performance advantages. Third, the performance advantages in less regulated labor markets is smaller in industries with high labor intensity and high labor volatility.

Keywords: Family firms, Labor market regulation

JEL Classification: G32

Suggested Citation

Bennedsen, Morten and Huang, Sterling and Wagner, Hannes F. and Zeume, Stefan, Family Firms and Labor Market Regulation (September 28, 2015). INSEAD Working Paper No. 2014/62/EPS. Available at SSRN: https://ssrn.com/abstract=2511044 or http://dx.doi.org/10.2139/ssrn.2511044

Morten Bennedsen

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5, Bygn 26
Copenhagen, 1353
Denmark

Sterling Huang

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore
6808 7929 (Phone)

Hannes F. Wagner

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://faculty.unibocconi.eu/hanneswagner

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Stefan Zeume (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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