When More Is Better: Multifamily Firms and Firm Performance

Entrepreneurship Theory and Practice (2019), DOI: 10.1177/1042258719851206

Posted: 8 Mar 2020

See all articles by Marcelo Ortiz M.

Marcelo Ortiz M.

Universitat Pompeu Fabra; Universitat Pompeu Fabra - Barcelona School of Management; Barcelona School of Economics

Patricio Duran

Adolfo Ibanez University

Date Written: May 18, 2019

Abstract

Does the presence of multiple and unrelated family controllers improve firm performance? Drawing on both agency and behavioral agency theories, we argue that multifamily firms outperform single-family firms since families in multifamily firms actively monitor owners’ socioemotional goals. Additionally, we suggest that a balanced distribution of control among the owning families facilitates the monitoring process. Finally, we argue that the focal relationship follows an inverted U-shaped pattern depending on the number of families controlling the firm. We test our hypotheses using a sample of Chilean publicly listed family firms. Our study extends current knowledge of the uniqueness of multifamily firms.

Keywords: multifamily firms, socioemotional wealth, agency theory, firm performance

Suggested Citation

Ortiz M., Marcelo and Duran, Patricio, When More Is Better: Multifamily Firms and Firm Performance (May 18, 2019). Entrepreneurship Theory and Practice (2019), DOI: 10.1177/1042258719851206, Available at SSRN: https://ssrn.com/abstract=3516644

Marcelo Ortiz M.

Universitat Pompeu Fabra ( email )

Barcelona
Spain

HOME PAGE: http://www.marceloortizm.com

Universitat Pompeu Fabra - Barcelona School of Management ( email )

Barcelona, 08005
Spain

Barcelona School of Economics ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Patricio Duran (Contact Author)

Adolfo Ibanez University ( email )

Diagonal Las Torres 2640 Peñaleón
Presidente Errázuriz 3485 Las Condes
Santiago, 794-1169
Chile

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