Family Firms, Socioemotional Wealth and Job Creation: Evidence from Latin America

Abstract

Job creation is essential for economic growth and societal well-being, particularly in volatile, uncertain, complex, and ambiguous (VUCA) environments like those found in many Latin American countries. Despite its critical importance, job creation remains one of the least explored dimensions of a firm's social performance, especially in difficult environments. This study examines how family-controlled firms (FCFs) contribute to job creation in weak institutional contexts characterized by extensive institutional voids. Grounded in socioemotional wealth (SEW) and VUCA frameworks and using a multi-industry sample of 388 large Latin American firms from six different countries (Argentina, Brazil, Chile, Colombia, Mexico and Peru), the study provides robust evidence that FCFs generate more jobs than their non-family-controlled counterparts (NFCFs). Additionally, the findings highlight the heterogeneity within FCFs, showing that locally controlled FCFs and those with gender-diverse boards create significantly more jobs. This research advances understanding of the ownership and corporate governance-related determinants of job creation and underscores the beneficial role FCFs play as strong social performers in regions with fragile institutional frameworks.

Keywords: family firms, job creation, emerging economies, Latin America, volatile, uncertain, complex, and ambiguous (VUCA) framework, socioemotional wealth (SEW) theory