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Married to the firm? A large-scale investigation of the social context of ownership

Publication ,  Journal Article
Belenzon, S; Patacconi, A; Zarutskie, R
Published in: Strategic Management Journal
December 1, 2016

Research summary: Using a large sample of private firms across Europe, we examine how the social context of owners affects firm strategy and performance. Drawing on embeddedness theory and the institutional logics perspective, we argue that embeddedness in a family, in particular the nuclear family, can strengthen identification and commitment to the firm, but can also induce owners to behave more conservatively. Consistent with this argument, we find that family-owned firms have higher profit margins, returns on assets, and survival rates compared to single-owner or unrelated-owners' firms, but also invest and grow more slowly, hold greater reserves of cash, and rely less on external debt. These differences are most pronounced when the two largest shareholders are married. Our results highlight the key role of marital ties in explaining differences in behavior and performance among firms. Managerial summary: Despite the prevalence of the married-couple ownership structure in firms, little research has been dedicated to understanding how these firms are managed and perform. We examine the behavior and performance of firms owned by married couples in a large panel of closely held Western European firms. We find that married-owner family firms are managed more conservatively relative to firms with unrelated owners and even to other family-owned firms. In particular, married-owner family firms invest and grow more slowly and rely less on external finance. However, they also exhibit greater performance stability and higher profitability. Our findings suggest that social relationships among owners have a large impact on firm strategy and performance, and highlight some potential trade-offs to performance when married couples control firms. Copyright © 2015 John Wiley & Sons, Ltd.

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Published In

Strategic Management Journal

DOI

EISSN

1097-0266

ISSN

0143-2095

Publication Date

December 1, 2016

Volume

37

Issue

13

Start / End Page

2611 / 2638

Related Subject Headings

  • Business & Management
  • 3507 Strategy, management and organisational behaviour
  • 1505 Marketing
  • 1503 Business and Management
 

Citation

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Belenzon, S., Patacconi, A., & Zarutskie, R. (2016). Married to the firm? A large-scale investigation of the social context of ownership. Strategic Management Journal, 37(13), 2611–2638. https://doi.org/10.1002/smj.2441
Belenzon, S., A. Patacconi, and R. Zarutskie. “Married to the firm? A large-scale investigation of the social context of ownership.” Strategic Management Journal 37, no. 13 (December 1, 2016): 2611–38. https://doi.org/10.1002/smj.2441.
Belenzon S, Patacconi A, Zarutskie R. Married to the firm? A large-scale investigation of the social context of ownership. Strategic Management Journal. 2016 Dec 1;37(13):2611–38.
Belenzon, S., et al. “Married to the firm? A large-scale investigation of the social context of ownership.” Strategic Management Journal, vol. 37, no. 13, Dec. 2016, pp. 2611–38. Scopus, doi:10.1002/smj.2441.
Belenzon S, Patacconi A, Zarutskie R. Married to the firm? A large-scale investigation of the social context of ownership. Strategic Management Journal. 2016 Dec 1;37(13):2611–2638.
Journal cover image

Published In

Strategic Management Journal

DOI

EISSN

1097-0266

ISSN

0143-2095

Publication Date

December 1, 2016

Volume

37

Issue

13

Start / End Page

2611 / 2638

Related Subject Headings

  • Business & Management
  • 3507 Strategy, management and organisational behaviour
  • 1505 Marketing
  • 1503 Business and Management