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EDHEC Family Business Centre Research Publications



A key factor of EDHEC Family Business Centre is the broad dissemination of its research findings, case studies, debates and publications about family-owned business issues.

Family Business Publications and Working Papers


The evolution of entrepreneurship research in family businesses: Three decades in review and future outlook
BERNANDON R, LABAKI R. from EDHEC Business School (2016)

Social Innovation in the family business: The Next Generation Perspective
LABAKI R. from EDHEC Business School (2016)

Analyzing the emotional dimension in the family business: Methodological framework and research insights
LABAKI R. from EDHEC Business School (2016)

The Janus-Face of CEO Retention: CEO Succession & Performance under Unity of Ownership & Control
UHLANER L. from EDHEC Business School (2016)

Family-oriented goals and the family firm's debt rate: The mediating effect of family board representation
UHLANER L. from EDHEC Business School (2016)

Responsible ownership in the privately-held family and non-family firms
UHLANER L. from EDHEC Business School (2016)

What do French middle-sized family firms really look like?        
LOPEZ de SILANES F. from EDHEC Business School and GREGOIR S. from INSEE (2015)
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Abstract
Middle-sized firms (Entreprises de taille intermédiaire, ETI) play a fundamental role in the French economy in terms of value added, employment, growth and innovation. These firms have long been ignored in France, but are seen now as the successful Small and Medium Enterprises or SMEs (Le nouvel Economiste.fr (2015)).1 The French Government has started creating new initiatives to help some SMEs become middle-sized firms in order to boost their presence in France (L’Usine Nouvelle (2015)). According to The Handelsblatt, “French Economics Minister Emmanuel Macron has made it clear that he is not fond of large national champions and admires Germany’s Mittelstand of small and medium-sized companies.” However, little is known about the management and governance structures of middle-sized firms in France, and even less about the differences between family and non-family controlled companies of this size.

The Relevance of a Whole-Person Learning Approach to Family Business Education: Concepts, Evidence, and Implications        
BERNHARD F. from EDHEC Business School (2015)
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Abstract
Preparing the next generation (“next-gens”) to lead the family business is imperative to firm continuity. Yet given the complex interconnected systems of family and business, next-gens can often struggle with unique challenges related to their various roles, identities, and internal career opportunities. Although training successors has been widely discussed, noticeably missing are investigations into the role that family business education can play. Drawing upon an existing undergraduate family business course, the authors of the study explore why and how “whole-person learning”—an experiential pedagogy focused on the acquisition of cognitive, emotional, and social skills—is a relevant approach to next-gen development. As scholarly interest in family business education increases, these findings have important implications for family business owners interested in preparing the next generation, as well as family business educators interested in experiential pedagogies.  

Family Businesses and Debt: Shifting Towards a New Paradigm

FOULQUIER P. from EDHEC Business School (2015)
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Abstract
For both companies and for the academic world, determining the optimal level of debt can be likened to the quest for the Holy Grail. The financial and the economic crises which have been ongoing since 2008 have brought this subject back into the spotlight, given the increasing scarcity of financial resources and the reduced profitability levels of companies, which consequently reduce self-financing. Within this context, many family businesses, in the quest for growth, have found themselves facing a structural problem and asking the following question: Do the intrinsic characteristics of family businesses justify debt levels that are structurally lower than those of their non-family peers? Within the current context of historically low interest rates, are family businesses taking on sufficient debt? Are the classic paradigms on funding structure not more fragile within this new interest rate environment?

Linking Bonding and Bridging Ownership Social Capital in Private Firms: Moderating Effects of Ownership-Management Overlap and Family Firm Identity
Uhlaner L. from EDHEC Business School with Matser I., Berent-Braun M. and Flören R. from Nyenrode Business Universiteit, Breukelen, Netherlands (2015)
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Abstract
In privately-held firms, members of the business-owning group vary in the degree to which they actively assist the firm by mobilizing their networks on the firm’s behalf. Tested on a sample of 679 Dutch privately-held firms, we find such mobilization efforts (referred to as bridging ownership social capital) are more likely with greater bonding ownership social capital—that is, when business-owning group members share the same vision with respect to the firm’s objectives, and when owning group members have higher quality relationships with one another (i.e., more trust, cooperation, honesty, and team spirit). The importance of family firm identity with respect to network mobilization is not simply stated. We do find a small statistically significant relationship between family firm identity and quality of relationships, but with neither shared vision nor network mobilization. Nevertheless, we do find an important interaction of family firm identity and shared vision such that both the positive and negative effects of shared vision are magnified in family firms. Nevertheless, shared vision and quality of relationships are also found to enhance network mobilization in nonfamily firms, especially those where ownership and management overlap.
 
Internal Capital Markets and Managerial Power: Implications for Family Groups
Lopez-de-Silanes, F. (2014)
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Abstract
Capital allocation is a central issue for family firms as their access to external resources is typically lower and thus exerting further pressure to optimally allocate capital among competing business units. So, how do firms allocate resources across business units? The main contribution of this publication is to empirically document whether managerial power and connections make a difference to internal capital allocations, and if so, under what circumstances. In this paper, new direct evidence is used from the internal accounting system of a large multinational conglomerate containing information about planned and actual capital allocations to its 20 business units. There are three main results that emerge from this empirical analysis. First, managers across business units use the standardized budgeting process to build buffers into their budgets. Second, although all unit managers try to use excessive capital budgets to justify additional spending, units run by more powerful and better connected managers obtain higher actual capital allocations at times of financial slack after unexpected firm cash windfalls. Third, the effects of power on internal capital allocation reflect inefficient resource allocations and do not lead to improved unit performance. Overall, to the extent that the management teams of family firms and family groups are structured in such a way that differences in power and connections may become more important, these findings are of particular importance as they strive to improve their capital allocation and other internal processes.
 
Is CEO education relevant for productivity?
Lopez-de-Silanes, F. (2014)
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Abstract
Financiers and economists have speculated about the factors that may explain the documented large differences in productivity across firms. Differences in productivity are a central topic for family firms as they face the classic trade-off of family ownership. In this paper, we investigate the determinants of firm productivity using a newly constructed database of close to 50,000 firms around the world. We combine this data with sub-national regional geographic, institutional, cultural, and human capital variables that may impact firm productivity in a cross-section of over 1500 different regions in close to 100 countries. The econometric estimates show that top management education is a critical factor explaining firm-level differences in factor productivity: the contribution of managerial education (i.e. CEOs and top management) to firm productivity is close to five times that of non-management firm workers. These results imply that investment in the education of future family-firm managers, or hiring outside managers with high human capital may prove to be a profitable policy for family firms, leading to significant productivity enhancements. The human capital of future family generations is thus crucial when ensuring the survival of the firm under family control.  

Family Firms and Performance: Where Do We Stand?
Lopez-de-Silanes, F. and Dr. Timothée Waxin (2014)
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Abstract
Family-owned firms are a major feature of the business landscape worldwide, from Europe to Asia to the Americas. They dominate the global corporate landscape, but little is known about their relative performance. The paper provides a systematic analysis of the literature on the comparative performance of family firms in the fields of finance and management, and an assessment of the robustness of the evidence thus far. This review shows that existing studies provide puzzling and conflicting evidence with substantial variation pointing in both directions. The paper then identifies potential explanations to help us interpret the data. Two robust patterns emerge from the analysis. Primarily, firms where founders play a role account for a large share of the positive relative performance of family firms found in the literature. Secondly, family firms with control-enhancing mechanisms and those located in countries with poor investor protection underperform. These lessons suggest that close founding family engagement and improving corporate governance in family firms may help firms improve their performance, valuations and access to capital.

Opening the Black Box: Internal Capital Markets and Managerial Power
Lopez-de-Silanes, F. and M. Glaser (2012)
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Abstract
We analyze the internal capital markets of a multinational conglomerate, using a new dataset of planned and actual allocations to business units. We show that more powerful managers obtain larger cash-windfall allocations and increase investment more than their less powerful peers. Our evidence suggests that the larger allocations to more powerful managers reflect inefficient internal capital allocations. Our findings contribute to our understanding of frictions in the resource allocation process within firms and point to a channel through which power may lead to inefficient capital allocations.

Innovation with limited resources: management lessons from the German mittlestand
Journal of Product Innovation Management
Audretsch, D. De Massis, A., Kammerlander, N., Uhlaner, L. (2017)
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EDHEC Working Paper

The Law and Economics of Self Dealing
Lopez de Silanes, F., Djankov, R. La Porta and A. Shleifer (2007)
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Abstract:
We present a new measure of legal protection of minority shareholders against expropriation by corporate insiders: the anti-self-dealing index. Assembled with the help of Lex Mundi law firms, the index is calculated for 72 countries based on legal rules prevailing in 2003, and focuses on private enforcement mechanisms, such as disclosure, approval, and litigation, governing a specific self-dealing transaction. This theoretically-grounded index predicts a variety of stock market outcomes, and generally works better than the previously introduced index of anti-director rights.

Investor Protection and Corporate Valuation.
Journal of Finance, LVIII , (3)
Lopez-de-Silanes, F. (with R. La Porta, A. Shleifer, and R. Vishny) (2002)
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Abstract
We use data on ownership structures of large corporations in 27 wealthy economies to identify the ultimate controlling shareholders of these firms. We find that, except in economies with very good shareholder protection, relatively few of these firms are widely held, in contrast to Berle and Means’s image of ownership of the modern corporation. Rather, these firms are typically controlled by families or the State. Equity control by financial institutions is far less common. The controlling shareholders typically have power over firms significantly in excess of their cash flow rights, primarily through the use of pyramids and participation in management.

Corporate Ownership Around the World.
Journal of Finance, LIV , (2), 471-517
Lopez-de-Silanes, F. (with R. La Porta, A. Shleifer) (1999)
[Full Text]
Abstract
We use data on ownership structures of large corporations in 27 wealthy economies to identify the ultimate controlling shareholders of these firms. We find that, except in economies with very good shareholder protection, relatively few of these firms are widely held, in contrast to Berle and Means’s image of ownership of the modern corporation. Rather, these firms are typically controlled by families or the State. Equity control by financial institutions is far less common. The controlling shareholders typically have power over firms significantly in excess of their cash flow rights, primarily through the use of pyramids and participation in management.

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