The role of entrepreneurial orientation and family control of the firm in the economic recovery of underperforming firms

Abstract

Purpose The purpose of this paper is to analyse how entrepreneurial orientation (EO) and the family control of the company influence the performance of underachieving firms and how they contribute to economic recovery. Design/methodology/approach The authors test the authors’ predictions on a unique and representative sample of 1,500 Spanish small firms in high and medium technology manufacturing and service industries. Given the nature of the dependent variable, the authors estimate a series of regression models to test the hypotheses. In addition, the authors consider two interaction terms where the underperforming firms’ variable is interacted with family firms and EO. Findings The results of analyses show that both EO and family ownership separately increase subsequent performance for underachieving firms. Originality/value The study contributes to expand the literature on underperforming firms analysing how strategic and structural factors affect the performance of firms that face an economic downturn. It also provides some guidance for practitioners on the decision and contexts that better serve the economic recovery of underperforming firms.