Family Control and Sustainable Competitive Advantage

Abstract

Shifting the attention from temporary to enduring competitive advantage, we theorize that family control of a business is a source of family-specific isolating mechanisms. These isolating mechanisms are based on path-dependent, socially complex, and inseparable resources that jointly enhance family firms’ ability to sustain competitive advantages vis-à-vis nonfamily firms. Longitudinal analyses of S&P 1500 manufacturing firms show that family firms are more likely to sustain superior performance than nonfamily firms. We also find that competitive advantages last longer in family firms that are older, have more family members involved, and a higher level of family ownership.