Family involvement in governance and firm performance in industrial districts. The moderating role of the industry’s technological paradigm

Abstract

ABSTRACT Studies on industrial districts tend to highlight the advantages for companies arising from the network of relationships among actors based on the sharing of a common history, culture and norms of behaviour. It has been recently shown that family businesses succeed in leveraging on the district effect only under certain size conditions. In this work, we further advance the study of the ‘district’ effect on family businesses with the analysis of further key contingencies in addition to size, namely the actual level of family involvement and the technological sector. It has been recently shown that family businesses succeed in leveraging on the district effect only under certain size conditions: for example, according to Cucculelli and Storai’s (2015) results, medium-sized family businesses companies enjoy the advantages of operating in a district more than larger and smaller companies and than non-family businesses of similar size. In this work, we further advance the study of the ‘district’ effect on family businesses with the analysis of further key contingencies in addition to size, namely the actual level of family involvement and the technological sector. We argue that an intense involvement of family members in the governance of companies operating within districts, negatively impacts on companies’ performance due to the emergence of a phenomenon of overembeddedness. Further, we also show an industry technological paradigm, characterized by radical breakthroughs, combines with family involvement and location in a district to negatively influence a company’s performance. The study is conducted on the Bocconi Italian Observatory of Family Business and includes a final usable panel of 55,489 company/year observations.