The Labor Productivity of Family Firms

This chapter analyzes the relationship between family control of the firm and its labor productivity. It builds upon the socioemotional wealth (SEW) perspective of family firms to develop a set of propositions that connect SEW priorities, trust, leadership style, nonfamily managers, and the implementation of high performance work practices with labor productivity. The authors argue that SEW priorities warrant adoption of a set of policies and behaviors among the controlling family managers that shape the behaviors and attitudes of the workforce, and these in turn affect labor productivity. This model helps explain observed differences in labor productivity between family and nonfamily firms across different firm sizes, as well as differences in labor productivity among family firms.