Family control and firm growth: Empirical evidence from Continental Europe

We propose and test a family firm growth model. Specifically, we analyze the link between the nature of family governance and firm growth, and identify the institutional moderating conditions affecting this link. Using a panel dataset of publicly traded firms in Continental Europe, we show that family firms on average do not have a lower growth rate than nonfamily firms. Notably, our results suggest that the growth rate in family firms is highly dependent on which generation controls the firm, and in which institutional environment they operate. In particular, founder-controlled family firms have a higher growth rate than heir-controlled family firms and nonfamily firms, and in countries with more democratic, well- regulated and less corrupt institutional environments, family firms have an overall higher growth rate than nonfamily firms. Our results challenge the stagnation perspective and popular views of family firms as slow growth organizations. Our results suggest that a family long-term orientation towards its business and the growth funded by that orientation will only flourish in a positive institutional environment that enables family priorities to be realized via the business.