Impact of family involvement on productivity

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Document Type

Conference Paper

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Citation only.

Barbera, F., & Moores, K. (2011). Impact of family involvement on productivity. Paper presented at the Family Business Australia (FBA): Family business research & education symposium, Perth, Australia.

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2011 HERDC submission. FoR code: 140211, 150303

© Copyright Frank Barbera & Ken Moores, 2011


Motivated by a lack of consensus in the current literature, this paper aims to shed light on whether family firms are more or less productive than non-family firms. As a first step, this paper links existing family business research to the theoretical notion that family involvement has an influence on the factors of production from a productivity standpoint. Secondly, utilising a Cobb-Douglas framework, we provide empirical evidence that family labour and capital indeed yield diverse output contributions relative to their non-family counterparts. In particular, family labour output contributions are significantly higher, and family capital output contributions significantly lower. Interestingly, differences in total factor productivity between family and non-family firms disappear once we allow for heterogeneous output contributions of family production inputs. These findings imply that the assumption of homogeneous labour and capital between family and non-family firms is inappropriate when estimating the production function.

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