Familial relationships and firm performance: the impact of entrepreneurial family relationships

While the family may serve as a resource for entrepreneurs, it has been studied separately in different disciplines. In this paper, we combine the arguments on familial relationships (family firm literature) and skill variety (regional learning literature) to analyse how different forms of entrepreneurial family relationships (co-occurrences) facilitate firm performance, and how familial relationships moderate the effects of skill variety on firm performance. Using longitudinal data (2002-2012) on a sample of privately owned firms with up to 50 employees with matched information on all employees, our results show that entrepreneur-children relationship is the dominant dyad familial relationship in family firms. The fixed effects estimates demonstrate that entrepreneurial family relationships do affect firm performance but that this is dependent on the type of familial relationship. Children and spouses show a positive relationship with firm performance while siblings of the entrepreneur show no significant relationship with performance. The estimates further indicate that familial relationships involving spouses abate the negative effects of having too similar or too different types of skills. The paper thus contributes to new knowledge regarding not only whether family relationships matter for performance, but also in what way they matter.