Employee Compensation and Job Security in Family Firms: Evidence from the Czech Republic

In countries from the former Eastern Bloc, family businesses have only a short modern history due to the transition from a centrally-planned to a market economy in 1989. The goal of this article is to examine the differences in wages and job security in family and non-family firms. Using data from 695 Czech family and 4 095 non-family firms from the period of 2009-2013, we find that family firms pay lower average wages to their employees and exhibit a lower fluctuation of employees. Moreover, we found that the gender of CEO, profitability and age of firms have no effect on salaries or job stability. The findings are consistent with past research, and support the hypothesis that family firms adopt a position of low-pay and high job security, while non-family firms are in a position of high-pay and low job security.