The impact of institutions on the competitive advantage of publicly listed family firms in emerging markets

Research Summary: We develop an institutional explanation for the finding that the competitive advantage publicly listed family firms (PFFs) enjoy over other publicly listed firms varies across emerging markets. We propose that PFF performance is contingent on the state of four types of institutions-formal constraining, informal constraining, formal enabling, and informal enabling institutions. We test these ideas with a meta-analysis of 177 primary studies, situated in 49 countries. Our results show that the competitive advantage PFFs enjoy is stronger when formal constraining institutions are less developed and when suitable informal enabling institutions are present. However, their competitive advantage is weaker when formal enabling and informal constraining institutions are less developed. We conclude that the competitive advantage of PFFs in emerging markets is contingent on local institutional conditions. Managerial Summary: We develop a framework to improve our understanding of how institutions impact the competitive advantage of publicly listed family firms (PFFs) in 49 emerging markets. The framework informs the decisions of PFF owners and managers concerning where to compete and when to invest in distinctive characteristics of family involvement, like a long-term orientation, familial control, stewardship, and reputational capital. While our baseline expectation is that PFFs enjoy a competitive advantage in emerging markets, the model also specifies in which contexts the competitiveness of PFFs will be compromised. Our framework offers guidance to policymakers interested in increasing the economic contribution PFFs make to their jurisdictions, which they can ensure by developing PFF-favoring institutions that strengthen the competitive advantage of these firms.