Firms financial strength during crisis periods: does “familiness” matter?

Purpose In this paper we propose to study the differences among family and non-family-firms in relation to its financial strength, and therefore its potential position to resist in front of financial crisis and receive financial support or conditions by public or private institutions. Design/methodology/approach We used multiple hierarchical regressions on a sample of 137 Spanish medium-sized firms (SMEs). Findings We observe that the perspectives and idiosyncratic characteristics of family-firms (strongly influenced by their socioemotional wealth) will affect the way these companies invest and operate in the market, which would be more related to efficiency because of their higher willingness to continue the legacy of the business and their weak risk-bearing attributes. Research limitations/implications Our study adopts a measure of familiness with a dummy variable, and not as a continuous variable as proposed by recent research. Therefore, our results although relevant and significant for the family firm literature, must be viewed carefully. Additional research could also retest some prior studies to depict differences caused by “real” family firm involvement. Practical implications Under a non-munificent environment, the financial strength maintained by firms will be highly relevant since this context could likely stress and influence their immediate future and viability, overcoming and blurring any other characteristic present in the firm or its managers. Originality/value This paper contributes to the family firm literature by offering insights into the nuanced dynamics between family and non-family firms during economic downturns, specifically examining their financial strength when different strategic options are pursued and when firms are managed by different type of managers.