Global insights into family firm performance: the mediating role of family relational dynamics

Purpose This study investigates the relationships between stakeholder engagement orientation (SEO), next-generation orientation (NGO), family relational dynamics (FRD) and family firm performance through a theoretical lens of the resource-based unified systems perspective. Design/methodology/approach Using data from 2,683 family firms across 80 countries provided by the successful transgenerational entrepreneurship practices (STEP) project, the research applies structural equation modeling to explore direct and mediated effects. Findings Results quantitatively reveal that SEO and NGO positively influence firm performance, both directly and indirectly, through their impact on family relational dynamic. FRD, measured by communication quality, trust, conflict resolution and collaboration, emerges as a critical mediator, underscoring the importance of the quality of the relational dynamics both within the family and the business systems, as well as the connection between them. Practical implications The findings offer actionable tools for families in business, their advisors and the non-family talent working in their firms, to strengthen intra-family relationships, foster next-generation engagement, build trust, ensure clarity of roles and manage conflicts more effectively. Originality/value The study extends the literature and quantitatively complements previous conceptual and qualitative studies by addressing gaps in generalizability through its diverse, global dataset and highlighting the interdependencies between the family dimension and firm outcomes. This research advances theory by identifying FRD as a mediating mechanism linking families’ values-based orientations to firm performance. It integrates family firm strategy with the unified systems perspective and offers globally generalizable insights from a large, cross-cultural dataset.