Family‐Managed Businesses and the Quality of Management Practices

ABSTRACT Better managed firms consistently outperform their peers, yet family‐managed firms tend to exhibit weaker management practices This study examines this relationship using data from approximately 9000 medium and large firms across 41 developing and advanced economies. Entirely family‐managed firms show a negative association with management quality; however, the relationship between the share of family managers and management quality is nonlinear, suggesting that a mixed family and nonfamily management structure can improve practices relative to full family management. Several internal and external factors moderate the relationship between entirely family‐managed firms and the quality of management practices, with corruption and political connections emerging as particularly influential. Results are robust to alternative estimation strategies, including propensity score matching.