Nuances matter: how alternative family firm definitions shape the observed relationship with financial performance in SMEs

Purpose This study aims to examine how alternative operational definitions of family firm status shape the observed relationship between family involvement and financial performance in small- and medium-sized enterprises (SMEs). Design/methodology/approach Drawing on agency theory, stewardship theory, behavioral agency arguments and the resource-based view, the study applies five operational definitions of family firms to the same sample of 184 Italian SMEs. Using a four-year panel dataset for 2014–2017, ordinary least squares regressions with industry and year fixed effects are estimated, controlling for firm age, size, generational change, sales growth, total assets and leverage. Findings Definitional choices materially affect empirical conclusions. Family firm status is positively associated with ROA under definitions based on majority ownership or voting rights, negatively associated under broader or lower-threshold definitions and not significantly associated under an intermediate definition. Thus, family firm definitions should not be treated as interchangeable classification devices. Research limitations/implications The study focuses on privately held Italian SMEs in a specific regional context and relies on accounting-based performance measures. Future research should test whether definitional sensitivity also affects non-financial and socioemotional outcomes. Practical implications Researchers, policymakers and practitioners should define family firm status transparently to avoid misleading performance comparisons, inappropriate benchmarking and ineffective support measures. Originality/value The study shows that definitional thresholds act as a methodological lens shaping family firm–performance evidence within the same SME sample.