Discussion Paper of the Institute for Organisational Economics 5/2019

The Influence of Political Characteristics on the Relationship between Family Control and Firm Performance
A Meta-Analytical Approach

Todor S. Lohwasser/Felix Hoch
May 2019



This multilevel meta-analytic study, based on 176 studies from 36 countries, examines the impact of political characteristics on the performance of family firms when comparing them to non-family firms (k=311, N=1,598,964). Our findings support the expectation that family firm characteristics are positively related to firm performance. We trace the variance between the studies to differences in certain political characteristics of the firms’ countries of origin: government stability, regime stability, regime type and special periods of factionalism. In terms of government and regime stability, we find positive moderating effects on the focal relationship. We further show that periods of factionalism even reverse the superior performance of family firms. While the focal relationship becomes stronger in democracies, the relationship turns negative when looking at anocracies and becomes stronger and positive again considering autocracies. Finally, we reveal that government stability partly mediates the influence of the regime type. Therefore, government stability is a crucial condition for family firms to prosper in any political environment. Our study has several implications for the interplay between family firms and politics: First, the comparative advantage of family firms depends on specific political characteristics. Second, the ability of institutions to provide stability is more important for family firms than the actual institutional setting itself. Third, the impact of a political environment on economic success differs between family firms and nonfamily firms and therefore depends on the structure of the given economy.