ARE FAMILY FIRMS REALLY THAT DIFFERENT? An empirical examination of some managerial differences between family and non-family SMEs when industry and size are accounted for

This study utilises data gathered from 2267 SMEs by the Australian Bureau of Statistic’s Business Longitudinal Survey (BLS) between 1995/96 and 1997/98. The context of these firms is controlled for by examining them according to industry and firm size. By dividing the numerous combinations of resulting groups into family and non-family businesses the study was able to determine statistically significant differences between the latter two groups’ responses to managerial type questions posed in the BLS. The findings indicate that when size and industry are accounted for, the managerial differences between family and non-family businesses are much smaller than portrayed in much of the literature. Little support was found for the contentions that family firms make less use of formal internal controls, have smaller management teams, have fewer owner/directors with tertiary degrees and make less use of business plans. Likewise, the proposition that the degree of difference between family and non-family micro-firms would be less than that for larger firms is not supported, as is the proposition that the degree of difference would be much less in the retail trade industry. However, there was found to be variation between industries and widespread significant differences between family and non-family firms in the number of working proprietors, partners or directors. Overall, it appears that both industry and firm size need to be accounted for when examining differences between family and non-family firms if the results are to be meaningful.