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Family involvement and financial performance in SMEs: evidence from Italy

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  • Paolo Roffia

Abstract

The aim of this study is to provide new evidence on the relationship between family involvement and financial performance in small and medium-sized enterprises (SMEs). We analysed the effects of family involvement in ownership and in the board of directors (BoD) for 214 Italian SMEs. Using an ordinary least squares (OLS) regression model with time-period and industry-fixed effects and lagged financial data over a four-year period (2014-2017), we found a statistically significant U-shaped relationship between family ownership and return on assets (ROA). Contrary to our expectations, the relationship between family involvement in the BoD and profitability was negative. These results suggest that family involvement in firms may have both positive and negative effects on financial performance depending on the thresholds considered. We also found a few other contextual variables related to company structure that influenced SME financial performance.

Suggested Citation

  • Paolo Roffia, 2021. "Family involvement and financial performance in SMEs: evidence from Italy," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 43(1), pages 39-60.
    • Handle: RePEc:ids:ijesbu:v:43:y:2021:i:1:p:39-60
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    Cited by:

    1. Diaz Restrepo, Carlos Andres & Patiño, Mónica & Duque, Pedro & Cervantes Cervantes, Luis Salvador & Franco Rivera , Andrea, 2023. "Rendimiento financiero en pequeñas y medianas empresas (pymes): un análisis bibliométrico de la producción científica," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 42(75), pages 45-80, January.

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