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The Distribution of Family Firm Performance Heterogeneity: Understanding Power Law Distributions

In: The Palgrave Handbook of Heterogeneity among Family Firms

Author

Listed:
  • Emma Su

    (Mississippi State University)

  • Daniel T. Holt

    (Mississippi State University)

  • Jeffrey M. Pollack

    (North Carolina State University)

Abstract

We examine an underlying assumption that is implicitly suggested in family business scholarship that the heterogeneity among family firm financial performance follows a normal distribution. Instead, performance heterogeneity may be represented more accurately by alternative distributions. In the present work, we substantiate this premise through the examination of three samples, and we argue that an examination of heterogeneity through this lens presents important research opportunities. This may help researchers better understand why recent meta-analyses, aggregating the relationship between family involvement and firm financial performance, indicate that the family’s involvement, at best, marginally influences financial performance. Methodologically, this perspective introduces a set of techniques that can offer novel insights into our understanding of important family firm questions.

Suggested Citation

  • Emma Su & Daniel T. Holt & Jeffrey M. Pollack, 2019. "The Distribution of Family Firm Performance Heterogeneity: Understanding Power Law Distributions," Springer Books, in: Esra Memili & Clay Dibrell (ed.), The Palgrave Handbook of Heterogeneity among Family Firms, chapter 15, pages 407-429, Springer.
    • Handle: RePEc:spr:sprchp:978-3-319-77676-7_15
    DOI: 10.1007/978-3-319-77676-7_15
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    Cited by:

    1. Crawford, G. Christopher & Joo, Harry & Aguinis, Herman, 2024. "Under the weight of heavy tails: A power law perspective on the emergence of outliers in entrepreneurship," Journal of Business Venturing Insights, Elsevier, vol. 21(C).
    2. Wang, Zhonghui “Hugo” & Randolph, Robert & Su, Emma & Memili, Esra, 2023. "How does the founding family matter in corporate governance? A study of the entrenchment heterogeneity among S&P 1,500 firms," Journal of Business Research, Elsevier, vol. 154(C).

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