Does family control affect trade performance?: evidence for Italian firms

Navaretti, Giorgio Barba, Faini, Riccardo and Tucci, Alessandra (2008) Does family control affect trade performance?: evidence for Italian firms. CEP Discussion Paper (896). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 9780853283294

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Abstract

This paper examines whether the export decision of firms is affected by their ownership structure, specifically it looks at whether family control is an obstacle to entering foreign markets. The underlying assumption is that family firms are risk averse. Risk aversion may be an obstacle to entering foreign markets, as far as these are perceived as more volatile and risky than the domestic one, particularly when such choice entices bearing relatively high sunk costs. We develop an illustrative theoretical model that shows how the combination between high risk aversion and low initial productivity may hinder family firms’ decision to enter foreign markets, particularly distant ones. The empirical analysis, based on a detailed panel data set of Italian firms covering the years from 1995 to 2003, confirms such predictions by showing that family controlled firms do indeed export less than other type of companies even after controlling for firm heterogeneity in productivity, size, technology and access to credit.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2008 The authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HD Industries. Land use. Labor
JEL classification:	F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior F - International Economics > F1 - Trade
Date Deposited:	06 Jul 2010 15:31
Last Modified:	11 Dec 2024 18:53
URI:	http://eprints.lse.ac.uk/id/eprint/28509

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