Did medium-sized family businesses perform better during the recent economic crisis? Empirical evidence from Italy

In today’s economic world, family businesses (FBs) are widely spread and they are a main actor in both industrialised and developing countries (European Family Businesses, EFB). In Italy, more than 85% of firms are FBs, and this value is in line with that of the main European countries (Spain, 83%; Germany, 90%; France, 80%; UK, 80%) (Aidaf, 2014). As a consequence, in business studies, there is a great interest in knowing the performance of these enterprises and reasons beyond them, in order to understand whether and how family ownership and control affect firms’ performance (Gallo, 2004; Allouche et al., 2008; Amann, Jaussaud, 2012; Basco, 2013; Minichilli, et al., 2015). The results from these studies, however, are not unequivocal (Enriques, Volpin, 2007; O’Boyle et al., 2012). Adopting the agency theory framework, some authors argue that FBs are more efficient than non-family business (NFBs), as in FBs few or no agency problems exist and agency costs are very low or nonexistent (Fama, Jensen, 1983). The strong involvement of family members in business ownership and management reduces the risk of opportunistic behaviour by managers and promotes the alignment of interests and objectives (Villalonga e Amit, 2006). In contrast with the more traditional view that FBs are free from agency problems, other scholars have observed that owner-manager and owner- owner problems (Villalonga and Amit, 2006) exist even in FBs and support the existence of a negative relationship between family ownership and company performance. Leading problems occurring in FBs include the pursuit of private benefits (Gómez-Mejía et al., 2001), entrenchment (Shleifer, Vishny, 1997), adverse selection (Lubatkin et al., 2005), nepotism and the consumption of unearned perks (Schulze et al., 2001). More recently, some scholars have raised the question of FBs’ ability to face periods of economic downturn and have analysed the link betweenfamily ownership and firms performance in a crisis context. In several countries, analyses on this topic have shown that FBs enjoy better performance than NFBs (Amann, Jaussaud, 2012; Wu et al., 2012; Allouche et al., 2008; Martìn-Oliver et al., 2015), also thanks to a stronger capital structure (Amann, Jaussaud, 2012; Martìn-Oliver et al., 2015). Similar analyses have also been carried out in Italy and have obtained similar results (Minichilli et al., 2015; Macciocchi, Tiscini, 2016). Mentioned analyses generally consider large companies; analyses focused on Italian medium-sized businesses during the recent economic crisis do not exist. Conversely, Italian medium-sized businesses represent a very important class of business, which has begun to play an increasingly important role. In this context, this article aims to fill a research gap, by focusing on Italian medium-sized firms. It contributes to the on-going debate by comparing Italian medium-sized FBs and NFBs, in order to understand if FBs have faced the recent economic crisis with a higher level of financial independence and obtained better economic performance. In this paper, we present preliminary results of the first step of our empirical research.