CEO characteristics and family firm performance

Many researchers aimed to find out how CEO characteristics affect the performance of large, publicly listed non-family firms. But how about family firms, in which the CEO often has a specific role and long tenure? Is there any specific relationship between CEO age or education and family firm performance? HSG-student Tobias Schori aimed to answer this research question in his master thesis. He collected data on 142 listed family firms from Germany, Austria, Switzerland, and France in 2013 and finds the following:

  • Functional diversity of the CEO – meaning that the CEO had worked in several different functional areas of the company – has a significant, positive effect on family firm performance (measured as profitability)
  • There is slight evidence that the higher the education of the CEO, the better the family firm performance (measured as Tobin’s Q).
  • Interestingly, the positive effect of CEO education and CEO functional diversity exists for family firms with more than 25% family ownership – but disappears when considering family firms with 5-25% family ownership
  • Contrarily to what we expected, the age of the CEO and the tenure of the CEO did not significantly affect firm performance

The following table illustrates some of the key variables and in particular differences between family and non-family CEOs.

In case of questions or if interested in the full text, please contact nadine.kammerlander[at]whu.edu

Descriptive data (source: T. Schori)
Descriptive data (source: T. Schori)

How can family firms motivate their employees to be innovative?

Employees are a key success factor for innovation – but how to motivate them?

Recent research showed that family firms are, on average, very innovative. But why is that? One reason provided by scholars is that employees in family firms feel especially encouraged to share their innovative ideas and implement them because of the particular “family firm culture.” So far, so good. But some of the readers might  wonder how exactly family firm owner-managers can motivate their employees to contribute to innovation. HSG-student, Johannes Netzhammer aimed to answer this question by integrating literature on family firms, innovation, and motivation. Here comes the summary of his excellent conceptual bachelor thesis (for references to original literature, please request the full text of the thesis):

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