Goals, management practices, and performance of family SMEs

Abstract

Purpose - To examine differences between family and non-family SMEs in business goals, management practices and performance as they grow. Design/methodology/approach - The study was based on 233 small non-family and 362 small family firms. Medium firms comprised 305 family and 341 non-family firms. Chi-square tests and t-tests were used to investigate the hypotheses formulated. Findings - Small family firms were less likely to pursue growth compared with similar non-family firms. Although medium family proprietors desired growth, their actual growth was lower than similar non-family firms. Management practices were less formal in family firms and the gap between family and non-family firms in this area widened with growth. Small family firms achieved greater profits than their non-family counterparts, although this disparity disappeared at the medium level. Exports were low for both firms at the small level. However, medium family firms were less likely than similar non-family firms to export. Research limitations/implications - Firms in the various size groups examined were independent of one another. A longitudinal investigation of family and non-family firms as they progress through various growth stages should complement the findings. Practical implications - The findings should assist policies makers, advisers, owners and management in designing policies and programs, providing advice and managing the two ownership types. Informal management procedures and the associated flexibility may enhance performance of small family firms but may impede their performance at larger sizes. Originality/value - The paper demonstrates that the relationship between goals, strategies and performance varies between family and non-family firms and the variations change with firm size.