the importance of family co-occurrence for firm performance
TRANSCRIPT
Relatedness through kinship The importance of family co-occurrence for firm performance Evans Korang Adjei
Relatedness through kinship The importance of family co-occurrence for firm performance
Evans Korang Adjei
Department of Geography and Economic History
Umeå 2018
Copyright © Evans Korang Adjei
Institutionen för Geografi och Ekonomisk Historia Umeå Universitet 901 87 Umeå Sverige
Department of Geography and Economic History Umeå University 901 87 Umeå Sweden
Mob: +46 76 279 6134 Tel: +46 90 786 9281 Fax: +46 90 786 6359 Website: http://www.geoekhist.umu.se E-mail: [email protected] [email protected]
Responsible publisher under Swedish law: the Dean of the Social Science Faculty This work is protected by the Swedish Copyright Legislation (Act 1960:729) Dissertation for PhD ISBN: 978-91-7601-839-2 ISSN: 1402-5205 GERUM 2018:1 Cover photo available at https://image.marriage.com/advice/wp-content/uploads/2017/11/7-Tips-for-Nurturing-Family-Relationships-in-Foster-Care.jpg Electronic version available at http://umu.diva-portal.org/ Printed by: Print & Media, Umeå University
Umeå, Sweden 2018
iii
Dedication
To my family.
iv
Acknowledgements
This thesis is a product of support and encouragement I received throughout my Ph.D.
journey. During my nearly fifty months of full-time studies, many people with and
without a clue about my Ph.D. project have influenced and inspired me in numerous
ways. It is, therefore, my pleasure to acknowledge the roles of special individuals who
were instrumental in one way or the other. However, if you are not mentioned here,
it is not deliberate.
First, I wish to give thanks to the ALMIGHTY GOD for HIS mercies and grace upon my
life during my Ph.D. studies. My utmost inspiration has come from GOD THE
ALMIGHTY. For GOD says in Isaiah 41:10 “Fear thou not; for I am with thee: be not
dismayed; for I am thy God: I will strengthen thee; yea, I will help thee; yea, I will uphold
thee with the right hand of my righteousness” (KJV). Indeed, the LORD has
strengthened and held me with HIS righteousness throughout my Ph.D. journey even
when I thought I had lost the strength to continue.
Second, I wish to thank my supervisors, Urban Lindgren (Professor) and Rikard Eriksson
(Professor). First, thank you for giving me the opportunity to work with you (it’s a
privilege). Encouraging me to take the thesis as my own helped me to discover my
strengths. Besides, your incisive comments (e.g. write short sentences) were often
enough to keep me going. From the very first day, you devoted a lot of time and energy
to my development as a researcher. Urban, you have a way of simplifying my own
thoughts and ideas when I did not feel like an authority in myself. Your constant
abilities to model my whirlpool ideas into thought-provoking ones have helped me to
overcome many tough moments. To you Rikard, your level of knowledge and
thoughtfulness and willingness to help in any way possible make me your admirer.
Finally, the two of you are wonderful and dynamic supervisors. I could not have asked
for better supervisors for my Ph.D. studies.
Third, I wish to extend my sincere gratitude to the various readers (both external and
internal) from the draft stage to this stage that it can be considered as a dissertation.
Many thanks to Bram Timmermans (Norwegian School of Economics - NHH) and
Markus Grillitsch (Centre for Innovation, Research, and Competence in the Learning
Economy - CIRCLE, Lund University), who were the opponents for my mid-term
seminar and pre-dissertation seminar respectively. Your outstanding comments and
suggestions have fuelled my work to this very end. Your comments helped me to both
broaden, and focus my thinking on different parts of the thesis. This provided me with
a clear course to follow. I wish to say thank you to Kerstin Westin, who was the internal
reader for both drafts for my mid-term and pre-dissertation seminars. Thank you to
Roger Marjavaara and Emma Lundholm for doing the last reading of my thesis. Thanks
to Judith Rinker Öhman for doing the proofreading of my thesis.
v
I wish to express my sincere thanks to some individuals and groups at the Department
of Geography and Economic History. Many thanks to the past and present members
of the Ph.D. group, we have been wonderful to ourselves in many ways. Memories of
time spent at Ph.D.’s workshops and Ph.D.’s outings fun games will forever be
cherished. Many thanks to the defunct beach team members, fishing team members,
and Mario Kart team members. Many thanks to Lotta Brännlund, Erik Bäckström, Ylva
Linghult, Fredrik Gärling, Maria Lindström, Tina Lundmark, and Cecilia Vallin for all the
invaluable practical, technical and administrative support. Special thank you to Lotta
and Erik for your yeoman’s administrative (travel practicalities) and technical (data
retrieval and setting) supports respectively, which you discharged with delights. I wish
to say thank you to both senior and junior members of the Economic Geography
seminar series for their comments and suggestions, especially on paper III: Rikard
Eriksson, Urban Lindgren, Emelie Hane-Weijiman, Therese Danley, Marcin Rataj, and
Lars-Fredrik-Andersson. A special thank you to Emelie Hane-Weijiman. I appreciate the
random and frequent discussions in the research lab and in the corridor and the
summary in Swedish.
Apart from writing the thesis, I have also had the opportunity to attend several
conferences, workshops and Ph.D. courses at different locations around the world,
which has given me great inspiration. My journeys were all made possible by financial
support from Gösta Skoglund Foundation, and the Knut and Alice Wallenberg
Foundation. A special thank you to Johan Lundberg, Director of the Graduate School
in Population Dynamics and Public Policy, who financially supported my trip to the
Association of America Geographers (AAG) annual conference in Chicago.
Finally, I would want to extend my warmest appreciation and gratefulness to friends
and family outside of academia. Many thanks to the Ghanaian community in Umea.
You guys have been wonderful all these years! While I enjoyed our weekend meetings,
it was also an opportunity for me to shake-off the stressful days at work. A special
thank you to the Ali Mumuni’s family for hosting us all these years. Many thanks to my
church members and Pastor Ogonna Obudulu (Ph.D.) for his spiritual counsels and
prayers.
I reserve a special gratitude to my family. Thank you to my parents: Mr. Robert Adjei
Yeboah, and Mrs. Annabel Adjei Yeboah for their prayers and support. Your prayers
have been my strength and enthusiasm in my academic and everyday life. Even though
you became weary along the line, your prayers kept me going. To my siblings: Ernest
Amoako-Adjei, Hilda Timah Adjei, Max Adjei Yeboah and Augustine Amankwah Adjei,
thanks for your support in various forms.
Special thank you to my wife Naomi Adom for her patience and support. To our son
Nhyira Papa Yaw Korang Adjei, you brought joy to Daddy and Mummy, especially to
Daddy in the last months of his Ph.D. studies. Coming home to you guys always gave
me the peace of mind and the energy to go on. My years of Ph.D. research have shown
vi
me that as a family we have strengths and abilities that set us apart from other social
groups.
You have all contributed to keeping me grounded, balanced and happy and I cannot
thank you enough for that.
GOD bless you all! Nyame nhyira mu!
Evans Korang Adjei
Umeå University
Umeå, March 2018
vii
Table of contents
Dedication iii Acknowledgements iv Table of contents vii List of tables viii List of figures viii List of included papers ix Abstract x 1. INTRODUCTION 13
1.1. Aim and research questions 16 1.2. Delimitation and contributions 17
1.3. Structure of the thesis 18 2. THEORETICAL FRAMEWORK 18
2.1. The co-occurrence and role of the family; a product of geography 18 2.2. Geographical differences in firm performance; from agglomeration economies to proximity
dimensions 20 2.3. Family and firm performance 23
2.4. Family firms and regional economy 31
3. RESEARCH DESIGN AND CONTEXT 34 3.1. Description of Data 34
3.2. Methodological comments 38 3.3. Method 38
3.4. The Swedish labour market in context 42 3.5. Ethical considerations regarding register data 44
4. SUMMARY OF PAPERS 45 Paper I Social proximity and firm performance: the importance of family member ties in workplaces 45 Paper II Familial relationships and firm performance: the impact of entrepreneurial family relationships 46 Paper III Family firm and entrepreneurial capital: the importance of entrepreneurial capital for firm survival
and growth 47 5. CONCLUDING DISCUSSIONS 49
5.1. Findings and discussions 49
5.2. Implications for theory and methodology 53 5.3. Implications for policy and regional development 54 5.4. Limitations and recommendations for future research 55 5.5. Conclusions 56
6. SAMMANFATTNING PÅ SVENSKA (SUMMARY IN SWEDISH) 57 REFERENCES 62
1.2.1. Delimitation 17 1.2.2. Contributions 17
2.3.1. The family and ties that bind 23 2.3.2. How family co-occurrence can affect firm performance 26
2.4.1. Location preferences of family firms and their superiority 31 2.4.2. Varying geographical effects of family co-occurrence and EC 32
3.1.1. Connecting family members in a firm 35 3.1.2. Identifying a family firm 36 3.1.3. Defining entrepreneurial capital (EC) 36 3.1.4. Limitations of the database 37
3.3.1. Data and empirical model 38 3.3.2. Measuring performance 39
5.1.1. The family, the family firm and the regional economy 50
viii
List of tables
Table 1: Firm classifications based on firm type and EC 37
Table 2: Summary of the research design of the three papers 41
List of figures
Figure 1: (A) Swedish FA regions with the 3 metropolitan regions selected; (B) number employees
(thousands); (C) family co-occurrence (share), and (D) productivity per capita (hundreds), quartile are
shown here (data on firms with maximum of 50 employees, 1995-2010) 43
ix
List of included papers
Paper I: Adjei, K.E., Eriksson, R. & Lindgren, U. (2016). Social proximity and firm performance: the importance of family member ties in workplaces. Regional Studies, Regional Science 3(1):304-320.
Author’s declaration: Joint effort in planning and writing the manuscript. Sole responsibility for the empirical analysis.
Paper II: Adjei, K.E., Eriksson, R. Lindgren, U. & Holm, E. (revised and resubmitted). Familial relationships and firm performance: the impact of entrepreneurial family relationships.
Author’s declaration: Joint effort in planning. Sole responsibility for the empirical analysis and 60% of the writing of the manuscript,
Paper III: Adjei, K.E. (submitted). Family firm and entrepreneurial capital: the importance of entrepreneurial capital for firm survival and growth.
Author’s declaration: Sole responsibility for planning, writing and empirical analysis.
Evans Korang Adjei
Umeå University, Sweden
Umeå, March 2018
x
Abstract
The aim of the thesis is to analyse the effects of family co-occurrence and past familial
relationships (inherited entrepreneurial abilities) on firm performance. This aim is
motivated by the contemporary arguments that social relations (e.g. family ties) are
important in the analysis of today’s space economy. In most studies, the point of
departure in the analysis of firm performance has often been to analyse and examine
the cognitive resources available in a firm, as well as a firm’s geographical closeness
to related firms and industries. However, this argument has been challenged, and it is
further suggested that social relations, and for that matter family relations (or family
co-occurrence), may be important in the analysis of firm performance. To test this
argument, the analysis is based on longitudinal data comprising various register data
on the Swedish population and firms.
To examine the aim, three different but related questions were analysed: the first
analysed the prevalence of family employment across different regions and how this
affects firm performance; the second examined the relationship between
entrepreneurs’ familial relations (co-occurrence of different family relations) and skill
variety, on one hand, and how the relationship affects firm performance on the other;
and the third examined the effects of present family relations (family firms) and
entrepreneurial capital (EC, inherited entrepreneurial capability from self-employed
parents – past family relations) on the survival and growth of new entrants. Questions
1 and 2 were explored by applying simple ordinary least squares (OLS) and fixed effects
(FE) regressions, respectively. Question 3 was explored by employing an event-history
analysis (survival analysis) to determine the time to exit and OLS for the growth
analysis.
The results show that family co-occurrence in firms (be they family or non-family firms)
positively affect labour productivity. At the same time, the results show that some
specific family relationships are more important than others in terms of impacting
labour productivity. Moreover, the results indicate that family firms, in particular,
benefit the most from having family members employed in the firm, especially when
this involves family relationships such as couples and/or children. The co-occurrence
of couples and/or children in family firms moderates the negative impacts of
similarities and unrelatedness of skills on productivity. The results show that the
impacts of family co-occurrence are greater in smaller specialized regions than diverse
and larger ones. Thus, while the family positively correlates with firm performance,
this is mainly the case in specialized regions. The results further show that family firms
are not more resilient, as the literature argues; but this effect is confounded by EC.
The implication is that it is not family firms per se that are resilient but rather firms
with entrepreneurial experience from parents, especially in rural regions; meanwhile,
family firms create more jobs. However, the analysis could not identify a clear regional
effect of the role of family firm on job creation. In this sense, the present thesis
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provides important insight into why the family constitutes an important part of the
firm production setup. The findings show that it is necessary and important to consider
the family, and family firms, in the larger regional development framework. Moreover,
while reflecting on the importance of the family in relation to firm performance, we
should also not lose sight of the fact that there is a latent risk in family co-occurrence
in firms: it is not a problem—until it becomes a problem.
Keywords: proximity dimension, agglomeration economies, family, family co-
occurrence, family firm, region, firm performance, regional development,
entrepreneurial capital, localized learning, Sweden
Evans Korang Adjei
Umeå University, Umeå
Umeå, March 2018
13
1. INTRODUCTION
“Family isn’t defined only by last names or blood; it’s
defined by commitment and by love. It means showing up
when they need it most. It means having each other’s
backs. It means choosing to love each other even on those
days when you struggle to like each other. It means never
giving up on each other” (Dave Willis)1.
Willis’ definition of the family shows how the family goes beyond just last name, blood,
marriage or adoption, and that it must be characterized by love and commitment to
one another. This distinguishes the family from other social groups in the economic
landscape. Willis’ conception of the family resonates with the popular Spanish adage
“an ounce of blood is worth more than a pound of friendship”; in other words, this
implies that the family represents an institution of economic, production, and social
functions that shape the economic landscape. In the pre-industrial stage, or in pre-
modern society, because technology was limited and barely changing, most economic
and productive activities took place within the family, in which the distribution of
activities was organized based on custom and tradition (Ross & Sawhill, 1977). The
family thus played a central role in production and distribution chains, since economic
and social status were defined by family ties.
New technology and specialization have caused a shift from the home to the factory,
which can be noted during the industrial stage, or in modern society. As part of the
effects of the Industrial Revolution or development, the shrinking of the extended
family into the present nuclear family leaves little to be said of the family’s capacity as
a production and economic unit. Ross and Sawhill (1977) argue that, to some degree,
the family itself has become a more specialized unit whose major responsibility is the
creation and socialization of children. The implication is that, because the family has
lost some economic and production functions, it is no longer the central institution in
society. Yet, the family still continues to play a crucial role in the economic and
productive setup of the economic landscape. For example, through families’ strategic
decisions and entrepreneurial activities, family firms are important agents in the
regional economic development framework. Recent studies indicate that, on average,
family or kinship ties constitute about 14% of Swedish workplaces (Holm, Westin, &
Haugen, 2017)2, at the same time as family firms account for about one-fourth of total
1 Dave Willis is a Pastor and the author of several books. He teaches communication courses, and has served as a consultant in the areas of interpersonal communication, public speaking, and social media strategy. http://www.patheos.com/blogs/davewillis/quotes-worth-sharing/.
2 In this thesis, the term family ties represents the relationship between family members and relatives (kin). This includes relations based on consanguinity (blood relations) – e.g. siblings, grandparents, cousins, uncles – and those based on conjugality (marriage). Family ties is therefore used interchangeably with kinship ties.
14
employment and one-fifth of the gross domestic product (GDP) in Sweden (Bjuggren,
Johansson, & Sjögren, 2011). This makes the co-occurrence of family members and
the impacts of family firms a phenomenon that is likely observable at most workplaces
and in most regional economies.
Despite the crucial role of the family and the report that family typologies play a major
role in regional development in terms of GDP per capita (Duranton, Rodríguez-Pose,
& Sandall, 2009), the family is relatively under-researched in most studies in relation
to regional differences in economic development. Basco (2015), for instance, argues
that regional development studies have neglected to investigate the role of the family
on firm behaviours and the consequences of this influence on regional economic and
social development. While regional development literature has recognized the role of
social capital in shaping competitive advantages (e.g. Saxenian, 1994), the potential
role of familial relations has often been studied through case studies (e.g. Johannisson
et al., 2007). However, the link between the family and regional socioeconomic
outcomes deserves more attention in the literature as it can offer significant progress
toward understanding why some regions are more developed or more able to adapt
to shocks than others (Duranton et al., 2009), since there is hardly an aspect of a
society’s life that is not affected by the family (Alesina & Giuliano, 2014).
Given the above-mentioned gap, this thesis contributes to the regional economic
development literature by analysing the role of the family on firm performance. The
thesis specifically considers how various forms of family relations (or family co-
occurrence) and entrepreneurial capital (EC) influence firm performance in different
types of regions. While family co-occurrences capture the present family relations
within firms, EC represents the entrepreneurial experiences and practices inherited
from self-employed parents (also termed as past familial relations). The analyses are
positioned at the intersection between the agglomeration and proximity dimensions
literature exploring and capturing the relevance of proximity in various dimensions, on
the one hand, and the family business literature on the other. The thesis places keen
attention on social proximity – the family and how such relations among many others
are important for understanding spatial differences in firm performance. The thesis is
based on the assumption that the family is a resource that is important for increased
firm performance, but most importantly, in regions characterized by agglomeration
diseconomies or in regions lacking the benefits derived from the collocation of firms,
usually small regions.
Social relations at the micro level comprise a major factor for collaboration within and
across firms (Boschma, 2005; Granovetter, 1985). This makes the family an effective
learning group since group norms and culture shape skills and communication in cases
in which the group attaches great value to learning (Granovetter, 2005). Family
relations offer an ideal environment for creating social capital through modelling trust
as a foundation for collaboration and reciprocity (Bubolz, 2001; Coleman, 1988). Trust
is an important element in relationships, and in economic transactions at large (Uzzi,
15
1997). In the family, trust can be assumed as path-dependent as family members
always strive to avoid ruining the established culture of trust and supportive
behaviours. This tends to preserve the family over other social groups, and further
makes family relationships more durable (McPherson, Smith-Lovin, & Cook, 2001;
Nahapiet & Ghoshal, 1998). Trust-laden relations permit others to act heuristically,
and hence speed up knowledge circulation and conserve cognitive resources.
At the same time, strong family ties can adversely affect firm performance or
economic development. First, a high level of trust in the family is likely to produce
distrust outside the family, a behaviour that can impede cooperation with and
development of formal institutions (Alesina & Giuliano, 2014). Ermisch and Gambetta
(2010) found that high family trust produced a lower level of trust in strangers as well
as distrust among co-workers, especially among non-family employees (Pearce, 2015).
In family relationships in which a great deal of loyalty is involved, there may be an
underestimation of the risk of opportunism and uncertainty. Furthermore, family co-
occurrence can adversely affect learning processes. Learning processes among family
members can result in the accumulation of similar cognitive resources that can cause
lock-in and slower growth (Bentolila, Michelacci, & Suarez, 2010; Grabher, 1993).
Kramarz and Nordström-Skans (2010) suggest that hiring family members is a
suboptimal strategy as children who perform well find jobs elsewhere, or quickly move
to other employers, while underperforming children tend to stay much longer in the
same firm with their parents. This creates undesirable spillovers and causes a lack of
flexibility, which can restrict novelty and hamper openness to potential knowledge
sources outside the family.
Moreover, the impacts of family co-occurrence and EC on firm performance and
regional development comprise a geographical problem. This situation has not
received enough attention in economic geography. The co-occurrence and role of
family ties are influenced by the region; that is, there is a potential varying outcome
of the role of family ties depending on the spatial context. For instance, because
metropolitan regions are characterized by a higher agglomeration of both specialized
and diverse industries and workers, there is comparatively increased efficiency in
labour market matching (Duranton & Puga, 2004; Glaeser, 1999; Gordon & McCann,
2000; Puga, 2010; Wheeler, 2001). This means that metropolitan regions may place
little importance on hiring through family referrals compared to rural regions, where
access to agglomeration externalities is scarcer and labour market efficiencies are
enhanced by established norms through continual interactions3. Florida (1995), for
instance, argues that larger labour market regions are collectors and repositories of
knowledge and ideas that give rise to positive externalities, primarily by creating
opportunities for people (and/or firms) in different industries to exchange ideas in an 3 In this thesis metropolitan regions are those characterized by high population, high population density, and high economic activities. Therefore, metropolitan regions is used synonymously with larger regions. The same applies to the use of rural and smaller regions, except when specified.
16
effort to explore and exploit complementarities (Glaeser, 1999). It is therefore
imperative to argue that, because rural regions are characterized by labour market
matching deficiencies and a lack of variety, family co-occurrence in firms may be more
dominant there. Consequently, geography drives the presence and role of family ties.
Moreover, there is evidence that agglomerations are not homogenous but rather vary
along several dimensions, and hence that different firm-internal resources influence
performance (Knoben, Arikan, van Oort, & Raspe, 2016). The implication is that family
co-occurrence could still influence firm performance in larger regions through the
interplay with resources at the firm level. This makes the family, and family firms, not
simply a small peripheral topic. However, we need to know more about the underlying
mechanisms and importance of the family and family firms in the economic landscape.
This suggests a need for an empirical analysis of the effects of the family and family
firms, which is what this thesis seeks to achieve.
1.1. Aim and research questions
The aim of this thesis is to analyse the effects of family co-occurrence and past familial
relationships (inherited entrepreneurial abilities) on firm performance. This aim is
motivated by the contemporary arguments that social relations (e.g. family ties) are
important in the analysis of today’s space economy (e.g. Blanc & Sierra, 1999;
Boschma, 2005; Gilly & Torre, 2000; Rallet & Torre, 1999). Basco (2015) also argues
that the role of the family has been under-researched in a regional development
framework, despite the claims that family relations create positive externalities and
hence may explain spatial variations of economic development (Duranton et al., 2009).
Moreover, although the firm has been the object of analysis, the exact mechanisms
driving the growth in different regions still remain unexplored. The aim of the present
thesis finds support in a qualitative finding in the Swedish context by Haugen and
Westin (2016), who found that hiring family members not only reduces the risk of
hiring the wrong person but also enhances the transfer of tacit knowledge among
family members. Nevertheless, family co-occurrence can also produce a suboptimal
outcome, owing to a lack of plurality of competences. The aim of this thesis is
addressed with three research questions, examined in three separate empirical
studies:
1. What are the effects of family co-occurrence on firm performance, and how
prevalent is family co-occurrence across different regions? (Paper I)
2. What are the impacts of entrepreneurial family relationships on firm
performance, and how do they interplay with in-house skill variety? (Paper II)
3. What are the effects of entrepreneurial capital on the survival and growth of
family firms? (Paper III)
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1.2. Delimitation and contributions
1.2.1. Delimitation
The present thesis is delimited to the effects of family co-occurrence within the firm.
By this delimitation, the analyses exclude all possible impacts of the family outside the
firm and between different firms. Instead, the thesis focuses on how family relations
within the same firm may enhance firm performance and explain differences in
regional development, but also how these same processes facilitate the transfer of EC.
The definition of the family and family ties is data-driven because the ASTRID database
provides information on the type of family and the type of familial relationships within
the family (see further discussion in section 3). The data were delimited to the periods
from the 1995s onwards (see further discussion in section 3). The above research
questions are brought to fruition in an empirical design that is predominantly
quantitative in nature, using longitudinal micro-data consisting of employer-employee
matched data in the Swedish economy.
1.2.2. Contributions
The major contribution this thesis seeks to make is to view and discuss uneven regional
development from the perspective of the role of family co-occurrence and EC on firm
performance. By so doing, the thesis seeks to systematically analyse the impacts of
family co-occurrence and EC on the behaviours of firms and the consequences of these
behaviours for regional development. The thesis goes beyond the general claim that
trust affects cooperation in certain industries in certain regions (Saxenian, 1994;
Storper, 1995), by drawing on large-scale data to investigate how the family affects
firm performance. By examining the importance of the family in the firm, the thesis
hopes to contribute to the understanding of the family’s role in firm competitiveness.
Besides examining the absolute benefits of the family, analysing the relational
character of learning requires a look at multiple proximities. Despite the extant
literature on proximity dynamics, the exact workings of proximity still remain a black
box (Boschma, 2005; Shaw & Gilly, 2000). Boschma (2005) suggests that combining
different proximity dimensions may offer a solution to most learning problems in the
firm; however, there have been fewer studies in this regard. A recent study has shown
that (un-)related flows within the same firm are important for firm performance
(Östbring, Eriksson, & Lindgren, 2017). Therefore, by examining the combination of
multiple proximity dimensions (social proximity and cognitive proximity), the present
thesis contributes to the proximity dimension literature. Finally, previous studies
indicate that family involvement in family firms enhances their performance over non-
family firms in terms of productivity and employment growth (Astrachan & Shanker,
2003; Villalonga & Amit, 2006; Westhead & Cowling, 1996), even when different
definitions of family firm are tested (Miller, Le Breton-Miller, Lester, & Cannella, 2007).
However, the exact mechanisms driving the growth and survival of family firms still
remain unexplored. The thesis therefore contributes to this body of literature by
18
analysing the impacts of EC on the survival and growth of new entrants across different
economic landscapes.
1.3. Structure of the thesis
The thesis comprises an introductory section (kappa) and three papers. The kappa
includes six main sections, the first being this introductory section. The second section
discusses the theoretical framework on uneven regional development in relation to
family ties and firm performance. In this section, the thesis discusses how family
relations can facilitate firm performance through various mechanisms. The intention
is to give a broader theoretical framework, within which the thesis aims to contribute.
The third section briefly discusses the data, key variables, methods, and applied
methodology used in the various papers, and the limitations of the data and various
methods. The fourth section presents a summary of the three papers, while the fifth
presents the concluding discussions on the main findings and implications for theory
and methodology as well as suggestions for future research. A short summary in
Swedish is provided in section six.
2. THEORETICAL FRAMEWORK
This part of the thesis presents the general theoretical framework. It is worth noting
that this does not reflect the entirety of the theoretical framework in each of the
papers, but rather the broader literature on which the thesis draws. The section starts
with a conceptual overview of how the co-occurrence (or presence) and role of the
family comprise a geographical product. From here, the family is discussed in the
context of proximity dimensions as important form of social proximity for firm
performance. Finally, this section further discusses how family co-occurrence and EC
in family firms contribute to the creation and definition of different economic
landscapes.
2.1. The co-occurrence and role of the family; a product of geography
In recent decades, studies have shown that firms are more productive, on average, in
metropolitan regions (Combes, Duranton, Gobillon, Puga, & Roux, 2012; Florida,
Mellander, Stolarick, & Ross, 2012). Two main explanations have been offered for this,
asserting that it entails: (1) the effects of firm and skills selection, or (2) the effects of
agglomeration economies. Competition is very high in metropolitan regions, allowing
only the most productive firms and workers to survive. Prior studies have shown that
tolerant and diverse metropolitan regions function as magnets for young, talented and
highly educated people (e.g. Florida, 2002). For instance, Bjerke (2012) argues that
large and growing Swedish regions are good at attracting and/or keeping graduates.
This is the case because highly skilled jobs have become more concentrated in larger
cities over time (Florida et al., 2012). Bjerke and Mellander (2017) found that Swedish
19
graduates are more likely to stay in or move to larger regions and commute longer
distances to creative jobs. At the same time, larger regions are characterized by the
presence of both specialized and diverse economic activities that promote
externalities, which increase the productivity of firms (Combes et al., 2012). Skilled
workers and economic activities continue to flock to larger regions, even though they
are associated with higher rent, higher cost of living, and higher wages. Glaeser and
Maré (2001) explain that higher wages in larger regions are compensated by higher
productivity. Glaeser (1999) further argues that, if cities are full of individuals with high
human capital and speed in the flow of information, the cities will be more valuable to
individuals with high human capital. The implication here is that the selection of
productive firms and skilled workers into larger regions only leaves smaller regions
with less productive firms and workers on the competitive global market. However,
this might not always be the case for all rural regions, as they are heterogeneous and
show ranges of economic trajectories; e.g. some are becoming attractive for
specialized industries and skills.
Economic geographers have attributed the spatial differences in firm performance to
the benefits associated with agglomeration economies. Agglomeration economies
arise from a variety of mechanisms, such as the possibility for collocated similar firms
or firms in the same industry to share suppliers via the existence of a thick labour
market, facilitate matching, and offer the possibility to learn from other firms.
Duranton and Puga (2004) emphasize that the spatial concentration of firms and
workers makes them more productive. Moreover, since urban agglomerations
facilitate skill accumulation and speed the rate of interactions, highly skilled
individuals, and productivity advantages are common in larger regions. This argument
is closely linked to the localization economies of Marshall (1920). The geographical
collocation of similar economic activities broadens the range of potential experiences
for all forms of collaboration and intellectual spillovers that are important for firm
performance (Glaeser, 1999; Glaeser & Maré, 2001). On the other hand,
agglomeration economies can arise from the collocation of a diverse range of
economic activities; this is closely linked to the notion of urbanization economies
asserted by Jacobs (1969). Clearly, from the above, it is obvious that the demand and
supply factors affect the spatial sorting of firms and skilled workers, and hence the
geographical differences in firm performance. In all this, we are oblivious to (or have
missed) how the spatial sorting of productive firms and skilled workers may result in
the differentiated spatial sorting of family co-occurrence or employment and family
firms in the literature.
Processes of spatial sorting of skilled workers and productive firms may result in the
production of higher family employment or co-occurrence in firms, and hence strong
family ties in certain firms and regions. In effect, regions that lack the availability or
presence of highly skilled workers may resort to hiring through referrals and family
networks, resorting in a higher presence and stronger family ties at the firm level. It
20
may be difficult to unambiguously claim that processes of spatial sorting of workers
and firms could produce family co-occurrence and stronger family ties in smaller
regions, inter alia the frequent face-to-face interactions. However, it is reasonable to
argue that because smaller regions are characterized by the sorting of relatively low-
skilled workers (Glaeser, 1999; Glaeser & Maré, 2001), hiring through family ties
becomes the most reliable and cheap source of employment (Montgomery, 1991).
Additionally, the spatial differences in family ties can be attributed to processes of
globalization. Globalization has resulted in structural changes in the family
(Roopnarine & Gielen, 2005). The processes of globalization have increased patterns
of migration, favouring high movement into larger regions owing to the availability of
job opportunities. This has torn families apart, weakening family relations. Moreover,
because smaller regions facilitate face-to-face interactions among family members, it
reasonable for these regions to produce stronger and more trustful family
relationships both within the firm and at home. In a recent paper, Holm, Westin and
Haugen (2017) found low levels of kinship density4 at workplaces in Sweden’s
metropolitan regions, somewhat high levels in intermediate-sized regions (urban
regions), and higher levels in remote and sparsely populated areas (rural or small
regions). They further showed that kinship density decreases with rising educational
levels, which means that workers with low education are overrepresented at
workplaces with high kinship density, a phenomenon that can highly be associated
with smaller or rural regions.
2.2. Geographical differences in firm performance; from agglomeration economies to proximity dimensions
Over the years economic geographers have studied the role of agglomerations in firm
performance. Evidence shows that the geographical agglomeration of firms facilitates
the creation of a localized learning system (Maskell & Malmberg, 1999a, 1999b) and
university-industry innovation processes (Abramovsky & Simpson, 2011; Ponds, van
Oort, & Frenken, 2010), etc. Marshall (1920) argues that there is something ‘in the air’
in geographical agglomeration that seems to stimulate the competitiveness and
growth of firms and shape our understanding of the uneven spatial development of
industrial districts (Saxenian, 1994; Storper, 1995). For instance, the geographical
collocation of related economic activities promotes access to specialized labour and
inputs, to technological and knowledge spillovers, and to greater demand and/or
supply. McCann and Folta (2008) argue that the geographical concentration of related
economic activities enhances efficient access to the supply and demand of important
resources exogenous to the economic actors (Ellison & Glaeser, 1999). Meanwhile,
according to Jacobs (1969), important sources of knowledge and technological
4 Where kinship density is the total number of direct individual kinship links at a workplace. For a son and father at the same workplace, the son has two links: one to the father and one from the father
(Holm et al., 2017).
21
spillovers are external to the industry in which an economic agent operates. The
geographical agglomeration of diverse economic activities promotes opportunities to
imitate and recombine ideas from different industries (Glaeser, 1999; Malmberg &
Maskell, 2002). For example, earlier studies have shown that more diverse economies
are conducive to the exchange of skills necessary to the emergence of new fields
(Harrison, Kelley, & Gant, 1996b). This is the case because more diverse economies
offer a labour force with a broader mix of skills, including new skills conducive to
working with emerging production technologies (Harrison, Kelley, & Gant, 1996a).
Therefore, proximity is not a new idea in economic geography; geographical proximity
has long dominated the theoretical and empirical discussions in the literature.
The general observation in the literature is a strong indication that regions are
connected with the geographical concentration of economic activities and skilled
workers, with production remarkably concentrated in space (Krugman, 1991),
especially in larger regions (Andersson & Lööf, 2011; Combes et al., 2012; Florida et
al., 2012). The strong connection between larger regions and the concentration of
economic activities and skilled workers tends to make larger regions superior
performers to smaller regions. Glaeser and Maré (2001) attribute the regional
differences in firm performance to wage differentials (urban wage premium).
According to this claim, it is not by chance that highly educated individuals are drawn
to larger labour markets where the returns on their human capital are the highest
(Wheeler, 2001) and the average productivity is higher. This argument has received
greater attention with diverse discussions on proximity dimensions. Besides,
geographical differences in innovation and productivity have long been analysed from
a diffusion point of view (Hägerstrand, 1967). Hägerstrand's view on innovation and
productivity is based on the nature and spatial distribution of information.
Hägerstrand argues that the probability that information is transmitted from one
economic agent to another declines with the distance between the two. Malmberg
and Maskell (2002) expand on this by arguing that when firms collocate, a spatially
defined community is usually constructed. This makes it easier for the firms to bridge
all forms of communication gaps resulting from different knowledge bases and
organizational arrangements. Duranton and Puga (2004) argue that the spatial
concentration of economic activities and skilled workers allows for a more efficient
sharing of local infrastructure and facilities, a variety of intermediate input suppliers,
or a pool of skilled workers. It offers larger markets better matching opportunities
between employers and employees, and buyers and suppliers (e.g. Wheeler, 2001). It
also facilitates learning processes, by promoting the development and widespread
adoption of new technologies and business practices (Puga, 2010). Moreover,
economic activities in larger regions tend to generally benefit from geographical
proximity because they are located in places where the occupational distribution of
workers matches the demand for labour by occupation (Rigby & Brown, 2015).
22
Proximity goes beyond simply geographical proximity. Developing the argument on
the proximity dimensions by the French Proximity Dynamics Group (e.g. Kirat & Lung,
1999; Rallet & Torre, 1999; Shaw & Gilly, 2000; Torre & Rallet, 2005), Boschma (2005)
presents four more proximity dimensions beyond the mere conceptualization of
geographical proximity: cognitive, organizational, institutional, and social. Cognitive
proximity explains the similarities and differences in the capabilities of economic
actors. Here the argument is how people perceive, interpret, understand and evaluate
economic issues based on shared absorptive capacities (Cohen & Levinthal, 1990), as
knowledge is distributed among different economic agents (Antonelli, 2000).
Therefore, for economic agents to learn and create knowledge by combining
complementary knowledge within and outside the firm, the cognitive distance must
be neither too long nor too short. Prior micro-level analyses of cognitive proximity
have shown a relationship between cognitive distance (relatedness) and firm
productivity (Boschma, Eriksson, & Lindgren, 2009; Timmermans & Boschma, 2014;
Östbring, Eriksson, & Lindgren, 2016; Östbring & Lindgren, 2013). Organizational
proximity explains that organizational arrangements expressed through similarities in
intra- or inter-organizational hierarchies have great impact on the ability to coordinate
and avoid uncertainty and opportunism. However, be it intra- or inter-organizational
arrangements, strong ties limit access to various pieces of novel information (Kirat &
Lung, 1999). The search for novelty often requires going beyond the established
channels (Boschma, 2005). Fu, Schiller, and Diez (2012) identified that firms in the
Pearl River Delta rely on organizational proximity to gain access to and absorb
knowledge – by turning to parent companies for key knowledge in their processes of
product innovation.
Institutional proximity (macro-level) describes how shared norms, values, and habits
(informal), as well as rules, conventions, and laws (formal) between economic agents,
can enhance cooperation. A similar institutional framework streamlines behaviours of
economic agents in contract (North, 1992). Analysing the collaboration efforts by
institutions, Ponds et al. (2007) found that even though geographical proximity
matters, it plays a minor role when the collaboration is between institutions of similar
background, even in international collaborations. At the global level, evidence shows
that there is a strong connection between agglomeration and a country’s institutional
context. Firms tend to agglomerate when investing in countries with a collectivist
culture and political/economic uncertainty (Martin, Salomon, & Wu, 2010). Finally,
social proximity (micro-level) is the socially embedded relationships between
economic agents based on kinship/family and friendship (Granovetter, 1985). Trust-
laden relations define socially embedded relationships. The embeddedness literature
suggests that higher interactive learning is associated with firms and individuals that
are socially embedded, contrary to the neoclassical view. This implies that social
relationships facilitate firms’ capacity to learn and absorb external knowledge since
social closeness breeds trust, which in turn lowers transaction costs and facilitates
collaboration. Fu et al. (2012) show that firms in the Pearl River Delta rely on social
23
relations to trigger product innovation ideas. The authors argue that socially
embedded innovators frequently interact with external partners by combining internal
capabilities. Firms rely on their established relations with customers and suppliers to
ascertain both tacit and codified knowledge in their product innovation processes.
Boschma (2005) suggests that the proximity dimensions, in their own ways but also
most likely in combination, will offer the solution to the fundamental problem of
coordination and hence firm performance. Combining different sets of proximities can
result in the co-evolution of different sets of knowledge and opportunities that can
facilitate novelty. Östbring et al. (2017) found that local related flows (cognitive
proximity) are economically beneficial if they cross-firm boundaries (organizational
proximity). This suggests that labour mobility across workplaces or firms with similar
institutional contexts like strong common rules, ethical practices, routines or incentive
structures (institutional proximity) reduces the need for trust-building but facilitates
the recombination of existing knowledge, hence creating a localized learning system
vital for firm performance. Östbring et al. (2016) demonstrated that multiple measures
of cognitive dimensions of employees (level of education and industrial experience)
interact in their influence on firm performance. The results suggest that high human
capital ratios or high levels of similarity in industrial experience reduce the commonly
found negative effects of similarity in the formal knowledge on firm performance.
Another example related to the quest in this thesis is the study by Huber (2012). Huber
revealed that learning processes can take place between cognitively distant economic
actors who are strongly socially related, such as spouses or children. The implication
is that cognitively distant economic actors may require a higher level of social
proximity (familial relationships) in order to function. This thesis attempts to analyse
the problem of firm performance by opening the black box on proximity dimensions
in relation to the role of the family.
2.3. Family and firm performance
This section of the theoretical framework presents discussions on why family
relationships are a unique form of social proximity, and how this affects firm
performance through various mechanisms.
2.3.1. The family and ties that bind
The family is the primary social affiliation an individual can claim (Canning, Mitchell,
Bloom, & Kleindorfer, 1994), and is, therefore, the basic unit of every society. The
family is both an economic and a production unit, while at the same time being a
mechanism for social inclusion (Canning et al., 1994; Ross & Sawhill, 1977). As an
economic unit, the family shares basic resources for the common benefit. For instance,
families use capital resources for the upkeep of the family, e.g. to sponsor the
education of children. Capital allocations between family members allow for risk-
sharing between members. As a production unit, the family organizes the division of
24
labour based on competence and gender, whereby information flows between family
members facilitate the quick execution of tasks. Furthermore, as a social unit, the
family ensures that family members are not permanently separated from society. This
function of the family satisfies the psychological need of belongingness, which
represents commitment and security in an uncertain world. The family is regarded as
a dynamic, ever-changing institution whose boundaries and meaning oscillate over
time (Holtzman, 2008). The family, thus, is a social group that includes relationships
based on consanguinity, conjugality or adoption (Trost, 1990) who share experiences
and emotional ties with varying responsibilities. This conceptualization of the family
assumes both traditional and social expansive status.
It is worth stressing that family relations can also involve step relationships. Martin,
Anderson, and Mottet (1999) argue that step relationships are less cohesive and more
stigmatized than biological ones. Fine, Coleman and Ganong (1998) indicate that
stepchildren regard stepparents as having less authority in their lives. Because of this
pre-conceived notion, there are often artificially established impermeable boundaries
between stepparents and stepchildren that hinder communication (Golish, 2003). Yet,
communication in the family is fundamental in the construction of strong family
relationships (Holstein & Gubrium, 1999). Holtzman (2008) argues that the idea that
humans come together to create, understand, and recreate their social world through
symbolic systems like language shows that family relationships are given meaning in
human interaction. Therefore, cultural identities like shared language and norms in
families are initiators of communication, which is highly critical in the construction of
successful stepfamily and family relationships.
The family can also involve several generations with different experiences and values.
Intergenerational relationships bring to play diverse experiences, which are relevant
for understanding the role of the family in modern society. Intergenerational relations
have invoked many theoretical paradigms or theories, predominant among them is
the exchange theory and altruism theory. The exchange theory, emerging from
theories of economic systems, assumes that family members make decisions based
how to minimize the costs and maximize the benefits of their decisions. The exchange
theory supports the argument that there are different levels of commitment among
family members (Bird, 2014; Wiklund, Nordqvist, Hellerstedt, & Bird, 2013) that
influence different levels of cooperation and exchanges. Moreover, people are more
willing to provide both high- and low-cost help to family members than to friends
(Stewart-Williams, 2007; Xue, 2013). This validates the kin-selection theory (Hamilton,
1964). The exchange theory predicts that people will increase their commitment to a
person if they experience more benefits than costs; however because family relations
have social obligations, the family has the power to ensure reciprocity beyond what
the market might produce. Migration studies have shown a strong association
between distance and support from family members. The foundation of this argument
is that the likelihood of receiving support from a family member decreases with
25
increased distance to that family member. Mulder and van der Meer (2009) found that
the ‘distance decay’ in family support differs between family members. Mothers are
more likely than fathers to render support over longer distances, while siblings are
likely to offer support only when other family members live in close proximity.
The altruism theory is explained as ‘‘a motivational state with the ultimate goal of
increasing another’s welfare’’ (Batson, 1991:6). In other words, altruism refers to
behaviours that benefit others at personal cost to the behaving individual. Becker
(1974) argues that the family has a set of motivations and bonds that guide their
interaction with and care for one another. Such altruistic feelings motivate family
members, especially parents, to invest in their children – for instance in education,
workplace experience, information delivery, etc. – even if there is no plan for
repayment by the children (Bianchi, Hotz, McGarry, & Seltzer, 2007). This act makes
family membership valuable in ways that both promote and sustain the family bond
across generations. Altruism enhances loyalty, as well as commitment, among family
members within and outside the firm. Those who feel greater responsibility for their
family members’ wellbeing are more likely to cover a longer distance to provide
support, i.e. among family members who share strong emotional ties (Mulder & van
der Meer, 2009). Siblings are less likely to provide such support than parents and
children are (Voorpostel & Van Der Lippe, 2007).
Moreover, family relationships within and outside the firm can expose family members
(especially children) to entrepreneurial experience and qualities that can facilitate
their entry into entrepreneurship. Thus, past familial relationships and experience can
be important resources for entrepreneurship. There is strong evidence suggesting that
entrepreneurial families contribute to the development of human capital in the form
of experience and skills or entrepreneurial qualities of family entrepreneurs in the
early years of childhood or adolescence. This process not only enhances the transfer
of complex family wisdom but also prepares individuals for entrepreneurship.
Entrepreneurial families can be referred to as institutions or social structures that can
both drive and constrain entrepreneurial activities (Dyer & Handler, 1994; Nordqvist
& Melin, 2010). Steier (2007) argues that for most successful entrepreneurs there is a
silenced story (sub-narrative) of how their family was pivotal in their entrepreneurial
lives. “Many entrepreneurs are embedded in a social context that includes a family
dimension. For these entrepreneurs, the family represents a rich repository of
resources: economic, affective, educative, and connective” (Steier, 2007: 1106).
Aldrich et al. (1998) suggest that the entrepreneurial family can be seen as an
incubator and a birthplace of entrepreneurial qualities (also; Heck et al., 2006).
Entrepreneurial abilities in the form of specific and general knowledge are referred to
as entrepreneurial capital (EC) (Aldrich et al., 1998). Marshall (1920) expresses this
argument as follows: “the mysteries of the trade become no mysteries; but are as it
were in the air, and children learn many of them unconsciously” (p. 271), through
things they see and hear around them. EC may not only promote the creation of future
26
entrepreneurs but may also facilitate successions, as pertains to the transferral of
ownership and management to the next generation. Despite this, the family has been
virtually neglected as a relevant unit of analysis, even though it could constitute a
genuine contribution to the broader regional science field.
The ability of the family to build and sustain trust makes it different from other social
groups. Sako (1992) defines trust as either ‘contractual’, ‘competence’ or ‘goodwill’.
Contractual trust entails a mutual understanding whereby partners adhere to a
specific written agreement, which controls interpersonal relations. Competence trust
develops through shared abilities and compliance between economic agents. Lastly,
goodwill trust develops over a long period of time. Goodwill trust is shaped by shared
norms and values (Sako, 1992), which makes it sustainable, efficient, effective and
reliable. Unlike contractual trust, goodwill trust requires no periodic renewal. This type
of trust is best produced in an informal, small, closed and homogeneous group, which
is able to enforce normative sanctions (Coleman, 1990); meanwhile, among
heterogeneous groups, formal rules and contractual trust serve as checks on
transactional relationships (Fukuyama, 1995). Trustworthiness in the family can be a
mobilizer and a capitalizer for economic and social gain (Bubolz, 2001; Luhmann, 2000)
even when the sense of intimacy and commitment may not be the same between all
family members (Brannon, Wiklund, & Haynie, 2013; Wiklund et al., 2013).
A very important question has been whether the Industrial Revolution stripped the
family of its economic and production functions, by entrusting these functions to the
welfare state. This notion has led to the conclusion that the family is no longer the
central institution in society (Ross & Sawhill, 1977). In simple terms, a welfare state is
a social system based on the assumption that the government has the primary
responsibility for the wellbeing of its citizens. The relationship between the welfare
state and the family has been described as either crowding-out or crowding-in (Wolfe,
1989). Halla, Lackner, and Scharler (2013) argue that a strong welfare state can
facilitate both the formation and the dissolution of family ties. The implication is that
a strong welfare state risks crowding out help and support between generations and
crowding in help or further responsibilities toward family members. This makes the
effects and role of the family still an empirical question, which the present thesis seeks
to explore in the Swedish context by analysing the effects of family co-occurrence on
firm performance.
2.3.2. How family co-occurrence can affect firm performance
Bubolz (2001) argues that the family is a source, a builder, and a user of social capital.
The relationship among family members creates an ideal environment in which social
capital can be created (Coleman, 1988). Arregle, Hitt, Sirmon, and Very (2007) suggest
that family co-occurrence in the family firm is likely to affect the firm’s social capital,
which is a source of competitive advantage. Since families develop sustainable and
reliable social capital when the family wields power through firm ownership and
27
management, this allows the family’s influence to be deeply engrained in all aspects
of the firm (Arregle et al., 2007). Yet, the effects of the family on the firm’s social
capital are dependent on the strength of the family's social capital. The implication is
that a firm’s social capital is rooted in strong family social capital. If a family is
characterized by weak social capital, the family firm’s social capital development will
be influenced more strongly by other proximate institutions and non-family
employees (Arregle et al., 2007). Therefore, the effects of the family on the family
firm’s social capital are strongly linked to the existence of strong family social capital.
Moreover, strong family social capital can also have detrimental consequences on the
firm’s social capital and possibly firm performance (Adler & Kwon, 2010; Leana & Van
Buren, 1999; Nahapiet & Ghoshal, 1998; Portes, 1998). There is a strong possibility of
transferring dysfunctional family attributes to the firm and a potential risk of the family
social capital dominating the family firm’s social capital. Dysfunctional family
communication can cloud appropriate communication in the firm. Unhealthy
competition within the family can lead to concerns about whom to select for
promotion, and this can create intense internal rivalries, which can impede firm
performance.
Family co-occurrence can also affect the resource base of the firm. The key tenets of
the resource-based view of the firm suggest that firms achieve competitive advantage
by employing valuable and rare resources (Barney, 1991). The reason why certain
resources are of greater value is that they are unique and less available, and are
therefore less likely to be imitated (Aldrich & Cliff, 2003; Habbershon & Williams, 1999;
Sirmon & Hitt, 2003). The theory suggests that firms with valuable and inimitable
assets are able to create a sustainable competitive advantage (Barney, 1991;
Wernerfelt, 1984). Families carry with them a unique set of resources in the form of
human capital in terms of experience and critical judgment (Becker, 1964), social
capital in the form of mutual trust, commitment and cohesion (Coleman, 1988), and
financial and patient capital in the form of financial aid with long-term repayment
plans (Sirmon & Hitt, 2003). The implication is that the family adds an extensive
dimension to the resource base of the firm in terms of its efficiency and reliability.
Moreover, the enduring nature of family relationships gives the family certain
advantages in developing and maintaining a unique bundle of resources that are
important for achieving a competitive advantage and hence increased firm
performance. On the other hand, because the family is characterized by common
values and norms, a higher family co-occurrence in the firm can result in the
accumulation of similar resources that might be detrimental to firm performance.
Additionally, because it is difficult to acquire and manage rare resources (Barney,
2001), there is a likelihood of the family being perceived as more valuable, which can
cause dissatisfaction among other employees; this can affect cooperation and
performance.
28
The family has peculiar assets that can affect a firm’s transactional costs. Gedajlovic
and Carney (2010) argue that firms are characterized by certain assets, generic non-
tradeable (GNT) that are peculiar to certain factors of production. Though these assets
are sticky, they are generic in application and highly common among family members.
The family is an influencer of transactional costs, especially in family firms (Gedajlovic
& Carney, 2010; Verbeke & Kano, 2010). The family holds GNT that are different from
other factors of production in the firm. Gedajlovic and Carney (2010) identify four
types of GNT in family relationships – bonding social capital, bridging social capital,
reputational assets, and tacit knowledge – that are seen as potentially valuable assets.
Regarding the firm as a collection of different factors of production (Alchian &
Demsetz, 1972), the family as a resource or a bundle of factors of production presents
the capacity to mediate transaction costs. Since the family is characterized by common
values and deep interpersonal relations, it facilitates the bonding, orientation, and
adaptation of new employees (family members). Mutual trust in the family can lower
contract and enforcement cost, and hence facilitate the deployment of resources in a
fast, flexible and discrete manner (Yeung, 1997a). The family can promote the
generational transmission of tacit knowledge, especially when the firm owner plans to
bequeath the business and accumulated institutional knowledge to heirs. Therefore,
the family has the capability to overcome information asymmetry and reduce
transaction costs; hence the strong incentive to sustain the survival of the firm (Miller,
Le Breton-Miller, & Scholnick, 2008).
Family co-occurrence can also influence firm performance through reduced agency
cost. An agency relationship is a contract under which the principal engages the agent
to perform some task on his behalf (Jensen & Meckling, 1976). This involves delegating
some decision-making authority to the agent. The theory suggests that, since the
principal and the agent are both utility maximizers, the agent may be tempted to act
in self-interest, contrary to the principal’s interest (Chrisman, Chua, & Litz, 2004; Fama
& Jensen, 1983b; Jensen & Meckling, 1976). To minimize divergence from the
principal’s interest, others suggest that the principal ought to establish appropriate
structural mechanisms or incentives for the agent, thus incurring monitoring costs
(Fama & Jensen, 1983a; Jensen & Meckling, 1976). Agency cost includes monitoring
expenditure by the principal, bonding expenditure by the agent, and residual loss by
the principal (Fama & Jensen, 1983a, 1983b). Moreover, agency cost may differ
between the principal and different agents, as the firm is viewed as sets of contracts
among different factors of production (Alchian & Demsetz, 1972; Gómez-Mejía,
Núñez-Nickell, & Gutierrez, 2001). Generally, it is virtually impossible for the principal
to have zero agency cost; however, some agents have relatively lower agency cost.
Jensen and Meckling (1976) suggest that the separation of ownership from
management is the chief source of agency cost in a firm. But, this cost is eliminated
when the firm’s ownership and management are not separated or when the firm is
managed by a single owner/family (Fama & Jensen, 1983a; Jensen & Meckling, 1976).
With this in mind, it may not be surprising when others argue that family contracting
29
in family firms represents an efficient form of firm governance. Therefore, firm
performance by way of cost minimization and greater efficiency is the outcome of a
principal-agent relationship involving a family agency contract (Corbetta & Salvato,
2004). Yet, some argue that since family agency contracts are based on common
bonds, emotions and sentiments (Dyer, 2006; Schulze, Lubatkin, & Dino, 2003; Schulze
et al., 2001), they are prone to depart from economic rationality (Gómez-Mejía et al.,
2001) and can therefore threaten firm performance (Schulze et al., 2001)5.
Family employment in family firms can affect firm performance through the acts of
stewards (Miller et al., 2008). The stewardship theory concerns the employment
relationship between the principal and the steward (Davis, Schoorman, & Donaldson,
1997; Donaldson & Davis, 1991). The theory suggests that employees’ are ordered as
stewards in their behaviours, such that pro-organizational and collectivistic behaviours
have higher utility than individualistic and self-serving behaviours (Davis et al., 1997;
Donaldson & Davis, 1991). Stewards are organizationally oriented agents, who seek
the best interest of the firm rather than their own interest, as they view the success
of the firm as a factor that will positively affect them (Davis et al., 1997). This suggests
that, given the choice between self-serving and pro-organizational behaviours,
stewards will pursue the interest of the organization. Stewards’ behaviours are
enhanced by the quality of the relationship with the principal and the business
environment (Corbetta & Salvato, 2004; Davis et al., 1997). A quality relationship
facilitates and empowers stewardship. Moreover, stewards’ behaviours are based on
choice, influenced by both psychological factors (intrinsic motivation, identification
and personal power) and situational factors (management, philosophy and culture)
(Corbetta & Salvato, 2004; Davis et al., 1997; Zahra, Hayton, Neubaum, Dibrell, &
Craig, 2008). Workers who are intrinsically motivated by intangible and higher-order
rewards have a high level of identification with the firm and are more likely to act as
stewards as they may feel a strong sense of membership in the firm (Davis et al., 1997;
Vallejo, 2009; Zahra et al., 2008). Given the choice between a family and a non-family
employee, family employees may place a higher value on attaining firm goals6. The
motivations for familial stewardship behaviours extend beyond economic self-interest
(Chrisman, Chua, Kellermanns, & Chang, 2007), but are often influenced by the nature
of the relational contracts between the family firm owners and family managers
(Argyris, 1973; Corbetta & Salvato, 2004; Davis et al., 1997). The stewardship
argument makes family employees lower-risk stewards as they may share in the
5 Schulze et al. (2001) claim that a failed labour market may lead to the employment of family members. This engenders the risk of adverse selection – when applicants hide information about themselves that prospective employers need in order to properly evaluate their quality and worth (e.g., that they lack the ability and skills to competently behave in the scope of the assigned job) (Fama, 1980; Schulze et al., 2001). This in turn may exacerbate the risk of moral hazard – post-contractual opportunism in privately held family firms, which in turn may affect firm performance.
6 A recent study has shown that stewardship behaviour among non-family employees positively and significantly influences the profitability and survival of family firms (Vallejo, 2009).
30
general vision of the family and the family firm, and act with sales and profit
maximization in mind, knowing that the firm’s success is tied to the family’s welfare.
On the contrary, the sense of psychological ownership plagues family stewards.
Because family members have a sense of identity and possessiveness in relation to the
firm, this creates ‘psychological ownership’ (Pierce, Kostova, & Dirks, 2001) of the firm.
This sense of ownership is more likely to affect the sense of subordination to the Chief
Executive Officer (CEO) or the entrepreneur. Such attitudes can create tension
between family members and result in dysfunctional communication, which can cloud
efficient communication in the firm. While the sense of psychological ownership in
itself can relate to the tenets of stewardship theory, how it is manifested can
negatively affect cooperation and firm performance (Pierce et al., 2001).
Finally, family co-occurrence can affect firm performance by influencing localized
learning systems. The family represents a ‘community of practice’ where learning
processes can take place. Learning can be a social process whereby participants are
actively integrated into the learning system (Brown & Duguid, 1991; Lave & Wenger,
1991; Wenger, McDermott, & Snyder, 2002). The learning process has meaning when
it is conducted in the context of a group of people with common experiences and
mutual trust (Jeon, Kim, & Koh, 2011). Wenger (2000) argues that humans have
formed groups that share cultural practices reflecting their collective learning. Such
groups comprise diverse competence bound together by values that influence a
common understanding of their communities, and hold each other accountable in this
sense of ‘joint enterprise’. Through the joint enterprise, family members understand
their stake in the learning system and contribute accordingly. Families continuously
establish norms and relationships of ‘mutuality’ that reflect their interactions and
produce a ‘shared repertoire’ of communal resources (Wenger et al., 2002). The family
as a community of practice presents an opportunity for negotiations through direct
participation without limitations. From this perspective, learning processes are
expedient not only among actors with shared knowledge base (e.g. skill-related
variety, Boschma et al., 2009), but also among actors with a common identity (Lave &
Wenger, 1991; Wenger, 2000), common social arrangements, and mutual trust
(Boschma, 2005; Giuliani, 2005; Huber, 2012; Maskell & Malmberg, 1999a, 1999b;
Nonaka, 1994; Nonaka & Konno, 1998; Reagans & McEvily, 2003).
Wenger (1998) describes the firm as a constellation of different communities of
practice; e.g. advice, trust, and communication (Krackhardt & Hanson, 1993). These
informal groups are formed across different functions and divisions (Ruuska &
Vartiainen, 2003). Through these communities of practice, the firm knows what it
knows and becomes effective and competitive. Family employees may overlap
between these different communities of practice and hence stand to benefit from the
localized learning process while keeping certain specific and complex knowledge
within the family. Since strong emotions influence knowledge sharing (Granovetter,
1973; Reagans & McEvily, 2003), family members have a greater motivation to engage
31
in any learning process. This makes the family an enabler of learning and a manager
of shared knowledge (Nonaka, 1994; Nonaka & Konno, 1998). Moreover, family co-
occurrence can also weaken the learning capacity of the firm. First, Uzzi (1997) argues
that embedded relationships based on loyalty and emotional bonds can lead to the
underestimation of opportunism. Since opportunists’ actions are guided by self-
interested motivations, this can affect the information flow. Second, a family’s
conservative practices can also constrain learning processes. A strong family culture
can lock family members into a particular way of doing things and hence make them
inflexible, resistant to change, and inclined to stick to path-dependent traditions
(Chirico & Nordqvist, 2010) at the expense of their own innovative and learning
capacities (Boschma, 2005). Such strong behavioural patterns can counteract changes
(family inertia – factors preventing the creation of dynamic capabilities). Lastly, family
co-occurrence can also result in the accumulation of similar and suboptimal
knowledge that can affect the learning process in the firm (Boschma et al., 2009) and
slow down growth (Bentolila et al., 2010).
2.4. Family firms and regional economy
This section of the theoretical framework discusses the connection between the
location choices of family firms and the superiority of family firms, and how the effects
of family co-occurrence and EC on firm performance vary across space.
2.4.1. Location preferences of family firms and their superiority
The location choices of firms has puzzled researchers in economic geography and
regional economics for some time now (Kahn & Henderson, 1992). There are two
extreme arguments that have dominated the literature: least cost factors, whereby
classic location theory suggests that firms locate to minimize cost and be closer to
resources and the market (e.g. Bartik, 1985); and attribute factors, whereby firm
location is based on location attributes, like certain infrastructures such as power and
water (e.g. Harding, 1988). Recent studies have shown that entrepreneurs tend to
start their businesses in regions where they are deeply rooted, where they have family
and friends, and that they can call their home region, even when more favourable
conditions exist elsewhere (Dahl & Sorenson, 2012). When examining the location
preferences of family and non-family firms, Kahn and Henderson (1992) found that
proximity to family residence was an important location factor, especially for family
firms. The preference of home region is not random. Entrepreneurs with deep roots
in their home regions may possess local information (knowledge) and connections that
may be of potential value for the survival and growth of the firm. Entrepreneurs may,
therefore, survive most in their home regions, even if these places offer the least
opportunities. Whereas this may have financial repercussions on the venture (Dahl &
Sorenson, 2009), most entrepreneurs appear to start firms not solely as means of
maximizing income but also in the pursuit of non-pecuniary compensation such as
feeling accomplished and having control over self-employment (Benz & Frey, 2008).
32
For such entrepreneurs, proximity to family residence may be an important location
factor. The analysis by Dahl and Sorenson (2012) indicates that locating a business in
the entrepreneur’s home region increases the firm’s survival by 2% (29 days) and its
annual profit by roughly $1,362.
Moreover, the location of new entrants differs along urban-rural dimensions. Apart
from entrepreneurs benefiting from the local connections in their home regions, the
location choices vary along dimensions like the composition, dispersion and turnover
of the region (Stearns, Carter, Reynolds, & Williams, 1995). These different dimensions
affect the survival and growth chances of new firms. Whereas rural regions have a
small number of new firms due to limited supporting resources, larger regions support
different types of new firms due to the size and diversity they offer. However, larger
regions generate greater levels of competition for resources that can affect the
survival of new firms. Contrarily, the diversity in larger regions also enables new
entrants to identify niches that reduce competitive effects (Stearns et al., 1995).
Moreover, Bird and Wennberg (2014) argue that family firms often exhibit an intense
desire to build strong and durable relationships with the local community or the home
region of the entrepreneur. This argument seems to be valid for rural regions, where
families have the opportunity to form alliances and build close connections with the
community to make up for the lack of economic resources and variety (Adler & Kwon,
2010).
2.4.2. Varying geographical effects of family co-occurrence and EC
The importance of family co-occurrence is mostly analysed in family firms because it
is these that tend to be the most frequent employers of family members. The
argument is based on the claim that the integration of family life and business life
creates a conducive atmosphere for the business to thrive. The union of family and
business life creates a bundle of resources that are distinctive to the family firm –
‘familiness’ (Habbershon & Williams, 1999). Familiness presents a unified system of
governance and a distinct family firm over a non-family firm. Family firms are the most
common form of business (Chang, Chrisman, Chua, & Kellermanns, 2008), and for this
reason, their importance cannot be underestimated in the growth and resilience of
modern societies (Astrachan & Shanker, 2003; Bertrand & Schoar, 2006). Family firms
are major contributors to the local economic development in terms of GDP and
employment (Astrachan & Shanker, 2003; Bassanini, Breda, Caroli, & Rebérioux, 2013;
Bjuggren et al., 2011). Using a narrower definition of a family firm (similar to that used
in the attached papers), Bjuggren et al. (2011) found that family firms constitute about
three-fourths of all firms in Sweden and account for about one-fourth of total
employment and one-fifth of GDP. Using Dutch data, Flören (1998) reports that family
firms account for about 43% of all employment in the Netherlands and 54% of GDP. In
the US, family firms account for about 60% of employment and GDP (Shanker &
Astrachan, 1996).
33
The performance of family firms is not homogeneous (Chua, Chrisman, Steier, & Rau,
2012) but is rather moderated by the geographical environment in which they
operate. In other words, the potential effects of family co-occurrence and EC on a
firm’s survival, growth, and productivity may be dependent on the spatial context. For
example, although larger regions are associated with higher levels of entrepreneurship
and EC, we can expect the effects of EC in larger regions to be stifled by intense
competition. It is small and medium-sized enterprises (SMEs) that are greatly affected
when competition in larger regions limits the importance of informal relationships.
Moreover, because SMEs by default have limited internal resources and capacities,
they rely on the scale and scope of resources in their environment (Hoover & Vernon,
1959) and personal networking (past and present family relationships) to mobilize
business resources (Aldrich, Elam, & Reese, 1996). Unlike larger regions, we can expect
greater impact of family co-occurrence on firm performance in smaller regions, where
the co-occurrence and face-to-face interactions between family members facilitate
frequent exchanges of tacit workplace knowledge. While this speculation may be
imperative and relevant in smaller regional settings, it still remains an empirical
question.
Moreover, the geographically varying effects of family co-occurrence and EC on firms’
outcomes may be influenced by the goals that drive family firms. Since family firms are
guided by the values of the managing family, these define the firms’ goals and strategic
economic and business decisions (Hiebl, 2012, 2014). Dunn (1995) argues that it is
more common for family firms to accept lower or longer returns on their investments
or sustain their socioemotional wealth (SEW) than to maximize profit (Berrone, Cruz,
& Gomez-Mejia, 2012; Gómez-Mejía, Takács-Haynes, Núñez-Nickel, Jacobson, &
Moyano-Fuentes, 2007). The implication is that non-economic and family-oriented
goals may be important as economic and business goals to family firms (e.g. Basco,
2017; Chrisman, Chua, & Litz, 2003; Chrisman, Chua, Pearson, & Barnett, 2012) as the
family firm serves the interests of multiple parties. When family firms are motivated
by family-oriented goals, they are likely to be characterized by a high level of family
co-occurrence and EC, especially in rural regions. This may contribute to the
competitiveness of rural areas by reinforcing experience-based knowledge in the form
of tacit knowledge circulation (Chirico, 2008; Chirico & Nordqvist, 2010). In other
words, the economic, social and emotional connections generated by the interaction
between families and firms are able to influence regional cognitive proximity (Basco,
2015) or regional absorptive capacity. This argument finds support in a qualitative
study by Gurrieri (2008), who found that families, familial history, and family firms
jointly determine the cognitive aspects of the textile industry networks in the Apulia
region (Italy). Family co-occurrence and EC can also influence regional trust-based
relations, as family members actively interact economically through the firm and
socially through social groups within and outside the firm (Basco, 2015). Trust-based
relations are likely to affect economic exchanges. Gurrieri found that social proximity
through socio-familial substrates plays a crucial role in Italian clusters of small firms
34
for knowledge transmission. At the same time, the family and family firms can affect
institutional and organizational proximities at the regional level. Moreover, because
the family and family firms continue to participate in the economic and social life of
the regional economy, they can to a certain extent be responsible for creating and
maintaining traditions, conventions and rules that may later serve as the foundation
for institutional and organizational proximity aspects in the region (Basco, 2015). Such
proximities may enhance collaborations not only through the knowledge that there
are explicit rules and arrangements guiding the relationship but also through an
awareness that the level of uncertainty is reduced. However, the competitive nature
of larger regions may force family firms to be more business-oriented (placing less
importance on the interaction between family members, the family and the firm). Yet,
family firms in metropolitan regions exhibiting high levels of family co-occurrence and
EC may be on the grounds of competence and need.
In conclusion, the theoretical framework has posited that family co-occurrence and EC
are geographical products that can affect different dimensions of the firm
(productivity, survival, growth) and partly help explain the varying nature of regional
development. Whereas previous studies have associated increased productivity,
growth, and survival of firms in metropolitan regions with the availability of skilled
labour and performing firms (Combes et al., 2012; Glaeser, 1999), this thesis argues
that family co-occurrence may not only compensate for the agglomeration
diseconomies or matching inefficiencies in rural regions but also enhance the
performance and growth of firms.
3. RESEARCH DESIGN AND CONTEXT
When conducting research, it is important to reflect upon the underlying research
questions in relation to what can be studied, how it can be studied, and the kind of
answers that are likely to be obtained. With this in mind, this part of the thesis presents
a discussion of the data, methodology, ethical considerations and method, and how
these adequately guide the empirical interest.
3.1. Description of Data
The analyses in the three papers are based on data from the ASTRID database, hosted
by the Department of Geography and Economic History at Umea University. The
database combines several registers from Statistics Sweden (SCB) and contains
relational micro-data for all firms, workplaces and individuals from the 1960s onward.
It is possible to connect most socioeconomic attributes of workers in relation to where
they work and in which region, as well as their place of residence, as the database
integrates several registers. The geo-referenced attributes of firms or plants and
people make it possible to conduct relational investigations at several spatial levels.
Moreover, the longitudinal nature of the ASTRID database allows for longitudinal
studies at the firm, industrial and regional levels in the Swedish economy. The basic
35
unit of analysis in the three papers is the plant or firm. In the database, the term plant
represents a separate economic activity part of a firm. The terms plant and firm are
used interchangeably because the analyses in the attached papers draw on only single-
plant firms. In other words, only firms with a single workplace or plant were included
in the analyses. With single-plant firms, we can trace the owners or the entrepreneurs
(usually sole ownership). Every firm and worker in the database has a unique
identification code, which makes it possible to link workers and their workplaces.
3.1.1. Connecting family members in a firm
The ASTRID database holds a longitudinal family register that contains information on
every family in Sweden. The multigenerational nature of the family register in the
database provides information on spousal couples (partners) as well as biological
family members – parents, children, siblings, etc. (the data do not distinguish between
biological and adopted children). More importantly, the family register contains
unique identification codes for every family, family members' indication of the kind of
family relationship, and the workplace identification code for all working family
members. The family and workplace identification codes enable the identification of
family co-occurrence in the same workplace or firm. The process is enhanced by
linking individuals to each other, sometimes using the firm owner or entrepreneur as
the pointer, based on the family information. The present thesis adopts a simple
definition of a family, based on the SCB records, either as consanguineous (blood-
related) and conjugal family relation (marriage/civil registration) (e.g. Brannon et al.,
2013; Trost, 1990). In Paper I, we identified family co-occurrence by (1) randomly
selecting an employee from the employee dataset connected to the firm and
subsequently checking whether any of his or her family members were present in the
same firm. (2) If none of his or her family members were present in the firm, another
random employee was selected. (3) The total number of family members was
summarized on every firm to examine the total effect of family co-occurrence on
labour productivity. The random approach of selecting family members eliminates
systemic bias by giving all families present in the firm an equal chance of being
selected. However, since families are heterogeneous and just one family group is
identified and selected for every firm, there is a higher probability of randomly
selecting a family with specific characteristics (e.g. dysfunctional communication) that
can affect the results. In Papers II and III, we used the entrepreneur or firm owner as
the pointer to connect family members in the firm. With the family identification code
and the employment identification code, we linked all family members related to the
entrepreneur in the firm. In Paper II, the family members are grouped based on the
type of relationship they have with the entrepreneur (spouse, children or siblings).
This approach presented the opportunity to access the impacts of the family and
different familial relationships in family firms. Meanwhile, in Paper III, this allowed us
to analyse the role of present and past familial relationships on the survival and growth
of new entrants.
36
3.1.2. Identifying a family firm
In the family business literature, there is no accepted or universal definition of a family
business (Chua, Chrisman, & Sharma, 1999; Miller et al., 2007; Westhead & Cowling,
1996). While many researchers have tried to offer satisfactory definitions, there is still
no widely accepted definition (Chrisman, Chua, & Sharma, 2005). However, the
involvement of the family in the management and ownership structure of the firm is
unique in the family firm definition (Bird & Wennberg, 2014; Sciascia, Mazzola,
Astrachan, & Pieper, 2012). Reviewing current trends in the family firm literature,
Chrisman et al. (2005) identified two approaches to defining the family firm: the
component-of-involvement approach (or input-based), and the essence approach (or
output-based). The component-of-involvement approach is based implicitly on the
belief that family involvement is sufficient to make a firm a family business whilst the
essence approach, on the other hand, is based on the belief that family involvement
is only a necessary condition. According to Kraiczy (2013), following the components-
of-involvement approach, a firm can be defined as a family firm when (1) a family or a
family member is the firm owner, (2) the firm is family-managed, or (3) the firm is
controlled by a family. And with the essence approach, family involvement must affect
(1) the strategy of the firm, (2) the vision and intention to maintain control and hand
the firm over to the next generation, (3) the firm’s behaviours, and (4) distinctive
familiness. As these two approaches of identifying a family firm are different in nature
and purpose, in the present thesis we used the input-based approach to define a
family firm as a firm (1) having two or more employees who belong to the same family
as the firm owner or entrepreneur, (2) having at least one family member in a
management position, and (3) that serves as the family members’ main source of
income (see, for example Bird, 2014; Bird & Wennberg, 2014; Miller et al., 2008;
Sciascia et al., 2012 for similar approaches). Nonetheless, though the data do not
readily avail the essence-approach effect of the family in the definition of a family firm,
it is possible to speculate that the adopted definition of a family firm based on the
component-of-involvement approach implicitly accounts for the family impact or
influence on the firm (essence approach). Thus, if a family owns and manages a firm,
it is not spurious to expect that the family may be likely to affect the strategy and vision
of the firm and the intention to maintain control and hand the firm over to the next
generation (especially when it is a small business).
3.1.3. Defining entrepreneurial capital (EC)
Unlike Aldrich et al. (1998), who measured or identified EC through several qualitative
questions, the nature of the ASTRID database allows a definition based on binary
outcome. To define EC, we first identified the parents of the entrepreneurs or firm
owners in the sample and traced them from the 1970s, which was as far as the data
would allow. Second, we checked whether any of the parents were entrepreneurs or
firm owners. We identified the self-employed parent(s) from the occupational code in
the sampled firm. Third, with these self-employed parents, we used stricter factors to
37
identify self-employed parent(s), who we argue may offer or provide EC to their
children (or may engage in entrepreneurial relationships that can influence their
children’s future entrepreneurial endeavours). First, the parent(s) must have been
self-employed for a minimum of three years, and second, they must have at least one
employee. The major reason for these stricter definitions is to avoid the selection of
solitary workplaces, where exchanges of knowledge do not take place. Whereas
Aldrich et al. (1998) identified that not having been born to self-employed parents did
not constitute a property barrier, we argue that the sociological processes that take
place between self-employed parent(s) and their children can constitute a resource in
itself (some form of entrepreneurial spillovers) (Lindquist, Sol, & Van Praag, 2015) for
the entrepreneurs’ labour market outcomes. Based on the two binary variables (family
firm and EC), four firm classifications were developed.
Table 1: Firm classifications based on firm type and EC
Firm type/EC Yes EC No EC
Family firm Family firm with EC - Family firms where the
owner has/had self-
employed parent(s)
Family firm without EC - Family firms where the
owner does not/did not
have self-employed
parent(s)
Non-family firm Non-family firm with EC - Non-family firms where
the owner has/had self-
employed parent(s)
Non-family firm without EC - Non-family firms where the
owner does not/did not
have self-employed
parent(s)
3.1.4. Limitations of the database
The ASTRID database has a major limitation related to this type of micro-level analysis.
The identification of family members is based on the family identification code, which
is linked to one’s parents or grandparents. In the database, family members are
identified in chains using the parents or grandparents as pointers (either alive or dead
– which implies that the family register contains records of both dead and living family
members, especially grandparents and parents, for the purposes of identifying family
chain or history). People connected to the same parents are recorded as siblings. The
chain is broken when parents or grandparents are missing in the register (e.g. parents
registered outside Sweden). This potentially underestimates an undisclosed number
concerning family co-occurrence across firms and regions. Despite the longitudinal
nature of the database, it has limitations in historical coverage, and some of the data
covering family members are missing. From this position, it is difficult to conduct
proper longitudinal studies in this respect. For instance, the parents or grandparents
of current older workers and immigrants are missing in the data; this is likely to affect
the density of family co-occurrence in a firm and, by extension, in the region.
38
3.2. Methodological comments
The three papers making up this thesis draw on the critical realist methodology, with
strong abstraction and concrete investigations (Bhaskar, 1978; Collier, 1994; Sayer,
1981; Yeung, 1997b). Each paper started by first reviewing existing related scholarly
studies in economic geography and related fields, like family and family business
studies (abstraction investigation). The literature review continued in an iterative
manner until theoretical saturation had been reached (when new evidence stopped
being obtained). This process helped in the identification of research gaps and the
formulation of the relevant research questions, as well as in placing each paper within
a specific literature(s). The abstraction investigation facilitated the creation of a
conceptual basis, which later assisted in the interpretation of the findings from
empirical analyses (concrete investigation). Guided by the assumption that there is no
fundamental difference between methods applied on data (Sayer, 1992; Yeung,
1997b), some of the results were methodologically validated on related and different
facets of the phenomenon under investigation (methodological and data
triangulation). The results were treated as complementary rather than contradictory.
3.3. Method
3.3.1. Data and empirical model
Even though the data for the three papers are from the same ASTRID database, the
analyses are based on different samples and time periods (see Table 1 for a summary).
The sampled firms (in Papers I-III) and time periods were driven by the research
questions, and consequently, have implications for the results. The sampled firms are
only privately-owned single-plant SMEs with more than one employee. Firms with
more than one employee were used to exclude one-man businesses, for which the
effects of family relations cannot be directly verified. SMEs were used in the analyses
because it is reasonably easy to identify a proxy firm owner or entrepreneur in the
ASTRID database based on the occupational status of either self-employed or regular
employee. This is barely possible in the very large firms. Public firms were excluded
from the analyses as they possess certain characteristics that are not conditioned by
the free market, which makes it difficult to study them, especially in matters
concerning firm performance. Firms without identification, industrial or regional codes
were excluded from the analyses. Firms without performance indicators (value-added
and Företagens och arbetsställenas dynamik (FAD code)) were excluded as well. The
unit of analysis in Paper I was firms between 1995 and 2010; in Paper II, firms between
2002 and 2012; and in Paper III, all start-ups in 2002, followed until 2012. These time
periods cover one major recovery phase of the real estate and financial crisis in the
early 1990s, and the latest global financial crisis in 2008. In light of this, it was
informative to explore family hiring vis-à-vis hiring based on meritocracy and how
family co-occurrence affects performance, controlling for these time periods.
39
For the empirical models, in Paper I we employed ordinary least squares regression
(OLS) (as well as in Paper III, for the growth model) as the main empirical strategy and
fixed effects regression (FE) for methodological triangulation (or robustness check in
this case). The panel nature of the data makes the triangulation technique
complementary to the OLS model. Moreover, because in Paper II we were concerned
about the within effects of entrepreneurial family relationships, we used the FE model.
The shortfall of FE is that it does not account for the between effects. In Paper III, we
used event-history analysis to analyse the relationship between family firms and EC.
We used a common analytical technique for event-history graphical analysis: a Kaplan-
Meier (KM) survival analysis as an explorative tool and a Cox proportional hazards
model as a measure of effects and strength. KM analysis explains the ratio of firms
that exit over firms at risk multiplied by time. Because the event (exit) is recorded in
discrete time in the ASTRID database (the year in which the firm exited), it is difficult
to know the exact time an event occurred. In the analysis, firms that survived at the
end of every observed period are treated as right-censored observations (Klepper,
2007). Since a KM analysis only offers the visualization of univariate or multivariate
curves, which lack statistical strength and significance of the relationship, a Cox
proportional hazards regression was introduced. Although the Cox proportional
hazards model restricts control over time, it is the most appropriate for firm-level
survival analysis in which the general trend tends towards a naturally decreasing
cumulative hazard over time.
3.3.2. Measuring performance
Although non-economic goals are important measures of performance, especially in
family firms (e.g. Basco, 2017; Chrisman, Chua, & Zahra, 2003), most empirical studies
on the performance of the family and family firms have primarily dealt with economic
performance. With this in mind, the discussion in this section is delimited accordingly
(Chrisman et al., 2005). The effects of family co-occurrence on firm performance can
be measured in many ways (Richard, Devinney, Yip, & Johnson, 2009). Theoretically,
family co-occurrence has been linked to different facets of the firm (e.g. learning
system, firm’s social capital, transaction and agency costs, etc.) that affect the firm’s
effectiveness (survival), performance (productivity), and growth (employment). For
instance, the effects of learning in the firm can be measured in many ways. Since
learning involves the acquisition of specific and general knowledge, it manifests itself
through the cognition of employees (McGrath, 2001), changes in cognition and
behaviours (Argote & Miron-spektor, 2011) and changes in knowledge embedded in
routines (Levitt & March, 1988). Furthermore, the effects of localized learning
manifest themselves in the characteristics of an organization’s products and services
(Helfat & Raubitschek, 2000) or its patent stock (Alcácer & Gittelman, 2006), as well
as in changes in the characteristics of performance (productivity), such as its accuracy
or speed (Argote & Epple, 1990).
40
In Papers I and II we defined firm performance as labour productivity, measured as per
capita value added. Labour productivity has been used as a performance measure in
many other studies (e.g. Boschma et al., 2009; Eriksson, 2011; Östbring & Lindgren,
2013). Productivity is a more straightforward measure of industrial output (Rigby &
Essletzbichler, 2002) than other measures such as patents and citations, which exclude
large parts of the economy. Moreover, productivity is a key measure of firm efficiency
(Palia & Lichtenberg, 1999). Labour productivity was estimated by compensating for
the effects of inflation/deflation. Log values of labour productivity were used in the
analyses to control for skewness in the data. In Paper III, we defined firm performance
as the rate of survival and employment growth. Studies have shown that family
ownership and control affect firm survival and employment growth (Bassanini et al.,
2013; Lee, 2006). Whereas survival may reflect the efficiency and effectiveness of the
firm, employment growth may reflect not only the capacity of the firm in terms of
human capital but also regional capacity in certain knowledge bases. We measured
growth as the annual absolute change in employment (Backman & Palmberg, 2015).
The natural log of the values was used in the models to control for skewness. Likewise,
survival as a measure of firm performance is measured using a categorical variable
that captures the existence of the firm. Survival and financial performance outcome
may be closely related, as mergers and acquisitions (M&A) may suggest higher
performance than bankruptcy, especially the acquisition of smaller firms (Richard et
al., 2009). However, M&A can also suggest a loss of control and ownership by the
owning family. Since the ASTRID database does not provide such detailed information
on how the organizational structure within firms changes in relation to either a merger
or an acquisition, M&A were excluded from the survival analyses.
41
Tab
le 2
: Su
mm
ary
of
the
rese
arch
des
ign
of
the
thre
e p
aper
s
Elem
ents
P
aper
I P
aper
II
Pap
er II
I
Aim
To
an
alys
e th
e ef
fect
s o
f fa
mily
mem
ber
s’
pre
sen
ce o
n f
irm
per
form
ance
To
anal
yse
th
e m
od
erat
ing
effe
cts
of
dif
fere
nt
fam
ilial
re
lati
on
ship
s o
n
skill
vari
ety
on
fir
m p
erfo
rman
ce
To a
nal
yse
the
effe
cts
of
entr
ep
ren
euri
al
cap
ital
on
fir
m s
urv
ival
an
d g
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42
3.4. The Swedish labour market in context
In Sweden, there are 290 municipalities, which are responsible for a large proportion
of local services, including schools, emergency services, and physical planning. The
municipalities in the north cover large areas of sparsely populated land. The
municipalities are further classified into 72 functional labour market regions, often
referred to as FA regions (see Figure 1A, highlight on the 3 metropolitan regions). The
FA regions normally consist of four to five municipalities, sometimes more (Johansson,
Klaesson, & Olsson, 2002), and constitute integrated housing and labour market areas
where most people can find both a place to live and a place to work. The regions are
grouped together based on the intensity of the commuting flows between
municipalities. The average commuting time is 8-15 minutes within a municipality, 20-
45 within an FA region, and longer than 45 minutes for extra-regional time distance
(Johansson et al., 2002; Johansson, Klaesson, & Olsson, 2003). An overwhelmingly
large share of commuting takes place within the FA regions, which justifies their being
classified as labour market regions and clusters in some form (Johansson et al., 2003).
Most of the large FA regions in terms of employment and number of economic
activities are located in central and southern Sweden, whilst those with large land
areas are found in northern Sweden (see Figure 1B), often most of these FA regions
have the highest per capita productivity (see Figure 1D). Even though Figure 1B and
1D show similarities in the spatial pattern of employment and productivity per capita,
some mid-Sweden regions characterized by moderate employment levels show low
per capita productivity (e.g. Mora, Malung, Torsby, Söderhamn, and Hudikvall) and
some regions in the north that are characterized by low employment show high levels
of per capita productivity (e.g. Luleå, Dorotea, Vilhelmina, Åsele, and Lycksele). Figure
1C does not show north-south spatial pattern of family co-occurrence as Figure 1B
shows for employment, however, it shows relatively higher share of family co-
occurrence in smaller regions across the entire Swedish economy (e.g. Ljusdal,
Harjedalen, Vansbro, Ludvika, Värnamo, Vetlanda, Arvidsjaur, Överkalix, Övertorneå,
and Haparanda). In other words, larger FA regions are characterized by relatively low
share of family co-occurrence.
The Swedish labour market is characterized by active labour policies (Bornhäll,
Daunfeldt, & Rudholm, 2017), safer workplace environments, and the role of workers’
unions. The employment policy, such as the last-in-first-out principle (Skedinger,
2010), implies that in cases of redundancies, firms must dismiss the last-hired
employee first. This may to some extent keep firms from hiring more labour, especially
during economic difficulty, as it may be expensive to revoke one bad recruitment
decision. A reform of the employment protection legislation in 2001 made it possible
for firms with less than eleven employees to exempt two of the employees from the
last-in-first-out principle. The implication is that, while the last-in-first-out policy may
reduce hiring, it also suggests fewer dismissals during a recession but also fewer hires
during recovery, especially for smaller firms. Furthermore, employers’ associations
43
and unions negotiate workers’ minimum wages, layoffs, social security, holidays, etc.
through collective agreements; this means that the government has little involvement
in such labour market issues. In recent years, changes on the Swedish labour market
have brought about changes in the composition of the labour force (Håkanson, 2014).
Observable changes on the Swedish labour market since the 1990s include economic
reform policies and demographic developments. These changes have contributed to
increased percentages of several groups of people on the labour market (i.e. persons
with weaker labour market attachment, like younger and older people and
immigrants). Swedish labour laws allow for a meritocratic style of hiring; however, not
in private sector firms, where family member hiring can be intense.
Figure 1: (A) Swedish FA regions with the 3 metropolitan regions selected; (B) number employees (thousands); (C) family co-occurrence (share), and (D) productivity per capita (hundreds), quartile are shown here (data on firms with maximum of 50 employees, 1995-2010)
44
In a survey, Emling (2000) found that the share of family firms among private firms
with Swedish owners accounted for about 55% in 1999. Bjuggren et al. (2011) also
found that 65% of privately-owned firms in 1999 with 20% voting rights were family
firms. This clearly indicates that family firms constitute a greater portion of the
Swedish economy, which makes the family and family firms more than a peripheral
topic. Family firms account for about one-fourth of total employment and one-fifth of
GDP (Bjuggren et al., 2011). Swedish family firms are relatively active in various sectors
of the economy, but are highly represented in sectors like the agriculture and forestry
industry (90%), retail (62%) and manufacturing (61%), and maintain a higher share in
rural areas (Emling, 2000). The abolishment of the inheritance and gift tax in 2004 has
helped families pass on family firms to the next generations. In the Swedish context, it
is the norm that family members hold key positions in the management of the family
firm. Over 90% of family firms have family members as company leaders (Emling,
2000). The business culture among Swedish family firms is stronger, sustainable over
a longer period of time, and more noticeable and describable for people both within
and outside the business (Hall, Melin, & Nordqvist, 2001). This is common among
SMEs, where ownership is often concentrated in one family or individual.
Finally, since Sweden usually is characterized by having weak family ties compared to
other northern European economies (Alesina & Giuliano, 2010), Sweden makes an
interesting case in two main regards. First, this thesis will be able to depict whether
this assumption of weak family relation actually is true. Second, if indeed family
relations do play a significant role for firm performance in Sweden, it is likely that these
relationships also are relevant in other countries where family relationships are argued
to be stronger. Therefore, analysing the role of family ties on firm performance in
Sweden allows for wider comparison.
3.5. Ethical considerations regarding register data
Ethical considerations in geographic research are critical (Griffith, 2008), and
permeate various stages of the research (i.e. design of the study, data collection,
analysis, and communication of results). Ethical considerations for quantitative
methodologies using register data have long been an issue in academia (Panter &
Sterba, 2011), but have received little attention. Ethical considerations for micro-data
are mainly concerned with complying with laws and standards concerning issues such
as data protection, confidentiality and security (Griffith, 2008). To uphold these ethical
standards, first, we started every paper by applying for the data with specific variables
from the Department of Geography and Economic History. This process ensures that
the variables or attributes that are made available are only those that are correct and
necessary for the research. Second, to ensure confidentiality, the firms and employees
included in the data are identified by workplace and employment identity codes,
respectively. This avoids direct identifiers like specific names and addresses. This is
important, as family relationships constitute a highly sensitive and important topic in
society. Finally, due to the sensitive nature of the data, they are stored and used on
45
Internet-free computers in a secured research laboratory. This means that the
analyses and results are secured from unapproved users on the Internet.
4. SUMMARY OF PAPERS
Paper I Social proximity and firm performance: the importance of family member ties in workplaces
In Paper I, we analysed the role of family co-occurrence across different labour market
regions and industries. The argument in this paper is based on the claim that social
relations between individuals in a firm are beneficial for the exchange of tacit
knowledge (Boschma, 2005; Nonaka, 1994; Nonaka & Von Krogh, 2009) and hence
firm performance. This is a process that is hardly possible to trade on the market
(Maskell & Malmberg, 1999a, 1999b). The literature on regional learning and
organizational learning has argued that proximity, in the form of social relations,
experiences, identity in language, norms and mutual trust, can easily enhance the
transfer and conversion of knowledge (Boschma, 2005; Nonaka, 1994).
This study comes as a significant contribution to the literature on proximity dimensions
at a time when social proximity in the sense of economic geography has come from
the analysis of former co-workers and professional acquaintances. On the whole, while
one strand of the literature argues that social proximity may enhance learning and
performance (Breschi & Lissoni, 2001), another argues that social proximity in any
form is less important in specialized regions (Gordon & McCann, 2000). These findings
are not contradictory, but rather exist in different contexts (or measurements) of
social proximity. In Paper I, we examined the impact of social proximity in the form of
family co-occurrence on firm performance, while considering how this effect differs
across agglomeration types, firm sizes, and firms with higher degrees of human capital.
We expect the effects of family co-occurrence on firm performance to vary across
space and type of firms. This is anticipated because prior studies have shown that firms
operating in larger agglomerations benefit from knowledge spillovers from large pools
of skilled labour and increased efficiency in labour market matching (Glaeser, 1999;
Overman & Puga, 2010), and therefore social proximity in the form of family relations
may have a subordinate role, unlike in smaller regions.
To test this, geo-referenced longitudinal employer-employee micro-data were used.
The analyses included privately owned firms in Sweden between 1995 and 2010, with
a maximum 50 employees in 1995. We analysed the impacts of family co-occurrence
on firm performance, measuring firm performance as the per capita deflated value
added (labour productivity). A simple OLS regression, weighted by employment size
with year, region and sector fixed effects, was used for the analyses. In addition, a
fixed-effect regression was also included in the model to determine the robustness of
the effects of family co-occurrence on firm performance.
46
The results in Paper I show that there is a higher prevalence or co-occurrence of family
members across firms in smaller regions and industries with low entry requirements,
where hiring is predominantly based on social contacts. This result confirms the notion
that because larger regions are characterized by agglomeration externalities, relying
on family networks as a means of hiring may be inefficient. In addition, across all
regions and industries, the results show a gradually diminishing rate in the proportion
of family hiring or co-occurrence over time. The analyses further indicate that family
co-occurrence positively affects firm performance. The results further show that the
effects of family co-occurrence on labour productivity are even positive and significant
in non-family firms (where there may often be a small proportion of family co-
occurrence). Finally, and more importantly, the results indicate that family co-
occurrence chiefly affects firm performance in specialized regions, contrary to the
argument by Gordon and McCann (2000).
In light of these results, Paper I suggests that the family represents an important factor
of production that can explain the contemporary differences in employment and firm
performance across regions and industries, even though its relevance has been
downplayed in economic geography over the years.
Paper II Familial relationships and firm performance: the impact of entrepreneurial family relationships
In Paper II, we analysed the context-dependent nature of family relationships and how
these relationships moderate the effects of skill variety on firm performance. The idea
that human capital is a superior factor of production has been highlighted using the
role of skill variety, which represents cognitive distance and the insight that it should
be neither too great nor too small (Boschma et al., 2009). However, there is divergence
in the existing empirical works on skill variety. Boschma et al. (2009) found related skill
inflows to be beneficial for productivity, whereas unrelated skill inflows were found to
positively impact productivity in capital-intensive industries in Sweden (Östbring &
Lindgren, 2013). Results from the Copenhagen region show that related skill inflows
are detrimental to the productivity of Danish firms (Timmermans & Boschma, 2014).
To fully understand this, we argue that it would be prudent to combine different
resources within the firm since local generation of knowledge is determined by the
combinative capabilities of the firm (Boschma, 2005; Kogut & Zander, 1992). This claim
is completely entrenched in the regional learning literature discussing the relationship
between proximity dimensions and learning (Shaw & Gilly, 2000). Family relation may
be an important contingency in shaping the economic effect of skill variety on firm
performance. While the family may offer ready employment for family firms (Birley,
Ng, & Godfrey, 1999), it is also an important source of resources for the entrepreneur
(Arregle et al., 2015). Though family co-occurrence affects firm performance (Cruz,
Justo, & De Castro, 2012), we still lack sufficient knowledge about which particular
family relation is the most important for firm performance, as family relations are
47
regarded as a set of nested circles reflecting a hierarchy of relationships (Aldrich &
Cliff, 2003; Cantor, 1979). Consequently, in Paper II, we argue that different family
relations may imply different stocks of social and human capital potential for
enhancing or impeding localized learning and performance.
To test this, we used longitudinal micro-data on privately owned firms between 2002
and 2012, with a maximum of 50 employees in 2002. Using the entrepreneur as a
pointer, we connected his or her family members in the firm. (Children, partner,
siblings). With this information, we examined the impacts and interplay between
entrepreneurial family relationships and formal skill variety on firm performance,
measuring firm performance as labour productivity, expressed as the per capita
deflated value added. For the empirical analyses, FE models were applied, weighted
by employment size and with year, region and sector fixed effects to control for
unobserved heterogeneity.
The findings indicate that family relationships involving children and/or spouse in the
firm are more likely than any other family constellations to positively and significantly
affect labour productivity. Moreover, the analyses showed no evidence of sibling
relationships influencing productivity. While the family is argued to be an important
source of capital, it appears that this is only the case when it involves children and/or
spousal relationships. The findings support the suggestion that family firms are not
homogeneous in terms of family co-occurrence and commitment to the firm (Melin &
Nordqvist, 2007), but rather comprise several forms of family relationships with
different levels of ties, which consequently affect the economic outcomes (Wiklund et
al., 2013). Furthermore, the results indicate that family relationships involving children
and/or spouse abate the negative effects of skill similarities and differences on labour
productivity. Consequently, entrepreneur-spouse relations in the firm positively affect
productivity at every level of similarity and/or unrelatedness in formal education. The
results corroborate the argument that learning processes can take place between
cognitively distant economic agents who are strongly socially related (Huber, 2012).
In conclusion, Paper II makes a strong case for the literature on why some employers
may be more selective when hiring, relying more on close family members, aware that
this is less expensive but also cognizant that there is a social dimension between
related variety and firm performance.
Paper III Family firm and entrepreneurial capital: the importance of entrepreneurial capital for firm survival and growth
In Paper III, we analysed the effects of current family relations (family firm) and past
family relations (EC) on the survival and growth of new entrants, taking into account
the regional context and the effects of the 2008 global financial crisis. There are
persistent regional differences in job creation and growth, as many peripheral regions
in the most advanced economies have struggled with the restructuring of the
48
manufacturing sectors. These differences have been attributed to the processes of
firm selection and agglomeration economies (Combes et al., 2012). This strand of
literature suggests that firms and workers are on average more productive in
metropolitan regions, which has contributed to an uneven regional development
(Combes et al., 2012; Glaeser & Maré, 2001). Still, there are also numerous exceptions
to this dominating picture, as social capital is often attributed to the resilience of
peripheral regions. Johannisson et al. (2007), for example, argue that family and
tradition jointly construct shared values that guide firms in the prosperous Gnosjö
region in Sweden.
However, the family and EC are often neglected factors in the empirical literature. EC
represents the entrepreneurial practices and experiences inherited from self-
employed parents (Aldrich et al., 1998). We argue that the family and EC may affect
the staying power and growth of firms, especially in rural regions where the family and
family firms are deeply rooted. We test for the relationship between family firms and
EC not because family firms constitute a bulk proportion of firms in the regional and
national economies (Chang et al., 2008), but because they are also important actors
in the regional and national development framework (Basco, 2015). This study aims to
bridge the disconnection between family firms’ survival and job creation in regional
development literature by emphasizing the role of EC.
For the analyses, we employed longitudinal employer-employee matched micro-data
of privately owned start-ups in 2002 with a maximum of 50 employees and followed
them until 2012. Considering the nature of the data, we defined a family firm as one
having two or more employees belonging to the same family as the firm owner, having
a family member of the firm owner in a management position, and serving as the main
source of income for the family members (e.g. Sciascia et al., 2012). A firm has EC if
the parent(s) of the entrepreneur were self-employed. We employed a Cox
proportional hazards model for the survival model and an OLS model for the growth
model. Together with a group of control variables, the effects of current and past
family relations on the survival and growth of new entrants were determined.
The results indicate that although family firms are somehow more resilient than non-
family firms, this effect is confounded by EC even when other co-determinants of firm
survival are controlled for. The implication is that it is not family firms per se that are
more resilient but rather those with entrepreneurial experiences, or EC, from self-
employed parents. This finding is contrary to what has previously been reported about
the resilience of family firms. Moreover, the effect is highly predominant in rural or
smaller regions. Additionally, the results show that family firms grow more than non-
family firms; however, the sample could not identify any clear regional effects of the
role of the family firm in job creation. In conclusion, Paper III makes a strong
contribution to the literature on regional development and the resilience of family
firms by arguing that current and past family relations explain different facets of
49
regional development. This finding should pave the way for further empirical studies
on the resilience of family firms in relation to the role of EC.
5. CONCLUDING DISCUSSIONS
This section of the thesis discusses the implications of the major findings from the
three papers in relation to existing theory and earlier findings. This section further
discusses the implications of the findings for policy planning, regional development,
and future studies.
5.1. Findings and discussions
The thesis set out to investigate three main research questions linking economic
geography and family business studies. The research questions are reiterated below
for the purposes of following the discussions:
1. What are the effects of family co-occurrence on firm performance, and how
prevalent is family co-occurrence across different regions? (Paper I)
2. What are the impacts of entrepreneurial family relationships on firm
performance, and how do they interplay with in-house skill variety affect firm
performance? (Paper II)
3. What are the effects of entrepreneurial capital on the survival and growth of
family firms? (Paper III)
In the literature on proximity dimensions and firm performance, the importance and
roles of cognitive and geographical proximity have been extensively highlighted (e.g.
Abramovsky & Simpson, 2011; Boschma, 2005; Boschma et al., 2009; McCann & Folta,
2008; Ponds et al., 2010; Timmermans & Boschma, 2014). Evidence on geographical
proximity indicates that being spatially close to other economic agents facilitates the
development of social capital and cooperation. These factors are difficult to trade
through the market but important for firm performance. The literature on proximity
dimensions and firm performance also indicates that for economic agents to learn and
create knowledge, their absorptive capacities must be complementary to facilitate the
easy absorption, interpretation, and evaluation of economic issues. Howells (2002)
suggests that geographical proximity may play only a subtle role in influencing
collaboration and the development of social capital. The implication is that
geographical proximity in itself is neither a prerequisite nor a sufficient condition for
learning processes or knowledge exchanges to take place. Although social proximity
(e.g. family relations or co-occurrence) has been argued to enhance learning processes
and collaboration within the firm, it has received little attention in the empirical
literature. Despite this evidence, Ross and Sawhill (1977) suggest that the family’s
major responsibility in today’s economic setup is the creation and socialization of
children. This suggests that the family has lost its economic and production functions
of the pre-industrial era, and is thus no longer the central institution in society.
50
Moreover, the increase in family start-ups (Chang et al., 2008) has shown that social
relations and family relations are important in the analysis of the space economy (e.g.
Basco, 2015; Boschma, 2005; Gilly & Torre, 2000).
Common to the above research questions is the link between the family, the family
firm, and the regional economy. This link has often been neglected in the discussion
on regional development. Therefore, this part of the concluding discussion focuses on
how the findings in the three papers consolidate the relationship between family,
family firm and regional economy. The thesis has advanced the proximity dimension
discussions by arguing that social proximity-invoked by family relationships can partly
explain variations in regional development in relation to firm performance. Primarily,
the findings have demonstrated that family relationships are as important as any other
resources available in the firm (Papers I, II & III). The findings corroborate prior claims
that family ties facilitate trustworthiness, a resource that is difficult to trade through
the market but important for localized learning and increased firm performance
(Boschma, 2005; Maskell & Malmberg, 1999b). In the same vein, the findings have
advanced the two main streams of research within the family business field; that is,
studies comparing family and non-family firms (Paper I & II) and studies discussing the
heterogeneity within family firms (Paper III). Previous studies have distinguished
between family firms and non-family firms with arguments such as family firms have
peculiarities in distinct resource endowment (Arregle et al., 2007; Habbershon &
Williams, 1999; Sirmon & Hitt, 2003), business attachment (Berrone et al., 2012;
Gómez-Mejía et al., 2007), specific governance mechanisms (Carney, 2005), and long-
term strategic goals and business culture (Miller & Le Breton-Miller, 2005; Zahra,
Hayton, & Salvato, 2004). The present thesis has advanced this line of research with
the findings in Papers I and II. Other studies have also shown considerable differences
between family firms; not all family firms behave in the same way (Chua et al., 2012).
This thesis contributes to this line of argument with the analysis of EC in Paper III.
5.1.1. The family, the family firm and the regional economy
The findings from the study demonstrate that family co-occurrence (be it a family or
non-family firm) influence different dimensions of the firm. Although interactive
learning processes cannot be pinpointed using micro-data, it is reasonable to expect
that the socializing process between co-workers usually involves some type of
knowledge transfer. In this regard, it is assumed that family members are more likely
to learn and exchange knowledge through socialization and internalization processes,
as proposed by Nonaka (1994). This effect is clear on the impacts of family co-
occurrence on firm performance. To some extent, this shows that family ties and
supports transcend welfare arrangements by the state and defy previous findings, by
emphasizing that even in today’s Western welfare states, where globalization and
labour mobility (or migration) have resulted in structural changes in the family,
solidarity between family members remains strong and resilient (Mulder & van der
Meer, 2009).
51
At the firm level, the results indicate that family co-occurrence positively affects firm
performance. For instance, the results show that having family members in the same
firm affect the firm’s performance (labour productivity). Moreover, the results reveal
that family firms, in particular, benefit the most from having family members
employed in the firm, particularly when this involves specific family relations like
spouse and/or children. The implication of this finding is that certain specific family
relationships are more important when it comes to impacting labour productivity. It is
not surprising to see why certain specific familial relationships co-occur in family firms
and positively impact labour productivity. Obviously, this result helps explain that the
presence or co-occurrence of strong family ties in the workplace creates a positive
social work environment where family members can support each other in job-related
tasks. Such a social work environment fosters intimate personal knowledge among the
family (Haugen & Westin, 2016), which strengthens cooperation to the benefit of
everyone, as well as firm performance. This finding also shows that family firms are
particularly dominated by certain types of family members – in this case, nuclear
family members. The dominance of certain family members also shows that the hiring
and co-occurrence of family members in firms may not necessarily be an absolute act
of nepotism, but rather a process to facilitate the transfer of specific family wisdom
(Cabrera-Suárez, Saá-Pérez, & García-Almeida, 2001; Chevalier, 2001).
The analyses further indicate that, at the firm level, some familial constellations have
the potential to moderate the effects of skill variety on labour productivity. The
implication of this finding is that the effects of skill variety on labour productivity are
highly associated with, or conditioned on, the presence or co-occurrence of certain
familial relationships, especially in family firms, something previously not known. In
particular, the results show that the co-occurrence of an entrepreneur and his/her
spouse in the same firm positively impacts labour productivity but also moderates (or
abate) the negative effects of highly similar and different skills on labour productivity
(Paper II). This relationship has previously been found to negatively affect labour
productivity (e.g. Boschma et al., 2009). Entrepreneur-child relationships in the firm
also moderate the negative impacts of highly similar skills in the firm. The results imply
that spousal and/or child relationships or co-occurrence in the firm may be important
moderators of highly similar and different skill portfolios at the workplace, especially
in family firms. This finding finds support in the argument by Huber (2012), who argues
that learning processes can take place between cognitively distant economic actors
who are strongly socially related, such as a spouse or children. The results show that
different cognitive capabilities require a higher level of social proximity in order to
function. The findings in Papers I and II indicate that, although family co-occurrence in
firms may be an important source of capital for firm performance, it appears that this
is only the case when the relationship involves children and/or a spouse. These
findings further confirm the suggestion that family firms are not a homogenous set of
firms but rather comprise several forms of familial relationships with different levels
of ties, which consequently affect their economic outcomes (Melin & Nordqvist, 2007;
52
Wiklund et al., 2013). The implication of the results is that spousal and child
relationships in the firm are likely and better able, to flexibly adapt both the family and
business roles to leverage their familial relationships to generate a competitive
advantage, while sibling relationships may be burdened by or shrouded in pre-existing
conflicts.
Furthermore, at the regional level, the analysis shows a relatively higher share of
family co-occurrence among firms in smaller or rural regions compared to firms in
larger regions; however, the proportion of family employment shows continuous
reduction over time (Paper I). The reduction in the proportion of family employment
can either be the result of the general decrease in employment rates or a decrease in
family ties, as argued by others (e.g. Alesina & Giuliano, 2010, 2014). At the same time,
the regional difference in family co-occurrence in firms can be attributed to the spatial
sorting of workers and firms. The spatial sorting of workers has resulted in the
limitation of highly skilled labour in rural or smaller regions, which has occasioned the
relatively higher family co-occurrence in firms, especially family firms. Additionally,
this picture of family employment in firms in smaller regions can partly be associated
with agglomeration diseconomies and labour market matching inefficiencies in
smaller regions. As compensation for these processes, social connections (e.g. family
ties) are used as sources of employment.
Moreover, the results show how the regional context matters when it comes to the
impacts of family co-occurrence on firm performance. In particular, the results
indicate that the impact of family co-occurrence is greater in smaller and specialized
regions than in diverse and larger regions. Consequently, the findings establish that it
is mainly in smaller, specialized regions that family co-occurrence positively affects
labour productivity. This finding has implications on or may hold for, smaller regions
characterized by specialized family firms, especially in ‘one-firm regions’. The findings
justify the argument that the geographical differences in firm performance can partly
be attributed to the spatial sorting of skilled labour and economic activities, as well as
the differentiated spatial sorting of family co-occurrence or employment and family
firms. While Gordon and McCann's (2000) claim that social proximity is less relevant
in specialized regions, the findings from the present thesis indicate that social
proximity invoked by family relations is indeed associated with higher performance in
specialized regions. It is no coincidence that most specialized regions in Sweden are
smaller regions with a relatively higher proportion of family firms and family
employment. To a larger extent, the results from Papers I and II point to the conclusion
that family co-occurrence in both family and non-family firms affects different levels
of analysis (individual, firm and region). These findings should bring some clarity to the
anecdotal evidence on hiring family members and how family co-occurrence enhances
the superiority of family firms across different types of regions.
Apart from extensively showing that family co-occurrence is highly viable for analysing
firm performance and uneven regional development, this thesis has also shown the
53
effects of current familial relations (family firm) and past familial relations (EC) on the
survival and growth of new entrants. The results have shown that past familial
relationships can expose family members to entrepreneurial capabilities, which has a
higher propensity to influence strategic decisions later in entrepreneurship. The
results show that entrepreneurs who have had self-employed parents (EC) are more
likely than other entrepreneurs to engage in strategic entrepreneurial decisions that
can drive entrepreneurial successes like firm survival, even when the regional context
and times of economic instability are controlled for (Paper III). Further analyses show
that this empirical evidence is valid for firms in rural regions. A possible interpretation
of this finding is that firms in rural regions develop and rely on durable past
entrepreneurial experiences from self-employed parents to surmount the resource
shortage that often characterizes rural regions. This finding advances the claim by
Aldrich et al. (1998), who argued that EC is an incentive for entering into self-
employment. However, the findings in the present thesis suggest that EC goes beyond
being simply a resource for entering into self-employment, also serving as a resource
for the staying power of new entrants, especially in rural regions. More importantly,
the thesis has demonstrated that the resilience of family firms is confounded by EC
(past familial relations), although it has previously been reported in the literature that
family firms (current familial relations) are more resilient due to cost internalization,
etc. (e.g. Braun & Latham, 2009; Mackie, 2001). The implication is that family firms per
se are not more resilient but that it is rather firms with entrepreneurial experience
from self-employed parents (or EC) that are. Furthermore, the findings also indicate
that family firms are more likely to create more jobs than non-family firms. However,
the results show no clear regional effect on the role of family firms in relation to job
creation. The results have shown that both present and past familial relationships
influence different facets of regional economic development (firm survival and
employment growth), a finding for regional policy planning.
Finally, this thesis has shown that family co-occurrence and EC have greater levels of
spatial variation, as well as positive effects on firm performance (e.g. labour
productivity, firm survival) and regional development (e.g. employment growth).
Support for this result is found in the recent work by Holm et al. (2017), who found a
higher share of family co-occurrence or kinship density in rural regions. While their
analyses suggested and expected diversity in the workforce at the firm level to be
potentially important and to interplay with the family dimension, especially in
metropolitan regions, the current thesis found this to be true in small specialized
regions. This confirms the underpinning assumption that the family is a bundle of
diverse resources that are important for increased firm performance, but most
importantly in firms (especially in family firms) in smaller or rural regions.
5.2. Implications for theory and methodology
The findings from this thesis have implications for theory and methodology in research
within economic geography and family business studies. First, the findings suggest that
54
proximity invoked by family ties may be as relevant as any proximity dimension in the
firm. The implication is that a comprehensive conceptual understanding of what the
family is and how it develops shared values should further be developed. A
comprehensive theorization of the family and family relations has the potential to
facilitate a deeper understanding of the mechanisms that drive mutual cooperation in
the family, and the possible effect on firm performance. Second, this study has laid
the foundation for understanding more important questions relating to how past and
present family relationships can affect different economic outcomes. These questions
may broaden our knowledge regarding the scope and role of social proximity. The
present thesis also has some methodological implications. The data provided by SCB
contain unique information on the family and family linkages, which allowed for the
construction of different family co-occurrences and the identification of family firms
based on ownership and management information. This approach of accounting for
the effects of family co-occurrences on firm performance is potentially more
informative than a mere binary variable indicating whether family members co-occur
in the same firm or not. The micro-level nature of the information on the family and
family linkages enabled the construction of some key variables that allowed us to
investigate the research questions on large samples, which increased the precision
and estimation power while reducing potential selection bias. Lastly, in the empirical
analysis, we relied on panel data, which allowed us to examine differences across
observations as well as differences within observations over time, providing stronger
claims of causality. This systematic methodological approach should facilitate and
guide future attempts in this regard, especially in different regional contexts.
5.3. Implications for policy and regional development
The present findings have implications for policy planning and regional development.
First, identifying the impacts of family co-occurrence on firm performance, especially
in family firms, is a great step toward understanding how to encourage
entrepreneurship while taking into account the role of the family. These findings
should not only provide policymakers with knowledge of the role of family co-
occurrence on firm performance but also aid policymakers in understanding the
importance of social context in the lives of entrepreneurs. Second, the findings have
implications for why certain family members co-occur in some workplaces. This should
feed policymakers not only with the general rhetoric of nepotism but also with the
knowledge of which familial relationships are the most beneficial in terms of impacting
firm performance, and their trade-offs. This makes a strong case for why some
employers may be more selective when hiring (mostly in private firms), relying more
on close family members, while also being aware that this is less expensive. In this regard,
policymakers should rather see such exercises as trade-offs. Third, the thesis has
demonstrated that geography is crucial in the analysis of the role of present and past
familial relationships in relation to the survival and growth of new entrants. This is an
interesting finding that should trigger different paradigms of policy planning, since the
55
creation of an entrepreneurial ecosystem not only facilitates entry into entrepreneurship
but also enhances entrepreneurial spillovers that ensure prudent decisions and strategies
that facilitate the survival of firms, especially in smaller regions. The implication is that,
although smaller regions may not have the same capacity as larger regions to promote
entrepreneurship, firms in smaller regions are more likely to leverage EC to enhance firm
survival. Finally, whereas the findings confirm the importance of the family, it is worth
noting that disparities in family structures still exist, e.g., across Europe, and have
contributed to the differences in social and economic development. This should inform
policymakers about the need to deal with the institutional barriers related to inherited
family structures and cultures that are particularly resistant to change (Duranton et al.,
2009).
5.4. Limitations and recommendations for future research
A discussion of some caveats and suggestions for future research is warranted in this
regard. Even though the data used in this study offer several benefits in relation to
their longitudinal nature, wide coverage, and ability to capture most aspects of the
firm and the region, they are also associated with a number of limitations, all of which
present important avenues for future research. First, the measurement of the family
effect on firm performance was mainly an investigation of the co-occurrence of family
members in the same firm. The nature of the data does not allow an examination of
the mechanisms that could be at play, how these mechanisms might contribute to a
better understanding of the synergistic familial relationships, or how they influence
firm performance. Failure to understand the underlying synergistic relationships only
allowed for the use of inferences, which rely on theoretical justifications. While there
is no problem with such an approach, a fine-grained dataset that captures synergistic
family relationships would contribute to understanding why certain familial
relationships are predominant in certain family firms and regions. Second, we are
aware of the limitations posed by how EC was measured. The underlying assumption
was that self-employed parents pass on entrepreneurial abilities and capabilities to
their children through familial socialization and involvement in family firms. The data
only allowed the use of a simple binary measure of EC, which is likely to miss more
interesting aspects of the argument. Future studies in this regard may consider a wider
definition of EC. Furthermore, such measurement of EC can enhance the examination
of how it could influence M&A deals since M&A is one of the most preferred processes
for implementing a firm’s strategic goals (e.g. increasing market share). Third, firm
performance was measured in the analysis as labour productivity, survival and
employment growth because these are effective measures of firm success. Moreover,
examining the impacts of family co-occurrence on non-economic indicators would also
be of great theoretical and practical value, as family firms are driven by both economic
and non-economic goals. Finally, future studies could explore individual family
members’ labour market outcomes in terms of how being employed in a family firm
affects one’s wages, career development, satisfaction, etc. vis-à-vis family members
56
employed in non-family firms. This could bring clarity to the argument of whether
family members’ successful labour market outcomes are tied to family firms only.
5.5. Conclusions
The present thesis set out as one of the few studies to investigate the economic
importance of family co-occurrence and EC for firm performance, and the
consequences of this influence in the analysis of the economic landscape. In the
analysis of firm performance and uneven regional development, extensive attention
has been given to geographical and cognitive proximities, to the neglect of other
proximity dimensions like social proximity. Many studies have confirmed the
importance of geographical proximity on firm performance in arguments referring to,
for instance, enhancing cooperation and the development of social capital. Others
have shown the relationship between cognitive proximity and firm performance
through factors like skills, education, and experience. Moreover, though evidence
shows that social relations are important for collaboration and firm performance, little
attention has been devoted to this in the empirical literature. In an attempt to
demonstrate that social proximity can partly explain the uneven regional development
from the level of the firm, we employed a longitudinal dataset from Sweden to address
three research questions. The thesis has laid the theoretical and empirical foundations
for understanding how social proximity affects firm performance; in this case, how and
why family co-occurrence is an important resource in the setup of the firm. The
present findings suggest that, apart from the family being an important resource
within the firm setup, certain family relationships are more able to leverage their
unique attributes to invoke economic importance in similar and unrelated skills for
firm performance. Further, the analyses show that the effects of family co-occurrence
on performance are more pronounced among firms in small, specialized regions.
Finally, the analyses show that past familial relationships (EC) constitute an important
resource for firm survival, especially in rural regions. This finding suggests that family
firms per se are not more resilient but that is rather firms with entrepreneurial
experience from parents that are. However, family firms grow more than non-family
firms. Moreover, it cannot be concluded that regions characterized by higher family
co-occurrence are the most prosperous regions, but, however, the findings contribute
to the discussions on the spatial variation of firm performance.
These findings contribute to the discussion in economic geography by providing
different perspectives for understanding the mechanisms behind economic growth
and development in various regions and industries. Likewise, the analyses bring some
understanding to the consistent heterogeneity of firm performance between different
firms within the same regions and industries, by assessing the impacts of family co-
occurrence and EC. All this should offer new perspectives for explaining and
supporting why the family constitutes an important part of the firm’s production
setup, particularly in family firms and in rural or smaller regions. The findings should
challenge policymakers to consider whether it might not be imperative to encourage
57
the development and sustenance of entrepreneurial families and family firms
(Benedict, 1968). Moreover, while reflecting on the importance of the family in
relation to firm performance, we should also not lose sight of the fact that there is a
latent risk in family co-occurrence in firms: it is not a problem—until it becomes a
problem (Haugen & Westin, 2016).
6. SAMMANFATTNING PÅ SVENSKA (SUMMARY IN SWEDISH)
Bakgrund/Forskningsläget
Trots familjens centrala roll och rapporter som visar på vikten av familjetypologier för
att förstå regional utveckling i form av BNP per capita är familjens roll relativt lite
undersökt i relation till regionala skillnader i ekonomisk utveckling. Basco (2015)
argumenterar exempelvis för att studier i regional utveckling har förbisett att studera
familjens roll i relation till företagsbeteende och därmed den roll familjen spelar för
regionens ekonomiska och sociala utveckling. Den regionala utvecklingslitteraturen
visar på vikten av socialt kapital för att förstå konkurrensfördelar, medan
familjerelationers potentiella roll primärt har behandlats i fallstudier. Länken mellan
familjen och regionala socioekonomiska utfall förtjänar mer uppmärksamhet i
litteraturen då den kan erbjuda betydelsefulla insikter om varför vissa regioner har
lyckats bättre, eller har lättare för att ställa om vid kristider än andra, då det i stort sett
inte finns någon aspekt av samhället som inte är påverkad av familjen (Alesina &
Giuliano, 2014).
Med tanke på den tidigare beskrivna luckan ger denna avhandling ett bidrag till den
regionalekonomiska litteraturen genom att analysera familjens roll i företag. Mer
specifikt så undersöks hur olika konstellationer av familjerelationer på arbetsplatser
(samförekomst) och entreprenörskapital (EC) påverkar företagets konkurrensförmåga
och potential att förklara ojämn regional utveckling. Medan familjesamförekomster
innefattar familjerelationer som finns i ett företag representerar EC entreprenörens
nedärvda erfarenheter från föräldrars entreprenörskap. Analysen sker i interaktionen
mellan agglomerations och närhetsdimensionslitteraturens (’proximity’) utforskande
av relevansen av olika typer av närheter, å ena sidan, och familjeföretagslitteraturen,
å andra sidan. Denna avhandling fokuserar på den sociala dimensionen av ”närhet” –
i form av familjen, och hur sådana relationer bland många är viktiga för att förstå
geografiska olikheter i företags konkurrenskraft. Avhandlingen utgår ifrån antagandet
att familjen är en resurs som är viktig för att öka företags konkurrensförmåga,
framförallt i regioner som karaktäriseras av agglomerationsnackdelar eller regioner
som saknar de fördelar som kommer av samlokalisering av företag, vilket vanligtvis är
små regioner.
Effekten av familjesamförekomster och EC på företags konkurrensförmåga och
regional utveckling har en viktig geografisk dimension. Denna dimension har inte fått
tillräcklig uppmärksamhet inom ekonomisk geografi. Den roll familjerelationer och
58
dess samförekomst spelar påverkas av regionen, dvs. det finns en potentiell variation
i utfallet av familjerelationer beroende på kontexten. På grund av att storstadsregioner
karakteriseras av exempelvis hög agglomeration av både specialiserade och
diversifierade sektorer och arbetskraft, finns det potential för en effektivare
arbetsmarknadsmatchning mellan jobb och arbetstagare i dessa regioner. Detta
betyder att i storstadsregioner läggs mindre vikt vid nyanställningar genom
familjerelationer i jämförelse med i landsbygdsregioner där agglomerationsfördelarna
är svagare. Då landsbygdsregioner karakteriseras av problem med
arbetsmarknadsmatchning och en brist på t.ex. variation avseende kompetenser
förefaller det som att familjesamförekomst i företag möjligen är mer utbredd där.
Följaktligen påverkar geografin förekomsten av familjerelationer, men också den roll
som dessa familjeband spelar. Dessutom finns det belägg för att agglomerationer inte
är homogena utan snarare varierar i flera olika dimensioner, och att olika resurser
inom företaget påverkar konkurrensförmågan. Detta tyder på ett behov av empiriska
analyser kring effekten av familj och familjeföretag, vilket är det som denna avhandling
avser att göra.
Forskningsfrågor
För att uppnå avhandlingens syfte har tre olika men relaterade frågor analyserats: den
första analyserar förekomsten av familjesamförekomst mellan olika regioner och hur
den påverkar företags konkurrenskraft; den andra undersöker å ena sidan relationen
mellan entreprenörers familjerelationer (samförekomst av olika familjerelationer) och
olika uppsättningar av kompetenser, och å andra sidan hur dessa relationer påverkar
företags konkurrensförmåga; och den tredje undersöker effekterna av
familjerelationer (familjeföretag) och entreprenörskapital (EC) för överlevnad och
tillväxt hos nyetablerade företag.
Data och metoder
Analysen i de tre artiklarna är baserade på data från ASTRID databasen, som finns vid
Institutionen för geografi och ekonomisk historia vid Umeå universitet. I denna
datainfrastruktur kombineras flera olika register från Statistiska Centralbyrån (SCB).
Den innehåller relationell mikro-data för alla företag, arbetsplatser och individer från
1960 och framåt. Eftersom ASTRID data sträcker sig över en längre tid möjliggörs
longitudinella studier av företag, sektorer och regioner i den svenska ekonomin. Varje
företag och anställd i databasen har en unik identifieringskod, vilken dessutom gör det
möjligt att länka individer och arbetsplatser. ASTRID innehåller även longitudinella
familjeregister som innehåller information om varje familj i Sverige. Familjeregistret
innehåller information om varje individs eventuella partner och biologiska
familjemedlemmar – föräldrar, barn, syskon, etc. (ingen distinktion görs mellan
biologiska och adopterade barn). Det som möjliggör dessa studier är att
familjeregistret dessutom omfattar unika identifikationsnummer för varje familj, samt
upplysningar om vilken typ av familjerelation det handlar om, och om dessa är länkade
59
till respektive arbetsplats för varje enskild familjemedlem. Familjens och
arbetsplatsens identifikationsnummer möjliggör identifiering av familjesamförekomst
i en och samma arbetsplats eller företag.
I artikel I och II definieras företags konkurrenskraft som arbetsproduktivitet, mätt som
förädlingsvärde per capita. Produktivitet är ett mera rättframt mått av
industriproduktion än andra mått som mäter patent och citeringar, vilket exkluderar
stora delar av ekonomin. Arbetsproduktiviteten har estimerats med hänsyn tagen till
inflation/deflation. Loggade värden av arbetsproduktiviteten har använts för att
kontrollera för snedfördelning i data. I artikel III definieras företags
konkurrensförmåga som graden av överlevnad och sysselsättningstillväxt. Studier har
visat att familjeägande och kontroll påverkar företags förmåga att överleva och dess
sysselsättningstillväxt. Medan överlevnad kan anses reflektera företagets effektivitet,
så är sysselsättningstillväxten kanske inte bara ett mått på företagets kapacitet
gällande humankapital, utan även den regionala kapaciteten i specifika kunskapsbaser.
Tillväxt mäts som årlig sysselsättningsförändring i absoluta tal. Den naturliga
logaritmen av värdena har använts i modellerna för att kontrollera för snedfördelning.
Analysenheten i artikel I är observationer av företag mellan 1995 och 2010; i artikel II,
företag mellan 2002 och 2012; och i artikel III, alla nyetableringar 2002, som följs upp
till 2012. Dessa tidsperioder rymmer en stor återhämtningsperiod av bostads- och
finansmarknaden under tidigt 1990-tal, och den senaste globala finanskrisen 2008. I
ljuset av detta är det informativt att undersöka familjeanställning gentemot
anställning baserad på meritokrati och hur familjesamförekomst påverkar
konkurrenskraften (kontrollerat för dessa tidsperioder). För de empiriska modellerna
i artikel I används en OLS-regression (såväl som i artikel III) som den huvudsakliga
empiriska strategin och fixed effects (FE) som robusthetskontroll. Att vi har paneldata
innebär att FE-modellen kompletterar OLS-modellen. I artikel II används FE-modellen.
I artikel III används event history-analys för att analysera relationen mellan
familjeföretag och EC. Vi använder Kaplan-Meier (KM) överlevnadsanalys för att
utforska sambandet och en Cox proportional hazards-modell som ett mått på effekter
och styrkan.
Resultat
Resultaten i artikel I visar att det finns en högre andel samförekomst av
familjemedlemmar i företag i mindre regioner och sektorer med låga inträdeskrav, där
anställning primärt är baserad på sociala kontakter. Detta resultat bekräftar
uppfattningen att större regioner karakteriseras av överspillningsfaktorer som
kommer av agglomerationer av företag och människor, vilket innebär att det kan vara
ineffektivt att förlita sig på familjenätverk som anställningsmedel. Oavsett region och
sektor visar resultaten att med tiden minskar andelen familjeanställningar och
familjesamförekomster successivt. Analysen indikerar dessutom att
familjesamförekomster påverkar företags konkurrenskraft positivt. Resultaten visar
60
också att effekten av familjesamförekomst på arbetsproduktiviteten till och med är
positiv och signifikant i icke-familjeföretag (där det ofta kan finnas en liten andel av
familjesamförekomster). Slutligen indikerar resultaten att familjesamförekomster
främst påverkar företags konkurrenskraft i specialiserade regioner, i motsats till vad
Gordon and McCann (2000) argumenterar för.
Resultaten i artikel II indikerar att där det finns familjerelationer inom företag som
involverar barn och/eller en partner är det mer troligt med positiva och signifikanta
effekter på arbetsproduktiviteten. Vidare uppvisar resultaten inga effekter från
syskonrelationer på produktiviteten. Medan familjen anses vara en viktig källa för
kapital, verkar det som att detta bara är fallet när den inbegriper barn och/eller
partnerrelationer. Resultaten stödjer idéen att familjeföretag inte är homogena vad
gäller familjesamförekomster och deras åtagande gentemot företaget, utan istället
innefattas flera typer av familjekonstellationer, som påverkar det ekonomiska utfallet.
Vidare indikerar resultaten att familjerelationer som involverar barn och/eller partner
dämpar de negativa effekterna av likheter i kompetenser och olikheter i
arbetsproduktivitet. Således påverkar partnerrelationer till entreprenörer i företag
produktiviteten positivt oavsett nivån av likheter och/eller olikheter i den formella
utbildningen. Resultaten stödjer argumentet att lärandeprocesser kan äga rum mellan
kognitivt olika individer som är socialt nära varandra (Huber, 2012).
Resultaten i artikel 3 tyder på att det inte är familjeföretagen per se som är mer
motståndskraftiga utan att det är entreprenörserfarenheter eller EC från
egenföretagande föräldrar som spelar roll. Detta resultat går emot tidigare
rapporterade resultat om mer motståndskraftiga familjeföretag. Denna faktor har
vidare större betydelse för företag på landsbygden och i mindre regioner. Resultaten
visar också att familjeföretag växer mer än andra företag. Däremot kunde inte
identifieras några tydliga regionala effekter av familjeföretag på jobbskapande.
Sammanfattningsvis bidrar artikel III till litteraturen om regional utveckling och
motståndskraften hos familjeföretag genom att visa att nuvarande och förflutna
familjerelationer förklarar olika aspekter av regional utveckling. Denna resultat banar
förhoppningsvis väg för ytterligare empiriska studier om motståndskraften hos
familjeföretag i relation till entreprenörskapitalets roll.
Avslutande diskussion
Avhandlingens syfte är att bidra till det underteoretiserade forskningsfältet om den
ekonomiska nyttan av familjesamförekomster och EC för företags konkurrenskraft,
och de konsekvenser detta får för analysen av det ekonomiska landskapet. I analysen
av företags konkurrenskraft och ojämn regional utveckling, har stor uppmärksamhet
riktats mot geografiska och kognitiva avstånd, medan andra dimensioner såsom
sociala avstånd har åsidosatts. Många studier har bekräftat vikten av geografisk närhet
för företags konkurrenskraft i argument som refererar till exempelvis ökat samarbete
och utveckling av det sociala kapitalet. Andra har visat på relationen mellan kognitiv
61
närhet och företags konkurrenskraft genom faktorer såsom kompetenser, utbildning
och erfarenhet. Trots att det finns belägg för att sociala relationer är viktiga för att
samarbeta har väldigt lite uppmärksamhet riktats mot denna dimensionen i den
empiriska litteraturen. I ett försök att visa att den sociala närhetsdimensionen delvis
kan förklara den ojämna regionala utvecklingen utifrån ett företagsperspektiv,
använder vi longitudinella svenska data för att besvara tre forskningsfrågor. Denna
avhandling har lagt den teoretiska och empiriska grunden för att förstå hur social
närhet påverkar företags konkurrenskraft; i detta fall hur och varför
familjesamförekomster är en viktig resurs för företag. Resultaten tyder på att förutom
att familjen är en viktig resurs, så kan vissa familjerelationer kompensera för de
negativa effekterna av lika eller orelaterade kompetenser för företagets
konkurrenskraft. Analysen visar dessutom att effekten av familjesamförekomster på
konkurrenskraften är större bland företag i små specialiserade regioner. Slutligen visar
analysen att EC utgör en viktig resurs för företags överlevnad, speciellt i
landsbygdsregioner. Dessa resultat innebär att det inte är familjeföretag i sig som är
mer motståndskraftiga utan att det handlar om företag som har
entreprenörserfarenhet genom föräldrar som har varit eller är egenföretagare.
Familjeföretag växer emellertid mer än andra företag. Detta innebär att nuvarande
familjerelationer främjar tillväxt hos nyetableringar. Detta bidrar till diskussionen inom
ekonomisk geografi genom att olika perspektiv tillhandahålls för att förstå
mekanismerna bakom ekonomisk tillväxt och utveckling i olika regioner och sektorer.
Genom att bedöma effekten av familjeförekomster och EC bidrar analysen därutöver
till en förståelse för den variation vi ser i företags konkurrensförmåga mellan olika
företag i samma regioner och sektorer. Allt detta torde kunna erbjuda nya perspektiv
för att förklara och ge underlag till varför familjen utgör en viktig del av företagets
produktionsstruktur, speciellt i familjeföretag på landsbygd och i mindre regioner.
62
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Department of Geography and Economic Histroy Umeå University, SE-901 87 Umeå www.geoekhist.umu.se
Why some firms are superior performers than other firms, and why some regions are more prosperous than other regions are key questions in policy planning and research. Economic geographers and regional economists often strongly associate these questions with agglomeration economies and proximity dimensions chiefly on geographical proximity and cognitive proximity to the neglect of other proximity dimensions, such as social proximity – family relationships (or family co-occurrences). In this thesis, using a Swedish longitudinal register data, a systematic analysis of the role of family co-occurrence on firm performance and how it contributes in explaining the uneven regional development is in focus.
Department of Geography and Economic Histroy Umeå University, SE-901 87 Umeå www.geoekhist.umu.se
GERUM 2018:1 ISBN 978-91-7601-839-2 ISSN 1402-5205
Why some firms are superior performers than other firms, and why some regions are more prosperous than other regions are key questions in policy planning and research. Economic geographers and regional economists often strongly associate these questions with agglomeration economies and proximity dimensions chiefly on geographical proximity and cognitive proximity to the neglect of other proximity dimensions, such as social proximity – family relationships (or family co-occurrences). In this thesis, using a Swedish longitudinal register data, a systematic analysis of the role of family co-occurrence on firm performance and how it contributes in explaining the uneven regional development is in focus.