Managing resources for economic value creation in the family firm Online publication date: Tue, 14-Oct-2014
by Alfredo M. Bobillo; Juan A. Rodríguez-Sanz; Fernando Tejerina-Gaite
European J. of International Management (EJIM), Vol. 8, No. 3, 2014
Abstract: This study examines the financing choices of family firms in relation to leverage and economic value creation, taking into account the family firm life cycle. Firm ownership, control and the generation that is managing the family firm are other attributes of these firms. Additional factors, such as the exploitation of intangible assets (innovation capacity), and the ability to detect growth opportunities may also prove important in contributing towards successful economic value creation strategies. Using a panel of 738 Spanish firms, including 338 family-run businesses, we show that ownership structure, along with other variables, such as the firm's use of intangible assets, its growth capacity, the generation running the firm and the stage it has reached in its life cycle, provide the foundational pillars for economic value creation and leverage in the family firm. We also find a higher proportion of family businesses in cyclical growth industries.
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