Family involvement in ownership, control, management and firm performance: empirical evidence from Viet Nam

The question of how family affects firm performance remains open for debate. Despite growing attention to family business research, results are mixed regarding the effects of of family involvement on family firm performance. The dissertation adopts various theoretical paradigms to reconcile empirical inconsistencies by examining both negative and positive effects of family involvement. The adopted paradigms include the familiness perspective constructed from the resource- based view; the socioemotional wealth perspective, an emerging construct with a potential to become a dominating theory of family firms; agency and stewardship theories. Using proxy data for 198 family firms listed on Ho Chi Minh City and Ha Noi stock exchange markets, multiple quadratic regressions are employed to assess the nonlinear effects of family involvement components on firm performance as measured by ROA and Tobin’s Q. Consistent with the author's conjecture, the study finds that the relationships between family involvement in ownership, board of directors and firm performance are curvilinear. The study also reveals the excessive family involvement on the board of directors is negatively related to firm performance. These findings suggest that unchallenged control might lead to expropriation for the private benefit of controlling families, and family firms' best performances are associated with moderate levels of ownership and optimal board structures with the involvement of both family and nonfamily members. Contrary to the author's predictions, the research results reject a curvilinear relationship between family involvement in management and firm performance. The results also reject moderation effects of multi-generational and family Chair/CEO spousal involvement on the influence of family involvement in ownership on firm performance. However, the study finds family involvement in management and multi-generational involvement are negatively associated with firm value. These findings shed light on the effects of family management; and familial altruism and complexity in multi-generation family firms. The research makes an important contribution to the growing knowledge of components of family involvement in the family business, further understanding of familiness and socioemotional wealth constructs. The findings suggest corporate governance mechanisms should promote a balanced board of directors and top management team with representation of family and nonfamily members to enhance the value of family businesses.