Strategies and motives of family and non-family firms in India: unexpected differences and similarities

Abstract

There is much debate in regards to whether family firms have a competitive advantage over non-family firms (Miller, Le Breton-Miller, Lester, and Cannella, 2007; Villalonga and Amit, 2006). While some research portrays family firms as outperforming their non-family counterparts due to the family’s strong commitment, social capital and long-term perspective (Miller, Le Breton-Miller, and Scholnick, 2008; Sirmon and Hitt, 2003), other research suggests that the tendency of family firms toward conservative strategies and risk aversion puts them at a disadvantage (Bertrand and Schoar, 2006; Morck and Yeung, 2003). Researchers also debate whether family firms have an advantage or disadvantage in emerging markets (Gedajlovic, Carney, Chrisman, and Kellermanns, 2012). While they may have an advantage in such contexts because of their family’s social capital and stability (for example, Luo and Chung, 2013; Miller, Lee, Chang, and Le Breton-Miller, 2009), they could be ill-equipped to compete in such markets due to their resistance to change and emphasis on family control (for example, Bertrand, Mehta, and Mullainathan, 2002). This chapter explores the strategies and motives of privately held family and non-family firms in India, whether the strategies and motives of family firms vary from those of non-family firms—and, consequently, whether family firms possess a performance advantage relative to nonfamily firms.