Journal of Family Business Strategy 12 (2021) 100420

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Journal of Family Business Strategy

journal homepage: www.elsevier.com/locate/jfbs

How do family businesses grow? Differences in growth patterns between

family and non-family firms
Ana M. Moreno-Menéndez *, José C. Casillas
Universidad de Sevilla, Facultad de Ciencias Económicas y Empresariales, Avda Ramón y Cajal, 1, 41018, Seville, Spain

A R T I C L E I N F O A B S T R A C T

Keywords: Family businesses vary considerably in size, ranging from small entrepreneurial ventures over medium-sized
Firm growth companies to large global corporations. However, we know little about how family businesses grow. Our
Family business research analyses differences in growth patterns between family and non-family businesses, considering two
Socioemotional wealth
dimensions of business growth: sales (performance) and employees (resources). Based on the Penrosean resource-
Resource-based view
Spain
based view of the firm and socioemotional wealth (SEW) perspective, we test and find —using a panel of 2000
Spanish manufacturing companies (2006–2014) —that family businesses tend to grow less than non-family
businesses in terms of sales but more in terms of employees. Our research casts doubt on the myth of low
growth in family businesses and shows that SEW should complement the Penrosean approach to explain the
growth of family businesses.

1. Introduction
Despite the importance of family businesses to most economies, the
majority of these firms remains relatively small in size (Bjuggren,
Johansson, & Sjögren, 2011; Chang, Chrisman, Chua, & Kellermanns,
2008; Shanker & Astrachan, 1996). While some family businesses are
able to grow into large publicly listed entities, such as S&P 500 firms
(Anderson & Reeb, 2003), there is limited research that explains the
differences in growth patterns between family and non-family busi­
nesses, and the little research that does exist yields inconclusive results.
Nevertheless, growth is often considered a company’s primary goal and
frequently viewed as an indicator of its performance and success (Autio,
Sapienza, & Almeida, 2000; Davidsson, Steffens, & Fitzsimmons, 2009;
Moreno-Menéndez & Casillas, 2008), ultimately affecting both eco­
nomic and social welfare (Storey, 1994; Wiklund, Patzelt, & Shepherd,
2009).
Although the topic of business growth has been researched exten­
sively in recent decades from a variety of perspectives (Geyer, 2016;
Pendergast, 2011; Wiklund et al., 2009), only a few studies have looked
at understanding family business growth in depth (Campopiano, Bru­
mana, Minola, & Cassia, 2020; Stenholm, Pukkinen, & Heinonen, 2016).
Some family business studies have used firm growth as a measure of
performance (Casillas and Moreno-Menendez, 2010) or have focused on
a specific type of growth, such as international expansion (Fernández
and Nieto, 2006; Sciascia, Mazzola, & Chirico, 2013) or diversification
(Gomez-Mejía et al., 2010). Prior research suggests that family busi­
nesses usually grow slower than non-family businesses, although there
are important exceptions to this rule, like the case of hidden champions
(De Massis, Audretsch, Uhlaner, & Kammerlander, 2018; Debicki et al.,
2016; Duran, Kammerlander, van Essen, & Zellweger, 2016). This
apparent paradox suggests that the relevant question is not whether
family businesses are able to grow or not, compared to non-family firms,
but how they achieve this growth. The answer to this question remains
inconclusive, as studies that investigated potential differences in growth
between family and non-family businesses have yielded mixed results.
One explanation for the inconclusive findings may be differences in
the way growth was measured. Growth is a complex and heterogeneous
process (Achtenhagen, Naldi, & Melin, 2010) with various dimensions,
requiring particular attitudes, such as entrepreneurial orientation (Bet­
tinelli, Sciascia, Randerson, & Fayolle, 2017; Casillas,
Moreno-Menendez, & Barbero, 2011; Naldi & Davidsson, 2014) and
certain specific types of resources and capabilities (Penrose, 1959). We
therefore started from the idea that the unique combination of resources
and capabilities of family businesses (Sirmon & Hitt, 2003) is respon­
sible for how much family firms grow compared to their non-family
counterparts. To investigate the growth process of family and
non-family businesses empirically, we asked: Do family and non-family
businesses grow in the same way? In an attempt to provide answers to

* Corresponding author.
E-mail addresses: ammoreno@us.es (A.M. Moreno-Menéndez), casillas@us.es (J.C. Casillas).

https://doi.org/10.1016/j.jfbs.2021.100420

Available online 9 March 2021

1877-8585/© 2021 Elsevier Ltd. All rights reserved.
A.M. Moreno-Menéndez and J.C. Casillas
this question, we investigated (a) the difference in growth between
family and non-family firms along two main dimensions of growth (sales
and employees), and (b) the moderating role of initial firm age and size
(just before the period of 2006–2014 considered) on the effect of family
control and involvement on firm growth.
We proposed three pairs of hypotheses based on two theoretical
approaches: the Penrosean theory of the growth of the firm (Penrose,
1959; Sirmon & Hitt, 2003) and the socioemotional wealth (SEW)
perspective (Berrone, Cruz, & Gomez-Mejia, 2012; Gómez-Mejía, Hay­
nes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007). While the
Penrosean approach explains that discrepancies in growth are based on
differences in availability of certain resources and capabilities, the focus
of the SEW perspective was to explain why family and non-family firms
not only have access to different types of resources and capabilities, but
also how they employ them in distinctive ways. The first two hypotheses
refer to how much family businesses grow, compared to non-family
firms. We proposed that family businesses will grow less than
non-family firms in terms of sales, but not in the number of employees.
The second pair of hypotheses introduces the effect of firm age as a
predictor of the family nature - firm growth relationship. Finally, the last
two hypotheses consider the effect of firm size in the relationship be­
tween family nature and firm growth.
The empirical research is based on a sample comprising a panel of
15,790 firm-year observations over a nine-year period (2006–2014),
corresponding to nearly 2000 medium and large Spanish manufacturing
companies. The results indicate that family firms experience lower sales
growth but higher employment growth than non-family businesses. We
also found that both firm age and firm size moderate the family nature –
firm growth relationship, but in different ways depending on the
dependent variable (sales versus employee growth). Our findings
contribute to the literature on firm growth and family business, showing
that family ownership and involvement have an impact on the way in
which firms develop and grow. First, our article further dispels the myth
of low growth among family businesses, showing that there is no glass
ceiling for growth in family firms, but rather, a different pace of growth.
Second, we contribute to the family business literature by regarding firm
age as a potential intensifying factor for the influence of SEW on busi­
ness behaviour. Our results suggest that older family businesses are
more reluctant to grow than younger family businesses. Interestingly,
this effect is not present in the case of non-family businesses. This
finding may be due to a more entrepreneurial behaviour in the family
firms’ initial lifecycle stages. The final contribution is to the firm growth
literature. Our work focuses the attention on the role of non-economic
goals, in particular the preservation of SEW, and long-term orientation
as potential dimensions for explaining differences in growth between
family and non-family businesses. In other words, our findings provide
another illustration that mainstream theories may require adaptation
when applied to family business (Astrachan, 2010). Specifically, the
Penrosean approach to the growth of the firm appears insufficient to
fully explain the growth of family businesses and would benefit from
incorporating non-economic determinants of growth, such as those
proposed in the SEW perspective.
The remainder of the article is structured as follows. In the next
section, we lay out the theoretical background of the paper, examine the
literature on growth theory and family business and propose our six
hypotheses. Next, we describe the methodology used to test the pro­
posed relationships, sample characteristics, measures and statistical
models. Then, we interpret the results, and finally conclude with a dis­
cussion of the main findings, implications, limitations and future
research suggestions.
2. Theory and hypotheses
2.1. Literature review
Business growth has been a recurring topic in the economics and
2
Journal of Family Business Strategy 12 (2021) 100420
management literature. From an economics perspective, most research
has been developed around the validation of Gibrat (1931), which
proposes that a firm’s growth is unconnected to its size. At the same
time, the relation between a firm’s age and growth has also been
investigated extensively (Almus & Nerlinger, 2000; Bechetti & Trovato,
2002; Correa, Acosta, González, & Medina, 2003). Adopting a man­
agement approach, research has focused on the endogenous variables
that promote or slow down firm growth. The resources/capabilities
view, based on the seminal work by Edith Penrose (1959), dominates
this approach and explains business growth through the ability of
managers to envision productive uses for firm resources (Penrose, 1959;
Pettus, 2001). From these seminal approaches, the literature has grown
significantly in recent decades. Wiklund et al. (2009) identify five
dominant perspectives in the small business growth literature, relating
to (1) entrepreneurial orientation, (2) the role of the firm’s environment,
(3) strategic fit, (4) resources, and (5) attitude to growth. A recent
meta-analysis of the resource-based view and growth of the firm shows
that versatile resources are associated with higher levels of growth,
whereas valuable, rare, inimitable, and non-substitutable (VRIN) re­
sources are not (Nason & Wiklund, 2018).
Recent global crises have stalled the increasing interest in growth, as
researchers and practitioners have shifted their primary focus to survival
(Campopiano, de Massis, & Kotlar, 2019; Dolz, Iborra, & Safon, 2019), a
process even more intensive due to the recent Covid-19 pandemic (Kraus
et al., 2020). However, the 2008 financial crisis has shown the greater
fragility of small businesses in the face of global economic collapse, and
various public (European Commission, 2010; Eurostat-OECD, 2007;
OECD, 2000) and private institutions (NESTA: Anyadike-Danes, Bonner,
Hart, & Mason, 2009) are demanding public policies that are oriented
toward encouraging firm growth, especially in those countries with a
higher proportion of micro-enterprises. In Spain, for example, the
average number of employees per firm is lower than 5 and more than 95
percent of firms have fewer than 10 employees (IEF: Casillas,
López-Fernández, Meroño, Pons, & Beiges, 2015).
Although family businesses dominate most economies (Bjuggren
et al., 2011; Chang et al., 2008 in the USA; IFERA, 2003; Shanker &
Astrachan, 1996 in the USA), only a limited number of studies have
directly focused on the growth of family firms (Cirillo, Huybrechts,
Mussolino, Sciascia, & Voordeckers, 2020; Miroshnychenko, De Massis,
Miller, & Barontini, 2020). Using a large sample of French SMEs,
Hamelin (2013) argues that the lack of financial resources and the more
conservative attitude towards growth of family-owned SMEs explain the
lower growth rate of family firms and Seibold (2021) analyses the role of
generational transition on family business growth using a sample of 350
big industrial family-owned businesses in Germany. Another line of
research analyses the relation between entrepreneurial orientation (EO)
and firm growth in family businesses (Casillas and Moreno-Menendez,
2010; Casillas et al., 2011; Stenholm et al., 2016), finding that EO
positively influences growth only in second-generation family busi­
nesses. This relationship is moderated by environmental dynamism and
hostility. Overall, these studies propose that the unique characteristics of
family firms (Habbershon & Williams, 1999; Sirmon & Hitt, 2003) in­
fluence the EO-growth relationship through their influence on the
different dimensions of EO, such as innovativeness, risk-taking, proac­
tiveness, competitive aggressiveness, and autonomy (Covin & Slevin,
1990; Lumpkin & Dess, 1996; Miller, 1983). Nevertheless, the results are
far from conclusive. For example, the influence of family business
characteristics on innovation behaviour and its implications for perfor­
mance and growth remain the subject of intense debate (Aparicio,
Iturralde, & Sanchez-Famoso, 2019; Arsubiaga, Maseda, Uribarri, &
Palma, 2019; Duran et al., 2016; Souder, Zaheer, Sapienza, & Ranucci,
2016). Cumulatively, these results suggest that the relationship between
family ownership and involvement is complex, and our current knowl­
edge is scant. As previous reviews of the growth literature indicate, the
influence of family ownership and management has been largely over­
looked (Davidsson, Achtenhagen, & Naldi, 2010; Henrekson &
A.M. Moreno-Menéndez and J.C. Casillas
Johansson, 2010; Wiklund et al., 2009). Bridging this gap is important,
not only for academics interested in improving their understanding of
the antecedents of firm growth, but also for policy makers, owners and
managers, so that they may improve their firms’ growth promotion
measures and practices.
2.2. Hypothesis development
Two complementary theoretical approaches are useful to further
investigate family business growth: the Penrosean theory of the growth
of the firm and the socioemotional wealth perspective (SEW). Edith
Penrose (1959) argued that a firm’s growth is based on how managers
search new uses for available resources, with managerial resources
being particularly relevant. Resources lie at the heart of the firm growth
literature, as research referring to Penrose’s seminal book illustrates
(Davidsson et al., 2009; Naldi & Davidsson, 2014; Wernerfelt, 1984;
Wiklund et al., 2009). However, as specified above, not all types of re­
sources necessarily have the same effect on growth. Nason and Wiklund
(2018) found that only versatile resources have a significant and positive
influence on firm growth. At the same time, one must acknowledge that
firm growth is a multi-dimensional and multi-faceted construct. The
common understanding of growth typically refers to sales versus em­
ployees (Achtenhagen et al., 2010). While sales growth is often a mea­
sure of performance (output), growth in the number of employees is a
measure of the evolution of a resource (input) that can be used to attain
sales growth or other organizational goals. We propose that family
businesses demonstrate a different orientation towards these two di­
mensions of growth, primarily because of socioemotional wealth (SEW).
We therefore consider that the SEW perspective can complement the
Penrosean approach to explain the differences in growth between family
and non-family firms. We propose that the orientation towards SEW and
the preservation of the family business affect the versatility of the
available resources and capabilities in terms of internal and external
fungibility (Nason & Wiklund, 2018). Moreover, SEW also affects the
way in which family firms use their resources and capabilities in order to
grow. More specifically, regarding sales growth, family and non-family
firms experience different effects of SEW on the use of (non)versatile
resources for growth. Following the differentiation of the internal and
external fungibility of resources (as a source of versatility), we propose
that the difference in growth between family and non-family firms is due
to the lower external fungibility and higher internal fungibility of family
firms’ resources and capabilities.
External fungibility refers to resources with little specificity that are
tradable between firms. Some examples of fungible resources are cash or
generic human resources. In order to preserve family control, family
businesses are reluctant to seek external capital from capital markets,
particularly if this requires the incorporation of new partners or
ownership sharing (Hamelin, 2013). As a result, they have fewer ver­
satile resources such as cash (Nason & Wiklund, 2018). Family firms’
preference for internal financing directly affects their growth capacity in
the short term (Carpenter & Petersen, 2002; Cull, Davis, Lamoreaux, &
Rosenthal, 2006). Financial resources are a clear example of versatile
resources (Brush et al., 2000) and so we would expect lower levels of
external fungible (financial) resources in family businesses compared to
non-family firms.
Regarding managerial resources, family businesses are also reluctant
to lose their control of strategic decision-making, as reflected in their
desire to keep boards and top management teams in the hands of family
members (Basco, 2014; Chrisman, Chua, & Pearson, 2012; Dyer, 1989).
Previous literature assumes that family businesses have less access to the
best human and managerial capabilities (Barbero, Casillas, & Feldman,
2012), accompanied by a reluctance to accept non-family expertise
(Arregle, Duran, Hitt, & van Essen, 2016). Consequently, family man­
agers may act as external non-fungible resources, with a narrow scope of
knowledge that is not easily transferable to other businesses (Nason &
Wiklund, 2018). In summary, family business resources (financial and
3
Journal of Family Business Strategy 12 (2021) 100420
managerial) show lower levels of external fungibility (low versatile re­
sources), which inhibits sales growth.
Internal fungibility, according to Nason and Wiklund (2018), includes
“uniquely developed and sticky assets with a broader range of uses” (p.
37), such as branding and experiential learning. We do expect high
levels of internal fungible resources in family businesses, due to the
importance of non-economic dimensions of the business to the owning
family. For example, from the SEW perspective, family businesses pro­
vide their members with a strong identity, through well-established
brands (sometimes linked to the family name), reputation, or a family
business image (Binz Astrachan, Botero, Astrachan, & Prügl, 2018;
Berrone et al., 2012; Binz, Hair, Pieper, & Baldauf, 2013; Elsbach &
Pieper, 2019). Other internal fungible resources are related to mana­
gerial capabilities, resulting from the close overlap of family members,
board of directors and TMT. Family directors and managers accumulate
considerable experiential knowledge, usually tacit knowledge (Leap­
trott, 2005) of the firm and the industry, that can be used to expand the
business and its growth (Nason & Wiklund, 2018). We suggest that a
potential lack of some versatile resources, such as managerial or finan­
cial resources, can be compensated for by other managerial capabilities
that make it easier to put decisions into practice. For example, family
firms have less formalised structures (Leaptrott, 2005), with more
flexible channels of communication, better circulation of information
and more centralised decision-making (Gomez-Mejía, Cruz, Berrone,
and De Castro, 2012; Kotey & Folker, 2007). Family businesses are less
likely to use formal systems (Harris & Reid, 2008), enabling more agile
behaviour and growth (Casillas and Moreno-Menendez, 2010).
In order to reconcile these two contradictory effects (low external
fungibility and high internal fungibility of family businesses resources),
the SEW perspective offers a potential explanation of how family and
non-family firms use their resources differently to achieve growth. The
SEW perspective argues that family businesses prioritise SEW over
economic utilities (Gómez-Mejía et al., 2007). The SEW construct is
manifested in different forms, such as control exercise in family busi­
nesses, family values development, family dynasty evolution, social
capital, or family altruism (Cleary, Quinn, & Moreno, 2019). SEW has
sociological (Kushins & Behounek, 2020) and psychological implica­
tions (Akhmedova, Cavallotti, Marimon, & Campopiano, 2019), and is
considered as a multi-dimensional construct (Berrone et al., 2012;
Cleary et al., 2019; Debicki, Kellermanns, Chrisman, Pearson, &
Spencer, 2016). Most researchers agree that SEW creates a preference in
family firms to take conservative decisions for the sake of their longevity
(Souder et al., 2016), avoiding decisions that might threaten the family’s
control and values (Gómez-Mejía, Makri, & Larraza-Kintana, 2010;
Miller, Le Breton-Miller, & Lester, 2010). In this view, family businesses
only take proactive actions to preserve SEW when it is threatened – the
loss aversion attitude (Bettinelli et al., 2017; Chrisman & Patel, 2012).
Closely related to these arguments, prior research has assigned a
long-term orientation (LTO) to family firms (Lumpkin & Brigham, 2011;
Lumpkin, Brigham, & Moss, 2010). According to this perspective, the
objective of these firms is to prioritise long-term survival over short-term
profit (Kotlar & De Massis, 2013). As a result of the LTO perspective
(compared to the shorter-term orientation – STO – of non-family firms),
family owners tend to provide patient capital for potential investments
(Pieper, Williams, Manley, & Matthews, 2020; Sirmon & Hitt, 2003).
In summary, we argue that family businesses’ growth patterns in
terms of sales are expected to be distinct from those of non-family
businesses due to the different levels of specific versatile resources and
different time orientations (family businesses tending toward long-term
orientation and non-family businesses more toward short-term orien­
tation), derived from SEW. We propose that family firms will be more
reluctant to increase their commercial activities over a relatively short
time, because of the low level of external fungible resources paired with
their risk aversion for a potential loss of SEW. Family firms that pursue
growth strategies will increase their growth slowly in the short term, and
instead search for growth opportunities in the long term (Bjuggren,
A.M. Moreno-Menéndez and J.C. Casillas
Daunfeldt, & Johansson, 2013). Family businesses’ internal fungible
resources, derived from firm-specific assets (e.g., brands, family man­
agers, share values) are useful for growth, but take longer to achieve the
desired results (Nason and Wiklund, 2018). In other words, the sales of
family businesses will grow slower in the short term, compared to the
sales of non-family firms. As a result, overall, we expect that family
businesses will grow more slowly than their non-family counterparts in
order to avoid high risks to SEW. This leads us to the following
hypothesis:
Hypothesis 1a. Within a specific time period, family businesses will
grow less than non-family businesses in terms of sales.
Family businesses tend to have a different approach to dealing with
employees, due to the role of SEW. As Miller, Le Breton-Miller and
Scholnick (2008, p. 56) propose, family-owned businesses will display
greater stewardship over their community of employees. The SEW
perspective argues that there is a stronger connection between family
members and the firm’s employees. One dimension of SEW (Berrone
et al., 2012) suggests that non-family employees are treated as part of
the family, promoting an integrative culture and commitment to the
firm (Miller & Le Breton-Miller, 2005), and creating binding social ties.
This close connection between family owners and non-family employees
develops an orientation towards personnel retention (Miller et al.,
2008), leading to higher levels of job creation than in non-family
businesses.
According to the SEW perspective, family businesses consider their
employees as long-term versatile (internal fungible) resources and not as
mere instruments to achieve short-term performance. In this sense,
family businesses will be less focused on immediate increases in pro­
ductivity and be more oriented towards building a long-term community
of interests (Miller et al., 2008). This will especially be the case when the
company has a positive performance and there is no risk to survival
(Casillas, Moreno-Menendez, Barbero, & Clinton, 2019). Prior research
also suggests that compared to their non-family cousins, family busi­
nesses often show flatter structures, more informal management models
and less professionalization (Fernández and Nieto, 2006; Stewart & Hitt,
2012). Family businesses may therefore be positively inclined towards
investing in the hiring of new employees with general capabilities to
develop a broader community, reinforcing the stock of internal fungible
resources (Nason & Wiklund, 2018). In line with this argument, we
propose that family businesses will increase their number of employees
in the short term as a resource to achieve long-term sales growth. In
relation to the growth in employees, therefore, we propose the following
hypothesis:
Hypothesis 1b. Within a specific time period, family businesses will
grow more than non-family businesses in terms of employees.
These general hypotheses are affected by demographic firm charac­
teristics, such as previous firm size and age of the firm (Wiklund et al.,
2009). As the literature has demonstrated, most SMEs do not grow over
time and only a small proportion of companies achieve high-growth
status (Birch, 1987; Henrekson & Johansson, 2010; Storey, 1994). We
will therefore treat firm size and firm age as independent dimensions,
and propose different effects on sales/employee growth than previous
papers that studied variables such as profitability (Yazdanfar, 2013),
strategic decisions (Sarangee & Echambadi, 2014) or intra- and inter­
cultural trust (Jiang, Chua, Kotabe, & Murrat, 2011).
2.3. The moderating role of firm age
There is general agreement that younger firms experience higher
growth than older ones (Henrekson & Johansson, 2010) as most prior
research has found a negative relationship between firm age and firm
growth (Wiklund et al., 2009). This finding has been explained by two
theories. First, the organisational learning perspective (Jovanovic,
1982) argues that young firms tend to be resource-constrained and
4
Journal of Family Business Strategy 12 (2021) 100420
suffer from ‘liabilities of newness’ (Stinchcombe, 1965). Young firms
tend to use their resource slack less efficiently than older firms, which
affects the perceptions and expectations relating to the firm’s best per­
formance (Correa et al., 2003; Dunne & Hugues, 1994; Mor­
eno-Menéndez & Casillas, 2007; Shafman, Wolf, Chase, & Tansik, 1988).
Second, the entrepreneurship literature generally proposes a negative
relationship between age and the entrepreneurial orientation of the firm
(Lumpkin, 1998; Lumpkin & Dess, 1996) and considers younger firms to
be more innovative, proactive and risk-orientated (Miller, 2003; Shane
& Venkataraman, 2000). This is due to the learning advantage of
newness (Autio et al., 2000) and the greater organisational agility
ascribed to younger firms (Baumol, 2004; Buckley & Prashantham,
2016; Kuemmerle, 2006).
In a family business, firm age can be related to the generational
involvement of the family. This has a bearing on the development of the
firm’s resources and capabilities and affects the way in which SEW in­
fluences decision-making processes. At the founder stage, family busi­
nesses often demonstrate entrepreneurial behaviour, given that most
founders are per se entrepreneurs (Bettinelli et al., 2017). Only when
family firms evolve, pass through the generations, and develop a more
complex family business system, specific characteristics such as ‘fami­
liness’ (Habbershon & Williams, 1999), or socioemotional wealth
(Gómez-Mejía et al., 2007) do emerge and grow. Previous research ar­
gues that while first-generation family businesses are expected to have a
‘leadership imperative’ that drives entrepreneurship (Miller, 1983),
second-generation family firms tend to be more externally oriented,
following an ‘environmental-structural imperative’ (Cruz & Nordqvist,
2007). In fact, as Zellweger and Sieger (2012) state, the levels of
entrepreneurial spirit and innovativeness usually fluctuate over time,
with occasional revolutionary phases; a succession phase acting as a
window of opportunity for renewing the family’s involvement (Arsu­
biaga et al., 2019; Hauck, Suess-Reyes, Beck, Prügl, & Frank, 2016b).
Conversely, there is no consensus about how SEW evolves over time
(Chua, Chrisman, & De Massis, 2015; Hasenzagl, Hatak, & Frank, 2018;
Le Breton-Miller & Miller, 2013; Miller & Le Breton-Miller, 2014;
Schulze & Kellermanns, 2015; Sciascia et al., 2014). On the one hand,
some prior research argues that SEW is strongest in firms managed by
first-generation family members and decreases as the firm evolves
(Gomez-Mejia et al., 2007; Strike, Berrone, Sapp, & Congiu, 2015).
Contradictory arguments emerge when other FIBER dimensions of SEW
are looked at more closely (Berrone et al., 2012). For example, binding
social ties, the emotional attachment of family members, and the
renewal of family bonds to the firm through dynastic succession tend to
become stronger as family firms pass through subsequent generations
(Arregle, Batjargal, & Hitt, 2015; Gómez-Mejía et al., 2007). Accord­
ingly, the growth and development of SEW in family businesses, their
risk aversion and the ‘loss mode’ of these firms will be higher in older
family businesses. In these cases, more family members are involved and
a legacy has been generated over time, compared to younger firms,
which are more closely linked to the founder, and whose behaviour
resembles that of an entrepreneur.
In terms of resources, we expect that, as time goes by, external
fungible resources will decrease more intensively in family businesses,
due to the avoidance of integrated external (financial and managerial)
resources. Older family firms have more wealth to lose from a risky
decision than entrepreneurial family firms, where a legacy has not yet
been generated, and there are fewer family members depending on the
business. Older family businesses may protect their SEW through less
development of more versatile resources, such as external financial re­
sources (cash) or external managers/directors, inhibiting sales growth.
For all these reasons, we propose the following hypothesis:
Hypothesis 2a. Firm age will moderate the negative effect of the
family nature of the firm on sales growth, in such a way that the negative
relationship between this characteristic and sales growth will be more
intense in older businesses than in younger ones.
A.M. Moreno-Menéndez and J.C. Casillas
When it comes to the relationship between family nature of firms and
employee growth, we propose a negative moderating effect of firm age
for two different reasons. As firms increase their experiences, they can
better adjust their correct size to the real activity of the business.
Younger family businesses do not have enough information to interpret
their past results, commonly suffering from interpretation problems
(Zajac & Bazerman, 1991). As family firms age and subsequent gener­
ations succeed the founder, they are increasingly able to adjust the
number of employees to match their real needs, as a result of their
accumulated experience. Additionally, the second and following gen­
erations change their way to preserve SEW (Berrone et al., 2012; Zell­
weger & Dehlen, 2012). After the founder generation, family managers
from further generations will have fewer emotional ties to employees,
promoting professionalization. For this reason, as family firms get older,
passing from generation to generation, we expect a lower expansion of
the number of workers in the company. We therefore propose:
Hypothesis 2b. Firm age will moderate the positive effect of the
family nature of the firm on employee growth, in such a way that the
positive relationship between this characteristic and employee growth
will be less intense in older businesses than in younger ones.
2.4. Firm size, growth and family firms
Past research offers inconclusive findings on the basic assumption of
Gibrat (1931), showing a positive, neutral and negative relationship
between size and growth (Bechetti & Trovato, 2002; Correa et al., 2003;
Dunne & Hugues, 1994; Evans, 1987; Henrekson & Johansson, 2010;
Knudsen, Levinthal, & Winter, 2017; Moreno-Menéndez & Casillas,
2007; Wiklund et al., 2009). The Penrosean perspective explains the
higher growth rates of smaller firms, arguing that they seek a more
efficient use of existing idle resources and capabilities (Penrose, 1959).
Small businesses work with highly versatile resources; they are partic­
ularly reluctant to incorporate external (e.g., financial or managerial)
resources, allowing the owners and managers to develop highly diver­
sified skill sets (Nason & Wiklund, 2018). We therefore argue that, in
terms of internal fungibility, small family firms are particularly rich in
highly versatile resources.
The way that family businesses manage their resources differs from
non-family firms. Family firm management tends to be based on high
levels of internal fungible resources and capabilities, using informal
procedures and more centralised decision-making processes (Daily &
Dollinger, 1992). Family businesses are managed based on tacit
knowledge (Leaptrott, 2005), it is clearer within family firms who the
strategic decision-makers are, and formal routines are less developed
(Fernández and Nieto, 2006). More informal management allows in­
formation to flow rapidly, improving communication and coordination
activities and making the implementation of strategies easier. Family
businesses usually show a more entrepreneurial management style
across generations (Jaskiewicz, Combs, & Rau, 2015). Other research
also suggests that entrepreneurship is supported by family members’
sense of unity with the firm (Eddleston, Kellermanns, & Zellweger,
2012), which can be carried across generations. Accordingly, some re­
searchers have considered imprinting theory to explain why some family
businesses remain entrepreneurial across multiple generations (Keller­
manns, Eddleston, Barnett, & Pearson, 2008). As Jaskiewicz et al. state
(2015, p. 32), “Conditions and features that supported earlier generations’
entrepreneurship, or lack thereof, might become imprinted on firms and
support continuous entrepreneurship”.
Family businesses work with fewer –albeit very versatile (internally
fungible)– resources than non-family SMEs, and develop less bureau­
cracy, clearer leadership and greater owner involvement. Besides, the
founder’s entrepreneurship imprints its culture (Schein, 1983). More­
over, these characteristics facilitate organisational agility (Hatum &
Pettigrew, 2004), which in turn can foster growth strategies for those
family firms that make the deliberate choice to grow. As a result,
5
Journal of Family Business Strategy 12 (2021) 100420
growth-oriented family firms show a more entrepreneurial behaviour
than non-family businesses (Nordqvist & Melin, 2010). At the same
time, larger family firms are also able to gradually incorporate external
fungible resources, such as professional managers and certain financial
resources (bank loans, greater self-financing, incorporation of small
capital partners, etc.), promoting sales growth. These highly fungible
resources, together with the flexible structure of family businesses
mentioned above, increase the potential for sales growth as the firms
increase in size. For this reason, we propose the following hypothesis:
Hypothesis 3a. Firm size will moderate the negative effect of the
family nature of the firm on sales growth, in such a way that the negative
relationship between this characteristic and sales growth will be less
intense in larger businesses than in smaller ones.
Finally, in relation to employment growth, we expect larger family
businesses to be more selective in their hiring of personnel as their
professionalism increases. Greater size used to be associated with a more
professional structure (task divisions, non-family management, less
nepotism, more formal routines, etc.), allowing businesses to be more
productive and efficient (Dekker, Lybaert, Stejvers, & Depaire, 2013). In
this context, as family firms grow, their decisions tend to be more
comparable to non-family firms (Stewart & Hitt, 2012), decreasing the
intensity of the positive effect of the family nature of the firm on
employment growth. This leads us to our final hypothesis:
Hypothesis 3b. Firm size will moderate the positive effect of the
family nature of the firm on employee growth, in such a way that the
positive relationship between this characteristic and employee growth
will be less intense in larger businesses than in smaller ones.
3. Methodology
3.1. Sample
The data source of our study is the Spanish Government’s Survey of
Business Strategies (SBS). This is a firm-level database and a represen­
tative sample of Spanish manufacturing firms with more than 10 em­
ployees. The validity of the sample was achieved by adopting a
combination of exhaustive criteria and random sampling. Two groups
were established by the database creators: In the first group, all firms
with over 200 employees were invited to participate, while the second
group consisted of firms with 10–200 employees, selected through
stratified sampling. This survey has been used in prior studies, since it
encompasses various aspects of Spanish firms’ strategic behaviour and
international activities (Fernández and Nieto, 2006; Golovko & Valen­
tini, 2011). Given the availability of some of the variables in our
research (such as family versus non-family firms), information was taken
from the 2006–2014 period. The average number of firms per year was
1973 (ranging from 1330 in 2014 to 2023 in 2006), with a total of 15,
790 firm-year observations.
3.2. Variables
Dependent variables: Due to the potentially spurious determinants of a
single-year measure of growth (e.g., accounting accrual, yearly contex­
tual factors, among others), we measured growth over three-year pe­
riods, instead of annual growth rates, susceptible to greater variability
from spurious causes. In doing so, we attempt to measure the growth
trend of the firms, reducing contingent variability. Three years is also
the time span used to identify high-growth or gazelle firms (Any­
adike-Danes et al., 2009; Daunfeldt, Johansson, & Halvarson, 2015;
OECD, 2000). However, we also measured growth at years 1 and 2 to
evaluate the robustness of our results. We used two measures for the
continuous variable firm growth: (a) sales growth: the percentage of sales
growth over a three-year period (salesn+3 – salesn / salesn); and (b)
employee growth: the percentage growth in the number of employees
A.M. Moreno-Menéndez and J.C. Casillas
(full-time) over a three-year period (employeesn+3 – employeesn /
employeesn).
Independent variable: Family firm status. The survey asked the firm
whether a family group is actively involved in the company, as con­
trolling owner or participating in management. These are the two main
characteristics used to identify a family business in the academic liter­
ature (Astrachan & Shanker, 2003; Boellis, Mariotti, Minichilli, & Pis­
citello, 2016; Fernández and Nieto, 2006). Similar to previous studies
(Fernández and Nieto, 2006; Nieto, Santamaría, & Fernández, 2015), we
used a binary variable, where the value ‘1’ indicates a family firm and ‘0’
a non-family firm. Applying this distinction, there were 9240 (58.52 per
cent) non-family business observations and 6550 (41.48 per cent) family
business observations in the overall sample. This variable was captured
each year (from 2006 to 2014), and is not a time-invariant variable,
since some companies may cease trading or become a family business as
a result of processes such mergers, acquisitions/sales, or changes in
ownership structure, corporate government, etc.
Moderator variables: (1) Firm age was measured by the logarithm of
the the difference between previous to current year and founding year
(Log Age i), which was previously standardised in order to be included
as a moderator variable (Thornhill & Amit, 2003; Wilson, Wright, &
Scholes, 2013); and (2) Firm size was measured through the number of
employees in the year before the growth (Revilla, Pérez-Luño, & Nieto,
2016; Zahra, 2010), measured by the dependent variable – firm growth.
In order to satisfy the normality condition for regression analysis, we
used this number as the logarithm (Log Size i).
Control variables: We controlled for leverage, in the form of the ratio of
long-term debt to total assets (Brannon, Wiklund, & Haynie, 2013; Lim,
Celly, Morse, & Rowe, 2013) and idle resources capacity, measured as the
“percentage of the firm’s manufacturing capacity that is not currently
being used”1 in each of the years analysed. Idle resources are key de­
terminants of growth according to the resourced-based view of the firm
(Penrose, 1959). It has been also considered in previous research about
firm growth (Bradley, Wiklund, & Shepherd, 2011). This information
was explicitly requested from the companies in the survey question.
Furthermore, in order to evaluate industry and time (years) effects and
considering that we are using panel data, depending on the final sta­
tistical model used, time-invariant variables should be eliminated,
especially for fixed-effects estimations. Therefore, we did not use sec­
tor/year dummies, given that firms typically do not change sector over
time. However, we used an alternative method to consider industry and
year effects: We introduced the mean values of the dependent variable
for each sector, as an explanatory variable, that is, the average growth of
the industry sector in the focal year –industry growth– (Cassiman &
Veugelers, 2002; Surroca, Tribo, & Waddock, 2010).
3.3. Statistical modelling
We calculated several regression models to ensure rigorous testing of
the statistical analysis of the evolution of sales and employment. Given
the nature of the data, we adopted a panel data approach, based on
dynamic models that use lagged dependent variables as explanatory
variables (Franco, 2013; Li, Li, & Tsay, 2012). The first test carried out
was the Breusch-Pagan Lagrange Multiplier, to decide between a
random effects model and a pooled least squares regression. We also
carried out an F-test, which compared the fixed effects model with the
pooled least squares regression. Results of these two tests showed that
the pooled least squares regression was inefficient, given the possible
unobserved heterogeneity associated with each firm. Based on the pre­
vious tests, a panel model was selected as the most appropriate. The next
step therefore was to choose between a fixed effects model and a random
effects model. The Hausman test recommended the use of the random
effects model and the Pagan-Hall test indicated that there were some
1
A single question in the survey used the exact phrase in quotation marks.
6
Journal of Family Business Strategy 12 (2021) 100420
problems with heteroscedasticity.
Given the continuous nature of firm growth, heteroscedasticity
problems can be resolved by using the generalised method of moments
(GMM) to control for the potential risk of endogeneity, which is
appropriate for cases with endogenous variables and potential reverse
causality (Jean, Deng, Kim, & Yuan, 2015; Yi, Wang, & Kafouros, 2013).
Referring to the earlier work by Arellano and Bover (1995), Blundell and
Bond (1998) used additional moment restrictions to improve the per­
formance of the Arellano and Bond GMM estimator when there is a low
number of time series observations, and when there is only a few years’
worth of data (xtdpdsys command). The Sargan tests (Blundell & Bond,
1998) confirmed the validity of the instruments. We considered two
possible dependent variables: sales growth and growth in the number of
employees.
4. Results
Table 1 describes the variables for the whole sample and using the
same variables, with the sample split into two groups: family and non-
family businesses. In this table, we did not convert any of the vari­
ables into logarithm form, in order to allow a clear understanding of the
characteristics of the firms. The firms have an average of over 250 em­
ployees, and family firms are relatively smaller than non-family firms
(157 versus 322 employees). Consequently, this is not a study of SMEs,
but of medium and large manufacturing family businesses. Both sub-
samples are homogeneous with regard to firm age, with an average of
29 years. Sales growth over the 2006–2014 period reached nearly 30
percent, with a considerable difference between family and non-family
businesses (6 percent versus 44 percent), but the data also revealed a
negative growth in the number of employees (-2.7 % — -2.2 % in family
businesses versus -3.0 % in non-family businesses). Table 1 also provides
the correlation matrix, using the converted version of the variables
(standardised logarithm for size and age).
Table 2 shows the regression models. Models 1 and 2 show the
regression results of the GMM, using sales growth (Model 1) and
employee growth (Model 2) as dependent variables. The first columns
(Models 1a and 2a) form the baseline, including only firm age, firm size
and family as explanatory variables. The next models incorporate the
interaction effect of firm age (Models 1b and 2b) and size (Models 1c and
2c) separately, while in the final model (Models 1d and 2d) the joint
interaction effect of both moderators with family business was added.
After several estimations, the best model estimated the two-step esti­
mator and two lags of the dependent variable. The Cumby-Huizinga test
suggested that potential autocorrelation is only present with a one-year
lag, but not with two lags. Variance inflation factors were all under 2.63,
well below the threshold level of 10 (Hair, Anderson, Tatham, & Black,
1995) and even below the more restrictive value of 5 (Ringle, Wende, &
Becker, 2015), suggesting that the estimated models did not suffer from
problems of multicollinearity. The eight models were significant, with
the Wald Chi-squared statistic of both models demonstrating statistical
significance (p-value<0.001).
Hypotheses 1a and 1b proposed a negative influence of family
business status on sales growth and a positive relationship with
employee growth. Considering the final models, Table 2 shows a nega­
tive effect of the family nature of the business on sales growth (Model
1d: β = -0.305; p-value<0.005), and presents a positive effect on
employment growth (Model 2d: β = 0.105; p-value<0.005). Interme­
diate models were consistent with these results. Hypothesis 2 refers to
the moderator effect of firm age on the family-growth relationship. Our
results show a negative interaction effect when the dependent variable is
sales growth (Model 1d: β = -0.131; p-value < 0.05), and we find the
same negative effect when growth is ascribed to employees (Model 2d: β
= -0.075; p-value<0.001). Finally, Hypothesis 3 considered that firm
size moderates the effect of the family nature of the firm on growth. In
this case, the results showed a positive coefficient when the dependent
variable is sales growth (Model 1d: β = 0.222; p-value<0.01), while it
A.M. Moreno-Menéndez and J.C. Casillas Journal of Family Business Strategy 12 (2021) 100420

Table 1
Descriptors and Correlation Matrix.
Mean s.d. Family Non-family 1 2 3 4 5 6 7

1. Sales growth 0.295 18.96 0.061 0.447 1.0000

2. Employee growth − 0.027 0.450 − 0.022 − 0.030 0.0233 1.0000
3. Family 0.396 0.489 – – − 0.0100 0.0090 1.0000
4. Idle capacity 0.152 0.203 0.139 0.161 0.0321 0.0293 − 0.0126 1.0000
5. Leverage 0.235 6.201 0.219 0.339 0.0123 0.0227 -0.2183 0.0360 1.0000
6. Size 257.3 816.3 157.2 322.2 0.0075 ¡0.0392 ¡0.1300 0.0155 0.1841 1.0000
7. Age 28.96 20.24 29.47 28.63 − 0.0065 ¡0.0324 0.0467 0.0329 0.2934 0.3971 1.0000

Italic, p-value>0.01; Bold. P-value<0.001.

Table 2
Regression Models.
Dependent variable: Sales Growth (GMM) 3 year Dependent variable: Employees Growth (GMM) 3 year

Model 1a Model 1b Model 1c Model 1d Model 2a Model 2b Model 2c Model 2d

Intercept − 0.557*** − 0.537*** − 0.558*** − 0.542*** 0.764*** 0.760*** 0.757*** 0.757***

(0.148) (0.148) (0.152) (0.150) (0.095) (0.095) (0.097) (0.097)
Leverage 0.104+ 0.104+ 0.105+ 0.104 − 0.050*** − 0.050*** − 0.050*** − 0.050***
(0.059) (0.059) (0.059) (0.059) (0.017) (0.017) (0.017) (0.017)
Idle resources 0.003*** 0.003*** 0.003*** 0.003*** 0.004 0.004 0.003 0.003
(0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000)
Industry growth 0.087** 0.084** 0.085** 0.087** 0.088** 0.087** 0.090** 0.090**
(0.052) (0.050) (0.056) (0.063) (0.074) (0.073) (0.079) (0.079)
1-Lag dep. variable 0.224*** 0.224*** 0.223*** 0.223*** 0.661*** 0.661*** 0.661*** 0.661***
(0.017) (0.017) (0.017) (0.017) (0.031) (0.031) (0.031) (0.031)
2-Lags dep. variable. − 0.133*** − 0.134*** − 0.134*** − 0.113*** − 0.083*** − 0.083*** − 0.085*** − 0.085***
(0.012) (0.012) (0.012) (0.012) (0.018) (0.018) (0.018) (0.018)
LnAge 0.489** 0.434** 0.492** 0.436* − 0.854*** − 0.838*** − 0.843*** − 0.843***
(0.175) (0.176) (0.178) (0.173) (0.119) (0.120) (0.120) (0.120)
LnSize 0.836*** 0.832*** 0.836*** 0.840*** − 0.990*** − 0.991*** − 0.992*** − 0.992***
(0.224) (0.225) (0.233) (0.232) (0.140) (0.140) (0.145) (0.145)
Family − 0.050* − 0.351* − 0.076** − 0.305** 0.012* 0.136** 0.105** 0.105**
(0.026) (0.157) (0.114) (0.176) (0.015) (0.113) (0.071) (0.071)
Age x family − 0.119* − 0.131* − 0.044** − 0.075***
(0.048) (0.052) (0.024) (0.097)
Size x family 0.179* 0.222* − 0.043** − 0.070***
(0.128) (0.129) (0.017) (0.017)
# Observations 9,466 9,466 9,494 6,702 6,702 6,702 6,702 6,702
# Groups 1,941 1,941 1,941 1,687 1,687 1,687 1,687 1,687
Wald Chi (p-value) 402,2*** 410,7*** 410,8*** 409,9*** 641,3*** 641,4 *** 679,1*** 681,6***

+ p-value<0.05; * p-value<0.01; ** p-value<0.005; *** p-value<0.001.

becomes negative when the endogenous variable is growth in the
number of employees (Model 2d: β = -0.070; p-value<0.001).
In order to test the robustness of these results, we repeated the
analysis, measuring growth for 2-year periods and single-year intervals.
The final results are presented in Table 3. Model 3a (1-year) and 3b (2-
year) refer to sales growth as dependent variables and Models 3c (1-
year) and 3d (2-year) represent the results for the growth in employment
as an explained variable. After several estimations, for models with 1-
year growth as the dependent variable, the models only included a
one-year lag for growth as an explanatory variable. The results did not
differ significantly from the main results shown in Table 2. We only
found differences in the level of significance of some coefficients, but
none of the significant relationships cease to be so in the new models
(Table 3).
5. Discussion
Our paper sought to explore family business growth. Based on SEW
and Penrosean perspectives of growth, we proposed that the growth
pattern among family firms is different from the one in non-family firms.
One potential explanation for these differences may be due to the fact
that family businesses tend to prioritise long-term non-economic goals
and avoid potential risks to SEW (Berrone et al., 2012; Gómez-Mejía
et al., 2007; Vazquez & Rocha, 2018). At the same time, from a Penro­
sean perspective of growth, previous literature suggests that family
businesses possess different types of resources (Sirmon & Hitt, 2003)
–with different levels of versatility (internal and external fungibility
—Nason & Wiklund, 2018)– that have potential positive and negative
effects on the different dimensions of firm growth in terms of sales and
employees (Discua, Howorth, & Hamilton, 2013; Naldi, Nordqvist,
Sjöberg, & Wiklund, 2007; Stenholm et al., 2016).
In the first two hypotheses, we proposed that family firms display
lower growth than non-family firms in terms of sales (H1a), and the
opposite (a positive effect) when growth is measured in terms of em­
ployees, proposing a positive effect of the family nature of the firm and
growth in the number of employees (H1b). The empirical results did
confirm both hypotheses, with a negative significant coefficient in
Model 1d (Table 2) and a positive significant coefficient in Model 2d
(Table 2). These findings suggest that, in a similar time period, family
firms seem to grow less than non-family firms in term of sales (output/
performance), but increase their number of employees (input/resources)
more than non-family firms. These apparently contradictory results may
be explained through the long-term orientation of family businesses
(Lumpkin & Brigham, 2011). These businesses seem to be more involved
in developing internal resources (such as a long-term investments),
although the effect on their performance may be deferred over time.
This result is consistent with the SEW approach that posits the desire of
family businesses to build an internal community of interests, thereby
integrating non-family employees.
Hypothesis 2 pertained to the age of family/non-family firms and

7
A.M. Moreno-Menéndez and J.C. Casillas Journal of Family Business Strategy 12 (2021) 100420

Table 3
Robustness tests.
1 year 2 year 1 year 2 year
Sales Sales Employees Employees
Model 3a Model 3b Model 3a Model 3b

Intercept − 0.575*** − 0.609*** 0.535*** 0.448***

(0.079) (0.094) (0.488) (0.082)
Leverage − 0.045+ 0.034 − 0.064*** − 0.018
(0.022) (0.041) (0.012) (0.022)
Idle resources 0.003*** 0.005*** 0.005+ 0.000*
(0.000) (0.000) (0.005) (0.000)
Industry growth 0.079** 0.073** 0.051** 0.067**
(0.068) (0.053) (0.040) (0.054)
1-Lag dep. variable 0.022** 0.292*** − 0.049*** 0.499***
(0.007) (0.012) (0.012) (0.025)
2-Lags dep. variable. − 0.324*** − 0.359***
(0.016) (0.027)
LnAge 0.446*** 0.610*** − 0.380*** − 0.447***
(0.100) (0.136) (0.066) (0.096)
LnSize 0.939*** 0.845*** − 0.968*** − 0.667***
(0.126) (0.152) (0.075) (0.125)
Family − 0.138* − 0.176** 0.053* 0.111**
(0.115) (0.186) (0.084) (0.108)
Age x family − 0.011* − 0.006* − 0.022+ − 0.049*
(0.034) (0.053) (0.026) (0.029)
Size x family − 0.045* − 0.043* − 0.032** − 0.073*
(0.022) (0.027) (0.011) (0.015)
# Observations 10,960 7,662 10,960 7,662
# Groups 2,264 1,884 2,264 1,884
Wald Chi (p-value) 524,9*** 1154,0*** 582,3*** 816,9***

firm growth in terms of sales (H2a) and employees (H2b). In relation to

sales growth, we proposed that the negative effect of the family char­
acteristics of a firm on its growth increases with company age. We found
a negative relationship between firm age and firm growth, in line with
the majority of previous research (Henrekson & Johansson, 2010;
Wiklund et al., 2009). In order to better interpret the interaction effects,
these are represented in Figs. 1 and 2. A simple slope test (Cohen, Cohen,
West, & Aiken, 2003) in relation to Fig. 1 indicated that the negative
Fig. 1. Moderator effect of family business on Age-Growth relationship.
effect of the family nature of the firm on sales growth is slightly more
1a. Dependent variable: Sales Growth (with 95 % CI).
intense when firms are older (simple slope = 0.17, SE = 0.21, p < 0.05), 1b. Dependent variable: Employee Growth (with 95 % CI).
according to Hypothesis 2a (which was confirmed). However, in the case
of employee growth (as a dependent variable), Fig. 1b shows, first, that
0.–10; SE = 0.07; p = 0.38). In summary, this result suggests that larger
firm age negatively influences the increase in the number of employees,
family businesses demonstrate similar behaviour to non-family busi­
and second, that this effect is less intense for family firms than
nesses in relation to potentially increasing or decreasing the number of
non-family firms, as proposed (and confirmed) in Hypothesis 2b. We
employees. One possible reason for this result is that larger family firms
verified that this relationship is significant using a simple slope test
tend to have more professional management and more formal decision-
(simple slope = -0.13, SE = -0.11, p < 0.05).
making processes, especially in areas that involve increasing amounts of
Finally, Hypothesis 3 proposed that firm size moderates the effect of
resources that may negatively impact the risk level assumed by the
family ownership and control and growth (sales growth in H3a and
owner family (Basco, 2014; Stewart & Hitt, 2012).
employee growth in H3b). The results for sales growth showed a positive
interaction effect in Model 1d (Table 2). Fig. 2a illustrates this moder­
ation effect (simple slope = 0.27; SE = 0.19; p < 0.05), indicating that 6. Conclusion
the positive influence of the firm’s size on sales growth is more intensive
in smaller firms than for larger companies. Fig. 2a shows that there are One of the main challenges of family business is growth (Campo­
no significant differences between larger family and non-family business piano et al., 2019; Stenholm et al., 2016). Previous literature shows that
in terms of sales growth. This finding supports Hypothesis 3a, which family firms tend to be smaller than non-family firms (Casillas et al.,
proposed that any negative influence of the family nature of the firm on 2015), and this characteristic implies several liabilities associated with
sales growth will be less intense for larger business. However, when we small size. However, until this study, we did not know so much about
look at employment growth, Table 3 shows a negative (significant) co­ how this smaller size of family businesses may influence their growth
efficient of the joint effect of firm size and its family nature on growth. pattern. With few exceptions, growth differences between family and
Fig. 2b graphically represents this interaction effect, showing nearly non-family companies are still under-investigated and our research
parallel lines for family and non-family businesses, with no differences findings offer three main contributions to both the firm growth and
in the effect of larger companies on employment growth. Among smaller family business literature.
firms only, there is a slight difference between family and non-family First, our research indicates that family and non-family businesses
businesses, showing more intense growth for family firms compared to differ in terms of sales growth and employment growth in the short-
their non-family counterparts, rejecting Hypothesis 3b. The simple slope term. We found differences in the growth development of family and
test indicated that there are no significant differences between small and non-family firms, suggesting there are differences in their time orien­
big family businesses in terms of growth in employees (simple slope = tation and the role of SEW (Pieper et al., 2020). First, our results support
the idea of the long-term orientation of family businesses (Lumpkin &

8
A.M. Moreno-Menéndez and J.C. Casillas Journal of Family Business Strategy 12 (2021) 100420

and family business, showing that conventional theories, such as Pen­

rosean perspective of business growth, must be complemented by spe­
cific theories of family businesses, in order to consider non-economic
goals and the role of preserving socioemotional wealth in the long term
(Astrachan, 2010; Gómez-Mejía et al., 2007).
Our research also offers several contributions to practitioners. First,
we show that growth is not a one-dimensional construct and that it is
possible to grow more in one dimension and less in others. Our research
finds that family businesses are able to grow more in employees but less
in sales, in comparison to non-family firms. This finding suggests that
family business may tend to invest into fungible resources in the short
term in order to grow more in the long term. At the same time, this result
underlines the social dimension of family firms, which can be considered
a community of interests. Second, managers should evaluate the results
of this study in relation to the potential impact of a higher growth in the
number of employees than in sales, especially in the case of smaller and
younger family firms. In these companies, increasing employment more
than sales may result in a decrease in efficiency and productivity,
compared to non-family business, which can make these firms less
competitive. Third and finally, managers should also consider the stage
of the company in the family-firm lifecycle (Gersick, Davis, McCollon, &
Lansberg, 1997). We find that firm age and firm size influence the
growth pattern of the family firms, and reiterate the findings of recent
studies that illustrate the role of entrepreneurial behaviour of the family
business in growth (Campopiano et al., 2019; Brumana, Minola, Garrett,
& Digan, 2017; Minola, Brumana, Campopiano, Garrett, & Cassia,
2016).
Our study does have a number of limitations, which point the way for
future research on the topic. The first limitation is the lack of informa­
tion regarding the direction and intensity of the family’s involvement in
the TMT and/or the board of directors (Casillas et al., 2011; Sciascia,
Mazzola, Astrachan, & Pieper, 2012, 2013). We only had demographic
characteristics of the companies at our availability, rather than internal
information regarding the proportion and distribution of ownership,
family involvement on the board and top management team, genera­
tional involvement, and so on. This information would be helpful in
delving deeper into how family members make decisions regarding
growth and shaping resources for future growth. A second limitation is
Fig. 2. Moderator effect of family business on Size-Growth relationship.
the sample selection. Our sample pertains to a single country (Spain) and
2a. Dependent variable: Sales Growth (with 95 % CI).
only includes medium and large companies from manufacturing in­
2b. Dependent variable: Employee Growth (with 95 % CI).
dustries (both private and public entities). Bjuggren et al. (2013) found
that there is likely to be a difference in the influence of family control on
Brigham, 2011; Lumpkin et al., 2010), showing a slower sales growth
firm growth between SMEs and larger companies. Therefore, subsequent
compared to non-family businesses. Furthermore, we find that family
studies should include firms of all sizes to cover a broader spectrum of
firms prefer to invest in versatile resources, such as employees, devel­
organizations. In relation to sample selection, our database is unbal­
oping a community of people, as argued by the SEW perspective. At the
anced (not all data were available for every firm/year). Although GMM
same time, we provide further evidence of how differences in the nature
(Generalized Method of Moments) is appropriate for this kind of data,
of resources (versatility and/or fungibility) may impact sales and
the database does not contain information about the reasons for a firm’s
employment growth in different ways (Sirmon & Hitt, 2003). In this
exit from the database (no information, acquisition, failure, and so on).
regard, our findings stress the importance of devising a series of mea­
Moreover, our analysis covered a nine-year period (2006–2014), during
sures with which to assess family and non-family business outcomes to
which time there was a severe economic crisis (2008). It would therefore
effectively capture their idiosyncrasies (see also Wagner, Block, Miller,
be interesting to explore our hypotheses using different time and
Schwens, and Xi (2015)) for similar findings on financial firm
geographical contexts; perhaps in the context of an expanding economy.
performance).
Finally, we have not considered nor measured the potential underlining
Second, we tested the role of the age and size of family firms in the
drivers of family business growth, such as the role of the different di­
context of firm growth. Here, our findings suggest that the lower growth
mensions of SEW, for example. Future studies could assess the valence of
of family firms is more pronounced among older firms, showing that the
SEW in its various dimension directly, using readily available scales to
potential negative influence of family owners and managers (risk aver­
operationalize SEW (e.g., Debicki et al., 2016; Hauck, Suess-Reyes, Beck,
sion and slack resources) may develop over time, as younger generations
Prügl, & Frank, 2016a).
become involved in the firm. This finding is consistent with the idea of
In conclusion, while previous research recognised the comparatively
an erosion of entrepreneurial orientation across generations in family
smaller size of family businesses (Bjuggren et al., 2011; Casillas et al.,
companies (Cruz & Nordqvist, 2007; Habbershon & Williams, 1999). In
2015; Shanker & Astrachan, 1996), few works have explicitly investi­
relation to the effect of firm size, our results support the idea of a greater
gated the drivers of growth among these firms. This article opens a door
similarity in the decision-taking process between large family and
for future research in relation to how economic and non-economic issues
non-family firms.
mutually influence growth strategies in family business and how het­
And finally, our findings contribute to the literature on firm growth
erogeneity of family firms, may affect to their decision-taking process.

9
A.M. Moreno-Menéndez and J.C. Casillas Journal of Family Business Strategy 12 (2021) 100420

Apart from firm size and age, analysed in our paper, future research Bradley, S. W., Wiklund, J., & Shepherd, D. A. (2011). Swinging a double-edged sword:
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