The distinctiveness of family firm intangibles: An empirical study

Abstract

This paper estimates the effects of four intangible resources —family organizational culture, family firm reputation, human capital and networks— and their combinations on firm performance in a private-family firm setting. Contrary to previous research, we find that none of the studied resources have a significant effect on firm performance when looked at individually. However, our results suggest that the combined influence of these resources is important, supporting the idea that resources do not create value in isolation. Moreover, looking at these combined effects allows us to offer more nuanced insights into the role of intangible resources, calling for further theoretical development. Particularly, the quality of human capital in combination with the other intangible resources has a positive influence, whereas having a family firm reputation appears to have some downsides. We find that high quality human capital has a significant positive effect on performance when the influence of the family on the organizational culture is only limited. Moreover, promoting the family character of the firm to the outside world can turn out negative without having a high quality network to fall back on. The results for these two highly family-oriented resources call for cautiousness when emphasizing the positive influence of familiness and family firm resources. Our findings indeed show that family intangible resources can add to performance but that their influence is more complex than frequently portrayed in studies on familiness.