Long-term Orientation of Family Firms An Investigation of R&D Investments, Downsizing Practices, and Executive Pay

Family firms play an important role in most economies. This fact is due not only to family firms’ share of overall revenues or jobs, but also because they are commonly assumed to be more long-term oriented than comparable non-family firms. This view, however, is largely based on - amples and case studies, while large-scale quantitative studies are so far missing. In more detail, we have very limited knowledge about how family and non-family firms compare along various - mensions of long-term orientation such as R&D activity, human resource policy, and incentive pay for executives. Furthermore, it is an open question how the hypothesized long-term orientation of family firms depends on the exact definition of this type of firm, in particular on management by family members and on the extent of family ownership. Jörn Block addresses the above questions in this pioneering book. Well-grounded in theory, he develops hypotheses regarding various dimensions of long-term orientation. Using an impressive data set on US stock-listed firms that draws on several data sources, the author then tests his - potheses using leading-edge empirical methods. Noteworthy, he not only proceeds by classical null hypotheses testing, but also employs Bayesian econometrics, a so far rather rarely used method. Jörn Block complements his comprehensive empirical work by an elegant principal-agent model of paying a non-family manager in a family firm.