Why Family Businesses Come Roaring out of Recessions


The following is an excerpt from an article by McCombs Marketing Professor Vijay Mahajan and Saim Kashmiri of the University of Mississippi, which originally appeared on the Harvard Business Review Blog Network and is used here with permission. The full story is available here.

The family business is still widely regarded as an ineffective organizational form (read this, this, or this paper), especially in the U.S., even though recent evidence challenges this perception. Some studies (see here or here) have shown that during periods of economic growth, family-managed companies in the U.S. actually perform better than professionally managed businesses.

However, a rising tide lifts all boats; it’s the ebbing tide that reveals the truth. Just how do family businesses perform during recessions, when only the strong survive?

To answer that question, we compared the performance of 148 publicly listed family-owned companies between 2000 and 2009 with that of 127 non-family businesses using Standard & Poor’s Compustat database. Of course, the National Bureau of Economic Research classified two (2001 and 2008) of those 10 years as recession years. We found that family businesses handily outperformed non-family companies during both the 2001 and 2008 recessions.

Read the full story here:

-- by Saim Kashmiri and Vijay Mahajan, HBR Blog Network


Read the research here:

Beating the recession blues: Exploring the link between family ownership, strategic marketing behavior and firm performance during recessions


Faculty in this Article

Vijay Mahajan

Professor, Marketing

Vijay Mahajan holds the John P. Harbin Centennial Chair in Business at McCombs School of Business, University of Texas at Austin. He has received...

About The Author

TXE Staff

Staff, Texas Enterprise

The Texas Enterprise staff covers a broad swath of disciplines and interests. Writers, researchers, technicians and artists all contribute to the...

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