Family Firms Amidst the Global Financial Crisis: A Territorial Embeddedness Perspective on Downsizing

This study explores the downsizing propensity of family and non-family firms by considering their territorial embeddedness during both periods of economic stability and financial crisis. By drawing on a panel dataset of Spanish manufacturing firms for the period 2002–2015, we show that, all things b...

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Bibliographic Details
Published in:Journal of business ethics 2023-02, Vol.183 (1), p.213-236
Main Authors: Amato, Stefano, Patuelli, Alessia, Basco, Rodrigo, Lattanzi, Nicola
Format: Article
Language:English
Subjects:
Belonging
Business and Management
Business Ethics
Companies
Downsizing
Economic crisis
Economic stabilization
Education
Embeddedness
Employees
Employment
Ethics
Family owned businesses
Hypotheses
International finance
Management
Manufacturing
Original Paper
Philosophy
Propensity
Quality of Life Research
Stockholders
Welfare
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Summary:This study explores the downsizing propensity of family and non-family firms by considering their territorial embeddedness during both periods of economic stability and financial crisis. By drawing on a panel dataset of Spanish manufacturing firms for the period 2002–2015, we show that, all things being equal, family firms have a lower propensity to downsizing than non-family firms. When considering the effect of territorial embeddedness, we found that territorially embedded family firms have an even lower propensity to downsizing than their non-family counterparts. Furthermore, the concern of territorially embedded family firms for their employees’ welfare was particularly pronounced during the years of the global financial crisis. This result is explained by the existence of socially proximate relationships with the firms’ immediate surroundings, based on similarity and a sense of belonging, which push deeply rooted family firms to treat their employees as salient stakeholders during hard times. Overall, our study stresses the importance of local roots in moderating the relationship between family firms and downsizing.
ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-021-04930-0