Family involvement in a hierarchical culture: Effect of dispersion of family ownership control and family member tenure on firm performance in Chinese family owned firms

We tested the effect of control rights dispersion on firm performance in Chinese family-owned firms. Developing arguments based on balancing cultural norms of hierarchy and respect for elders with providing tangible incentives to express crucial divergent views in a culturally acceptable manner, we hypothesized that high dispersion of control among family members in a Chinese family firm would be associated with positive firm performance and the tenure of family members would positively moderate this relationship. Results generally support our model, and suggest that involvement of family members in a variety of cultural contexts is an important direction to advance the field.

► We study the effect of dispersion of family ownership control rights on firm performance.
► Dispersion of family ownership control is positively associated with firm performance.
► Family involvement in terms of tenure with the family firm positively moderates the negative effect of low dispersion of ownership control rights.