What's in a name?: An analysis of the strategic behavior of family firms

Family firms play a significant role in the U.S. economy. Not all family firms, however, use their family name as part of their firm name. For example, while Dell Inc. and Gap Inc. are both family firms, Dell Inc.'s name includes the name of the founding Dell family, but Gap Inc.'s name does not include the name of the founding Fisher family. This research explores differences in strategic behavior between family firms that use their family name as part of their firm name (termed family-named firms, or FN firms) and those that do not (termed non-family-named firms, or NFN firms). The authors also investigate whether FN firms perform better than NFN firms, and whether or not their superior performance is mediated by differences in their strategic behavior. Findings based on a multi-industry sample of 130 publicly listed U.S. family firms over a five-year period (2002–2006) show that, compared to NFN firms, FN firms have significantly higher levels of corporate citizenship and representation of their customers' voice (i.e., presence of a chief marketing officer) in the top management team. FN firms also have a higher strategic emphasis (i.e., a greater emphasis on value appropriation relative to value creation) compared to NFN firms. Furthermore, FN firms perform better (i.e., have a higher ROA) than NFN firms, and their superior performance is partially mediated by their higher corporate citizenship levels and higher strategic emphasis. The authors highlight the significance of these findings for both theory and practice.