Exploring the effect of distinct family firm reputation on consumers’ preferences

Are family-owned companies perceived more positively by consumers than their non-family analogues, as has been proposed by family business scholars? A multiplicity of anecdotal clues as well as theory and some empirical evidence support the proposition that family firms enjoy a consumer-based reputational advantage over non-family firms. However, it has not yet been empirically shown that this presumed superior reputation effectively positively affects consumer's product and service preferences. In this research, we investigate consumer's distinct perceptions of family firms as a class of economic actors, and their preference for or indifference towards the services or products offered by family firms as compared to those of non-family businesses. Using covariance-based structural equation modeling on a sample of 253 Swiss consumers, we find that promoting a company's status as a family firm strengthens consumers’ preference for the products and services offered by family firms, mainly because of the relational qualities consumers associate with family-owned companies.

► Consumers perceive family firms and non-family firms differently. ► Family firms have a superior organizational reputation as compared to non-family firms. ► Some consumers have a preference for the products and services offered by family firms. ► Consumer preference is driven by the relational qualities associated with family firms. ► Family firms may benefit from promoting their relational qualities to their customers.