Thursday, October 20, 2011

Family firms are like public employers

Family-owned businesses have good reputation with the public, for reasons that have never been clear to me. Indeed, it is even good marketing to mention that a firm is family-owned. Why? The products are not likely to be better. I suppose such firms are possibly smaller and younger, thus the likelihood of a product to be discontinued is higher. I guess such firms have stronger ties with the community, in case this matters.

Andrea Bassanini, Eve Caroli, Antoine Rebérioux and Thomas Breda find that there is an important distinction between family-owned business and other privately-owned ones. Looking at France, they observe that they pay there workers less, which does not seem like a big advantage in the public eye. However, families tend to offer more job security. This mirrors the public sector that in the end offers the same value as private enterprises, trading off job security and pay. So after all, family-owned are more involved in the community by providing more insurance to workers through job security, like so often the French government does by pursing rather Keynesian policies. I wonder whether this would apply to other countries where the public sector is not necessarily leading with such policies.

1 comment:

mOOm said...

As a customer I would think that a family owned firm might care more about maintaining their reputation than a firm owned by public shareholders who can just dump their shares in the market. Therefore, their products might be more reliable and their service better etc.