Relatedness through kinship The importance of family co-occurrence for firm performance Evans Korang Adjei

Relatedness through kinship The importance of family co-occurrence for firm performance

Evans Korang Adjei

Department of Geography and Economic History

Umeå 2018

Copyright © Evans Korang Adjei

Institutionen för Geografi och Ekonomisk Historia Umeå Universitet 901 87 Umeå Sverige

Department of Geography and Economic History Umeå University 901 87 Umeå Sweden

Mob: +46 76 279 6134 Tel: +46 90 786 9281 Fax: +46 90 786 6359 Website: http://www.geoekhist.umu.se E-mail: evans.korang.adjei@umu.se evanskadjei@gmail.com

Responsible publisher under Swedish law: the Dean of the Social Science Faculty This work is protected by the Swedish Copyright Legislation (Act 1960:729) Dissertation for PhD ISBN: 978-91-7601-839-2 ISSN: 1402-5205 GERUM 2018:1 Cover photo available at https://image.marriage.com/advice/wp-content/uploads/2017/11/7-Tips-for-Nurturing-Family-Relationships-in-Foster-Care.jpg Electronic version available at http://umu.diva-portal.org/ Printed by: Print & Media, Umeå University

Umeå, Sweden 2018

iii

Dedication

To my family.

iv

Acknowledgements

This thesis is a product of support and encouragement I received throughout my Ph.D.

journey. During my nearly fifty months of full-time studies, many people with and

without a clue about my Ph.D. project have influenced and inspired me in numerous

ways. It is, therefore, my pleasure to acknowledge the roles of special individuals who

were instrumental in one way or the other. However, if you are not mentioned here,

it is not deliberate.

First, I wish to give thanks to the ALMIGHTY GOD for HIS mercies and grace upon my

life during my Ph.D. studies. My utmost inspiration has come from GOD THE

ALMIGHTY. For GOD says in Isaiah 41:10 “Fear thou not; for I am with thee: be not

dismayed; for I am thy God: I will strengthen thee; yea, I will help thee; yea, I will uphold

thee with the right hand of my righteousness” (KJV). Indeed, the LORD has

strengthened and held me with HIS righteousness throughout my Ph.D. journey even

when I thought I had lost the strength to continue.

Second, I wish to thank my supervisors, Urban Lindgren (Professor) and Rikard Eriksson

(Professor). First, thank you for giving me the opportunity to work with you (it’s a

privilege). Encouraging me to take the thesis as my own helped me to discover my

strengths. Besides, your incisive comments (e.g. write short sentences) were often

enough to keep me going. From the very first day, you devoted a lot of time and energy

to my development as a researcher. Urban, you have a way of simplifying my own

thoughts and ideas when I did not feel like an authority in myself. Your constant

abilities to model my whirlpool ideas into thought-provoking ones have helped me to

overcome many tough moments. To you Rikard, your level of knowledge and

thoughtfulness and willingness to help in any way possible make me your admirer.

Finally, the two of you are wonderful and dynamic supervisors. I could not have asked

for better supervisors for my Ph.D. studies.

Third, I wish to extend my sincere gratitude to the various readers (both external and

internal) from the draft stage to this stage that it can be considered as a dissertation.

Many thanks to Bram Timmermans (Norwegian School of Economics - NHH) and

Markus Grillitsch (Centre for Innovation, Research, and Competence in the Learning

Economy - CIRCLE, Lund University), who were the opponents for my mid-term

seminar and pre-dissertation seminar respectively. Your outstanding comments and

suggestions have fuelled my work to this very end. Your comments helped me to both

broaden, and focus my thinking on different parts of the thesis. This provided me with

a clear course to follow. I wish to say thank you to Kerstin Westin, who was the internal

reader for both drafts for my mid-term and pre-dissertation seminars. Thank you to

Roger Marjavaara and Emma Lundholm for doing the last reading of my thesis. Thanks

to Judith Rinker Öhman for doing the proofreading of my thesis.

v

I wish to express my sincere thanks to some individuals and groups at the Department

of Geography and Economic History. Many thanks to the past and present members

of the Ph.D. group, we have been wonderful to ourselves in many ways. Memories of

time spent at Ph.D.’s workshops and Ph.D.’s outings fun games will forever be

cherished. Many thanks to the defunct beach team members, fishing team members,

and Mario Kart team members. Many thanks to Lotta Brännlund, Erik Bäckström, Ylva

Linghult, Fredrik Gärling, Maria Lindström, Tina Lundmark, and Cecilia Vallin for all the

invaluable practical, technical and administrative support. Special thank you to Lotta

and Erik for your yeoman’s administrative (travel practicalities) and technical (data

retrieval and setting) supports respectively, which you discharged with delights. I wish

to say thank you to both senior and junior members of the Economic Geography

seminar series for their comments and suggestions, especially on paper III: Rikard

Eriksson, Urban Lindgren, Emelie Hane-Weijiman, Therese Danley, Marcin Rataj, and

Lars-Fredrik-Andersson. A special thank you to Emelie Hane-Weijiman. I appreciate the

random and frequent discussions in the research lab and in the corridor and the

summary in Swedish.

Apart from writing the thesis, I have also had the opportunity to attend several

conferences, workshops and Ph.D. courses at different locations around the world,

which has given me great inspiration. My journeys were all made possible by financial

support from Gösta Skoglund Foundation, and the Knut and Alice Wallenberg

Foundation. A special thank you to Johan Lundberg, Director of the Graduate School

in Population Dynamics and Public Policy, who financially supported my trip to the

Association of America Geographers (AAG) annual conference in Chicago.

Finally, I would want to extend my warmest appreciation and gratefulness to friends

and family outside of academia. Many thanks to the Ghanaian community in Umea.

You guys have been wonderful all these years! While I enjoyed our weekend meetings,

it was also an opportunity for me to shake-off the stressful days at work. A special

thank you to the Ali Mumuni’s family for hosting us all these years. Many thanks to my

church members and Pastor Ogonna Obudulu (Ph.D.) for his spiritual counsels and

prayers.

I reserve a special gratitude to my family. Thank you to my parents: Mr. Robert Adjei

Yeboah, and Mrs. Annabel Adjei Yeboah for their prayers and support. Your prayers

have been my strength and enthusiasm in my academic and everyday life. Even though

you became weary along the line, your prayers kept me going. To my siblings: Ernest

Amoako-Adjei, Hilda Timah Adjei, Max Adjei Yeboah and Augustine Amankwah Adjei,

thanks for your support in various forms.

Special thank you to my wife Naomi Adom for her patience and support. To our son

Nhyira Papa Yaw Korang Adjei, you brought joy to Daddy and Mummy, especially to

Daddy in the last months of his Ph.D. studies. Coming home to you guys always gave

me the peace of mind and the energy to go on. My years of Ph.D. research have shown

vi

me that as a family we have strengths and abilities that set us apart from other social

groups.

You have all contributed to keeping me grounded, balanced and happy and I cannot

thank you enough for that.

GOD bless you all! Nyame nhyira mu!

Evans Korang Adjei

Umeå University

Umeå, March 2018

vii

Table of contents

Dedication iii Acknowledgements iv Table of contents vii List of tables viii List of figures viii List of included papers ix Abstract x 1. INTRODUCTION 13

1.1. Aim and research questions 16 1.2. Delimitation and contributions 17

1.3. Structure of the thesis 18 2. THEORETICAL FRAMEWORK 18

2.1. The co-occurrence and role of the family; a product of geography 18 2.2. Geographical differences in firm performance; from agglomeration economies to proximity

dimensions 20 2.3. Family and firm performance 23

2.4. Family firms and regional economy 31

3. RESEARCH DESIGN AND CONTEXT 34 3.1. Description of Data 34

3.2. Methodological comments 38 3.3. Method 38

3.4. The Swedish labour market in context 42 3.5. Ethical considerations regarding register data 44

4. SUMMARY OF PAPERS 45 Paper I Social proximity and firm performance: the importance of family member ties in workplaces 45 Paper II Familial relationships and firm performance: the impact of entrepreneurial family relationships 46 Paper III Family firm and entrepreneurial capital: the importance of entrepreneurial capital for firm survival

and growth 47 5. CONCLUDING DISCUSSIONS 49

5.1. Findings and discussions 49

5.2. Implications for theory and methodology 53 5.3. Implications for policy and regional development 54 5.4. Limitations and recommendations for future research 55 5.5. Conclusions 56

6. SAMMANFATTNING PÅ SVENSKA (SUMMARY IN SWEDISH) 57 REFERENCES 62

1.2.1. Delimitation 17 1.2.2. Contributions 17

2.3.1. The family and ties that bind 23 2.3.2. How family co-occurrence can affect firm performance 26

2.4.1. Location preferences of family firms and their superiority 31 2.4.2. Varying geographical effects of family co-occurrence and EC 32

3.1.1. Connecting family members in a firm 35 3.1.2. Identifying a family firm 36 3.1.3. Defining entrepreneurial capital (EC) 36 3.1.4. Limitations of the database 37

3.3.1. Data and empirical model 38 3.3.2. Measuring performance 39

5.1.1. The family, the family firm and the regional economy 50

viii

List of tables

Table 1: Firm classifications based on firm type and EC 37

Table 2: Summary of the research design of the three papers 41

List of figures

Figure 1: (A) Swedish FA regions with the 3 metropolitan regions selected; (B) number employees

(thousands); (C) family co-occurrence (share), and (D) productivity per capita (hundreds), quartile are

shown here (data on firms with maximum of 50 employees, 1995-2010) 43

ix

List of included papers

Paper I: Adjei, K.E., Eriksson, R. & Lindgren, U. (2016). Social proximity and firm performance: the importance of family member ties in workplaces. Regional Studies, Regional Science 3(1):304-320.

Author’s declaration: Joint effort in planning and writing the manuscript. Sole responsibility for the empirical analysis.

Paper II: Adjei, K.E., Eriksson, R. Lindgren, U. & Holm, E. (revised and resubmitted). Familial relationships and firm performance: the impact of entrepreneurial family relationships.

Author’s declaration: Joint effort in planning. Sole responsibility for the empirical analysis and 60% of the writing of the manuscript,

Paper III: Adjei, K.E. (submitted). Family firm and entrepreneurial capital: the importance of entrepreneurial capital for firm survival and growth.

Author’s declaration: Sole responsibility for planning, writing and empirical analysis.

Evans Korang Adjei

Umeå University, Sweden

Umeå, March 2018

x

Abstract

The aim of the thesis is to analyse the effects of family co-occurrence and past familial

relationships (inherited entrepreneurial abilities) on firm performance. This aim is

motivated by the contemporary arguments that social relations (e.g. family ties) are

important in the analysis of today’s space economy. In most studies, the point of

departure in the analysis of firm performance has often been to analyse and examine

the cognitive resources available in a firm, as well as a firm’s geographical closeness

to related firms and industries. However, this argument has been challenged, and it is

further suggested that social relations, and for that matter family relations (or family

co-occurrence), may be important in the analysis of firm performance. To test this

argument, the analysis is based on longitudinal data comprising various register data

on the Swedish population and firms.

To examine the aim, three different but related questions were analysed: the first

analysed the prevalence of family employment across different regions and how this

affects firm performance; the second examined the relationship between

entrepreneurs’ familial relations (co-occurrence of different family relations) and skill

variety, on one hand, and how the relationship affects firm performance on the other;

and the third examined the effects of present family relations (family firms) and

entrepreneurial capital (EC, inherited entrepreneurial capability from self-employed

parents – past family relations) on the survival and growth of new entrants. Questions

1 and 2 were explored by applying simple ordinary least squares (OLS) and fixed effects

(FE) regressions, respectively. Question 3 was explored by employing an event-history

analysis (survival analysis) to determine the time to exit and OLS for the growth

analysis.

The results show that family co-occurrence in firms (be they family or non-family firms)

positively affect labour productivity. At the same time, the results show that some

specific family relationships are more important than others in terms of impacting

labour productivity. Moreover, the results indicate that family firms, in particular,

benefit the most from having family members employed in the firm, especially when

this involves family relationships such as couples and/or children. The co-occurrence

of couples and/or children in family firms moderates the negative impacts of

similarities and unrelatedness of skills on productivity. The results show that the

impacts of family co-occurrence are greater in smaller specialized regions than diverse

and larger ones. Thus, while the family positively correlates with firm performance,

this is mainly the case in specialized regions. The results further show that family firms

are not more resilient, as the literature argues; but this effect is confounded by EC.

The implication is that it is not family firms per se that are resilient but rather firms

with entrepreneurial experience from parents, especially in rural regions; meanwhile,

family firms create more jobs. However, the analysis could not identify a clear regional

effect of the role of family firm on job creation. In this sense, the present thesis

xi

provides important insight into why the family constitutes an important part of the

firm production setup. The findings show that it is necessary and important to consider

the family, and family firms, in the larger regional development framework. Moreover,

while reflecting on the importance of the family in relation to firm performance, we

should also not lose sight of the fact that there is a latent risk in family co-occurrence

in firms: it is not a problem—until it becomes a problem.

Keywords: proximity dimension, agglomeration economies, family, family co-

occurrence, family firm, region, firm performance, regional development,

entrepreneurial capital, localized learning, Sweden

Evans Korang Adjei

Umeå University, Umeå

Umeå, March 2018

13

1. INTRODUCTION

“Family isn’t defined only by last names or blood; it’s

defined by commitment and by love. It means showing up

when they need it most. It means having each other’s

backs. It means choosing to love each other even on those

days when you struggle to like each other. It means never

giving up on each other” (Dave Willis)1.

Willis’ definition of the family shows how the family goes beyond just last name, blood,

marriage or adoption, and that it must be characterized by love and commitment to

one another. This distinguishes the family from other social groups in the economic

landscape. Willis’ conception of the family resonates with the popular Spanish adage

“an ounce of blood is worth more than a pound of friendship”; in other words, this

implies that the family represents an institution of economic, production, and social

functions that shape the economic landscape. In the pre-industrial stage, or in pre-

modern society, because technology was limited and barely changing, most economic

and productive activities took place within the family, in which the distribution of

activities was organized based on custom and tradition (Ross & Sawhill, 1977). The

family thus played a central role in production and distribution chains, since economic

and social status were defined by family ties.

New technology and specialization have caused a shift from the home to the factory,

which can be noted during the industrial stage, or in modern society. As part of the

effects of the Industrial Revolution or development, the shrinking of the extended

family into the present nuclear family leaves little to be said of the family’s capacity as

a production and economic unit. Ross and Sawhill (1977) argue that, to some degree,

the family itself has become a more specialized unit whose major responsibility is the

creation and socialization of children. The implication is that, because the family has

lost some economic and production functions, it is no longer the central institution in

society. Yet, the family still continues to play a crucial role in the economic and

productive setup of the economic landscape. For example, through families’ strategic

decisions and entrepreneurial activities, family firms are important agents in the

regional economic development framework. Recent studies indicate that, on average,

family or kinship ties constitute about 14% of Swedish workplaces (Holm, Westin, &

Haugen, 2017)2, at the same time as family firms account for about one-fourth of total

1 Dave Willis is a Pastor and the author of several books. He teaches communication courses, and has served as a consultant in the areas of interpersonal communication, public speaking, and social media strategy. http://www.patheos.com/blogs/davewillis/quotes-worth-sharing/.

2 In this thesis, the term family ties represents the relationship between family members and relatives (kin). This includes relations based on consanguinity (blood relations) – e.g. siblings, grandparents, cousins, uncles – and those based on conjugality (marriage). Family ties is therefore used interchangeably with kinship ties.

14

employment and one-fifth of the gross domestic product (GDP) in Sweden (Bjuggren,

Johansson, & Sjögren, 2011). This makes the co-occurrence of family members and

the impacts of family firms a phenomenon that is likely observable at most workplaces

and in most regional economies.

Despite the crucial role of the family and the report that family typologies play a major

role in regional development in terms of GDP per capita (Duranton, Rodríguez-Pose,

& Sandall, 2009), the family is relatively under-researched in most studies in relation

to regional differences in economic development. Basco (2015), for instance, argues

that regional development studies have neglected to investigate the role of the family

on firm behaviours and the consequences of this influence on regional economic and

social development. While regional development literature has recognized the role of

social capital in shaping competitive advantages (e.g. Saxenian, 1994), the potential

role of familial relations has often been studied through case studies (e.g. Johannisson

et al., 2007). However, the link between the family and regional socioeconomic

outcomes deserves more attention in the literature as it can offer significant progress

toward understanding why some regions are more developed or more able to adapt

to shocks than others (Duranton et al., 2009), since there is hardly an aspect of a

society’s life that is not affected by the family (Alesina & Giuliano, 2014).

Given the above-mentioned gap, this thesis contributes to the regional economic

development literature by analysing the role of the family on firm performance. The

thesis specifically considers how various forms of family relations (or family co-

occurrence) and entrepreneurial capital (EC) influence firm performance in different

types of regions. While family co-occurrences capture the present family relations

within firms, EC represents the entrepreneurial experiences and practices inherited

from self-employed parents (also termed as past familial relations). The analyses are

positioned at the intersection between the agglomeration and proximity dimensions

literature exploring and capturing the relevance of proximity in various dimensions, on

the one hand, and the family business literature on the other. The thesis places keen

attention on social proximity – the family and how such relations among many others

are important for understanding spatial differences in firm performance. The thesis is

based on the assumption that the family is a resource that is important for increased

firm performance, but most importantly, in regions characterized by agglomeration

diseconomies or in regions lacking the benefits derived from the collocation of firms,

usually small regions.

Social relations at the micro level comprise a major factor for collaboration within and

across firms (Boschma, 2005; Granovetter, 1985). This makes the family an effective

learning group since group norms and culture shape skills and communication in cases

in which the group attaches great value to learning (Granovetter, 2005). Family

relations offer an ideal environment for creating social capital through modelling trust

as a foundation for collaboration and reciprocity (Bubolz, 2001; Coleman, 1988). Trust

is an important element in relationships, and in economic transactions at large (Uzzi,

15

1997). In the family, trust can be assumed as path-dependent as family members

always strive to avoid ruining the established culture of trust and supportive

behaviours. This tends to preserve the family over other social groups, and further

makes family relationships more durable (McPherson, Smith-Lovin, & Cook, 2001;

Nahapiet & Ghoshal, 1998). Trust-laden relations permit others to act heuristically,

and hence speed up knowledge circulation and conserve cognitive resources.

At the same time, strong family ties can adversely affect firm performance or

economic development. First, a high level of trust in the family is likely to produce

distrust outside the family, a behaviour that can impede cooperation with and

development of formal institutions (Alesina & Giuliano, 2014). Ermisch and Gambetta

(2010) found that high family trust produced a lower level of trust in strangers as well

as distrust among co-workers, especially among non-family employees (Pearce, 2015).

In family relationships in which a great deal of loyalty is involved, there may be an

underestimation of the risk of opportunism and uncertainty. Furthermore, family co-

occurrence can adversely affect learning processes. Learning processes among family

members can result in the accumulation of similar cognitive resources that can cause

lock-in and slower growth (Bentolila, Michelacci, & Suarez, 2010; Grabher, 1993).

Kramarz and Nordström-Skans (2010) suggest that hiring family members is a

suboptimal strategy as children who perform well find jobs elsewhere, or quickly move

to other employers, while underperforming children tend to stay much longer in the

same firm with their parents. This creates undesirable spillovers and causes a lack of

flexibility, which can restrict novelty and hamper openness to potential knowledge

sources outside the family.

Moreover, the impacts of family co-occurrence and EC on firm performance and

regional development comprise a geographical problem. This situation has not

received enough attention in economic geography. The co-occurrence and role of

family ties are influenced by the region; that is, there is a potential varying outcome

of the role of family ties depending on the spatial context. For instance, because

metropolitan regions are characterized by a higher agglomeration of both specialized

and diverse industries and workers, there is comparatively increased efficiency in

labour market matching (Duranton & Puga, 2004; Glaeser, 1999; Gordon & McCann,

2000; Puga, 2010; Wheeler, 2001). This means that metropolitan regions may place

little importance on hiring through family referrals compared to rural regions, where

access to agglomeration externalities is scarcer and labour market efficiencies are

enhanced by established norms through continual interactions3. Florida (1995), for

instance, argues that larger labour market regions are collectors and repositories of

knowledge and ideas that give rise to positive externalities, primarily by creating

opportunities for people (and/or firms) in different industries to exchange ideas in an 3 In this thesis metropolitan regions are those characterized by high population, high population density, and high economic activities. Therefore, metropolitan regions is used synonymously with larger regions. The same applies to the use of rural and smaller regions, except when specified.

16

effort to explore and exploit complementarities (Glaeser, 1999). It is therefore

imperative to argue that, because rural regions are characterized by labour market

matching deficiencies and a lack of variety, family co-occurrence in firms may be more

dominant there. Consequently, geography drives the presence and role of family ties.

Moreover, there is evidence that agglomerations are not homogenous but rather vary

along several dimensions, and hence that different firm-internal resources influence

performance (Knoben, Arikan, van Oort, & Raspe, 2016). The implication is that family

co-occurrence could still influence firm performance in larger regions through the

interplay with resources at the firm level. This makes the family, and family firms, not

simply a small peripheral topic. However, we need to know more about the underlying

mechanisms and importance of the family and family firms in the economic landscape.

This suggests a need for an empirical analysis of the effects of the family and family

firms, which is what this thesis seeks to achieve.

1.1. Aim and research questions

The aim of this thesis is to analyse the effects of family co-occurrence and past familial

relationships (inherited entrepreneurial abilities) on firm performance. This aim is

motivated by the contemporary arguments that social relations (e.g. family ties) are

important in the analysis of today’s space economy (e.g. Blanc & Sierra, 1999;

Boschma, 2005; Gilly & Torre, 2000; Rallet & Torre, 1999). Basco (2015) also argues

that the role of the family has been under-researched in a regional development

framework, despite the claims that family relations create positive externalities and

hence may explain spatial variations of economic development (Duranton et al., 2009).

Moreover, although the firm has been the object of analysis, the exact mechanisms

driving the growth in different regions still remain unexplored. The aim of the present

thesis finds support in a qualitative finding in the Swedish context by Haugen and

Westin (2016), who found that hiring family members not only reduces the risk of

hiring the wrong person but also enhances the transfer of tacit knowledge among

family members. Nevertheless, family co-occurrence can also produce a suboptimal

outcome, owing to a lack of plurality of competences. The aim of this thesis is

addressed with three research questions, examined in three separate empirical

studies:

1. What are the effects of family co-occurrence on firm performance, and how

prevalent is family co-occurrence across different regions? (Paper I)

2. What are the impacts of entrepreneurial family relationships on firm

performance, and how do they interplay with in-house skill variety? (Paper II)

3. What are the effects of entrepreneurial capital on the survival and growth of

family firms? (Paper III)

17

1.2. Delimitation and contributions

1.2.1. Delimitation

The present thesis is delimited to the effects of family co-occurrence within the firm.

By this delimitation, the analyses exclude all possible impacts of the family outside the

firm and between different firms. Instead, the thesis focuses on how family relations

within the same firm may enhance firm performance and explain differences in

regional development, but also how these same processes facilitate the transfer of EC.

The definition of the family and family ties is data-driven because the ASTRID database

provides information on the type of family and the type of familial relationships within

the family (see further discussion in section 3). The data were delimited to the periods

from the 1995s onwards (see further discussion in section 3). The above research

questions are brought to fruition in an empirical design that is predominantly

quantitative in nature, using longitudinal micro-data consisting of employer-employee

matched data in the Swedish economy.

1.2.2. Contributions

The major contribution this thesis seeks to make is to view and discuss uneven regional

development from the perspective of the role of family co-occurrence and EC on firm

performance. By so doing, the thesis seeks to systematically analyse the impacts of

family co-occurrence and EC on the behaviours of firms and the consequences of these

behaviours for regional development. The thesis goes beyond the general claim that

trust affects cooperation in certain industries in certain regions (Saxenian, 1994;

Storper, 1995), by drawing on large-scale data to investigate how the family affects

firm performance. By examining the importance of the family in the firm, the thesis

hopes to contribute to the understanding of the family’s role in firm competitiveness.

Besides examining the absolute benefits of the family, analysing the relational

character of learning requires a look at multiple proximities. Despite the extant

literature on proximity dynamics, the exact workings of proximity still remain a black

box (Boschma, 2005; Shaw & Gilly, 2000). Boschma (2005) suggests that combining

different proximity dimensions may offer a solution to most learning problems in the

firm; however, there have been fewer studies in this regard. A recent study has shown

that (un-)related flows within the same firm are important for firm performance

(Östbring, Eriksson, & Lindgren, 2017). Therefore, by examining the combination of

multiple proximity dimensions (social proximity and cognitive proximity), the present

thesis contributes to the proximity dimension literature. Finally, previous studies

indicate that family involvement in family firms enhances their performance over non-

family firms in terms of productivity and employment growth (Astrachan & Shanker,

2003; Villalonga & Amit, 2006; Westhead & Cowling, 1996), even when different

definitions of family firm are tested (Miller, Le Breton-Miller, Lester, & Cannella, 2007).

However, the exact mechanisms driving the growth and survival of family firms still

remain unexplored. The thesis therefore contributes to this body of literature by

18

analysing the impacts of EC on the survival and growth of new entrants across different

economic landscapes.

1.3. Structure of the thesis

The thesis comprises an introductory section (kappa) and three papers. The kappa

includes six main sections, the first being this introductory section. The second section

discusses the theoretical framework on uneven regional development in relation to

family ties and firm performance. In this section, the thesis discusses how family

relations can facilitate firm performance through various mechanisms. The intention

is to give a broader theoretical framework, within which the thesis aims to contribute.

The third section briefly discusses the data, key variables, methods, and applied

methodology used in the various papers, and the limitations of the data and various

methods. The fourth section presents a summary of the three papers, while the fifth

presents the concluding discussions on the main findings and implications for theory

and methodology as well as suggestions for future research. A short summary in

Swedish is provided in section six.

2. THEORETICAL FRAMEWORK

This part of the thesis presents the general theoretical framework. It is worth noting

that this does not reflect the entirety of the theoretical framework in each of the

papers, but rather the broader literature on which the thesis draws. The section starts

with a conceptual overview of how the co-occurrence (or presence) and role of the

family comprise a geographical product. From here, the family is discussed in the

context of proximity dimensions as important form of social proximity for firm

performance. Finally, this section further discusses how family co-occurrence and EC

in family firms contribute to the creation and definition of different economic

landscapes.

2.1. The co-occurrence and role of the family; a product of geography

In recent decades, studies have shown that firms are more productive, on average, in

metropolitan regions (Combes, Duranton, Gobillon, Puga, & Roux, 2012; Florida,

Mellander, Stolarick, & Ross, 2012). Two main explanations have been offered for this,

asserting that it entails: (1) the effects of firm and skills selection, or (2) the effects of

agglomeration economies. Competition is very high in metropolitan regions, allowing

only the most productive firms and workers to survive. Prior studies have shown that

tolerant and diverse metropolitan regions function as magnets for young, talented and

highly educated people (e.g. Florida, 2002). For instance, Bjerke (2012) argues that

large and growing Swedish regions are good at attracting and/or keeping graduates.

This is the case because highly skilled jobs have become more concentrated in larger

cities over time (Florida et al., 2012). Bjerke and Mellander (2017) found that Swedish

19

graduates are more likely to stay in or move to larger regions and commute longer

distances to creative jobs. At the same time, larger regions are characterized by the

presence of both specialized and diverse economic activities that promote

externalities, which increase the productivity of firms (Combes et al., 2012). Skilled

workers and economic activities continue to flock to larger regions, even though they

are associated with higher rent, higher cost of living, and higher wages. Glaeser and

Maré (2001) explain that higher wages in larger regions are compensated by higher

productivity. Glaeser (1999) further argues that, if cities are full of individuals with high

human capital and speed in the flow of information, the cities will be more valuable to

individuals with high human capital. The implication here is that the selection of

productive firms and skilled workers into larger regions only leaves smaller regions

with less productive firms and workers on the competitive global market. However,

this might not always be the case for all rural regions, as they are heterogeneous and

show ranges of economic trajectories; e.g. some are becoming attractive for

specialized industries and skills.

Economic geographers have attributed the spatial differences in firm performance to

the benefits associated with agglomeration economies. Agglomeration economies

arise from a variety of mechanisms, such as the possibility for collocated similar firms

or firms in the same industry to share suppliers via the existence of a thick labour

market, facilitate matching, and offer the possibility to learn from other firms.

Duranton and Puga (2004) emphasize that the spatial concentration of firms and

workers makes them more productive. Moreover, since urban agglomerations

facilitate skill accumulation and speed the rate of interactions, highly skilled

individuals, and productivity advantages are common in larger regions. This argument

is closely linked to the localization economies of Marshall (1920). The geographical

collocation of similar economic activities broadens the range of potential experiences

for all forms of collaboration and intellectual spillovers that are important for firm

performance (Glaeser, 1999; Glaeser & Maré, 2001). On the other hand,

agglomeration economies can arise from the collocation of a diverse range of

economic activities; this is closely linked to the notion of urbanization economies

asserted by Jacobs (1969). Clearly, from the above, it is obvious that the demand and

supply factors affect the spatial sorting of firms and skilled workers, and hence the

geographical differences in firm performance. In all this, we are oblivious to (or have

missed) how the spatial sorting of productive firms and skilled workers may result in

the differentiated spatial sorting of family co-occurrence or employment and family

firms in the literature.

Processes of spatial sorting of skilled workers and productive firms may result in the

production of higher family employment or co-occurrence in firms, and hence strong

family ties in certain firms and regions. In effect, regions that lack the availability or

presence of highly skilled workers may resort to hiring through referrals and family

networks, resorting in a higher presence and stronger family ties at the firm level. It

20

may be difficult to unambiguously claim that processes of spatial sorting of workers

and firms could produce family co-occurrence and stronger family ties in smaller

regions, inter alia the frequent face-to-face interactions. However, it is reasonable to

argue that because smaller regions are characterized by the sorting of relatively low-

skilled workers (Glaeser, 1999; Glaeser & Maré, 2001), hiring through family ties

becomes the most reliable and cheap source of employment (Montgomery, 1991).

Additionally, the spatial differences in family ties can be attributed to processes of

globalization. Globalization has resulted in structural changes in the family

(Roopnarine & Gielen, 2005). The processes of globalization have increased patterns

of migration, favouring high movement into larger regions owing to the availability of

job opportunities. This has torn families apart, weakening family relations. Moreover,

because smaller regions facilitate face-to-face interactions among family members, it

reasonable for these regions to produce stronger and more trustful family

relationships both within the firm and at home. In a recent paper, Holm, Westin and

Haugen (2017) found low levels of kinship density4 at workplaces in Sweden’s

metropolitan regions, somewhat high levels in intermediate-sized regions (urban

regions), and higher levels in remote and sparsely populated areas (rural or small

regions). They further showed that kinship density decreases with rising educational

levels, which means that workers with low education are overrepresented at

workplaces with high kinship density, a phenomenon that can highly be associated

with smaller or rural regions.

2.2. Geographical differences in firm performance; from agglomeration economies to proximity dimensions

Over the years economic geographers have studied the role of agglomerations in firm

performance. Evidence shows that the geographical agglomeration of firms facilitates

the creation of a localized learning system (Maskell & Malmberg, 1999a, 1999b) and

university-industry innovation processes (Abramovsky & Simpson, 2011; Ponds, van

Oort, & Frenken, 2010), etc. Marshall (1920) argues that there is something ‘in the air’

in geographical agglomeration that seems to stimulate the competitiveness and

growth of firms and shape our understanding of the uneven spatial development of

industrial districts (Saxenian, 1994; Storper, 1995). For instance, the geographical

collocation of related economic activities promotes access to specialized labour and

inputs, to technological and knowledge spillovers, and to greater demand and/or

supply. McCann and Folta (2008) argue that the geographical concentration of related

economic activities enhances efficient access to the supply and demand of important

resources exogenous to the economic actors (Ellison & Glaeser, 1999). Meanwhile,

according to Jacobs (1969), important sources of knowledge and technological

4 Where kinship density is the total number of direct individual kinship links at a workplace. For a son and father at the same workplace, the son has two links: one to the father and one from the father

(Holm et al., 2017).

21

spillovers are external to the industry in which an economic agent operates. The

geographical agglomeration of diverse economic activities promotes opportunities to

imitate and recombine ideas from different industries (Glaeser, 1999; Malmberg &

Maskell, 2002). For example, earlier studies have shown that more diverse economies

are conducive to the exchange of skills necessary to the emergence of new fields

(Harrison, Kelley, & Gant, 1996b). This is the case because more diverse economies

offer a labour force with a broader mix of skills, including new skills conducive to

working with emerging production technologies (Harrison, Kelley, & Gant, 1996a).

Therefore, proximity is not a new idea in economic geography; geographical proximity

has long dominated the theoretical and empirical discussions in the literature.

The general observation in the literature is a strong indication that regions are

connected with the geographical concentration of economic activities and skilled

workers, with production remarkably concentrated in space (Krugman, 1991),

especially in larger regions (Andersson & Lööf, 2011; Combes et al., 2012; Florida et

al., 2012). The strong connection between larger regions and the concentration of

economic activities and skilled workers tends to make larger regions superior

performers to smaller regions. Glaeser and Maré (2001) attribute the regional

differences in firm performance to wage differentials (urban wage premium).

According to this claim, it is not by chance that highly educated individuals are drawn

to larger labour markets where the returns on their human capital are the highest

(Wheeler, 2001) and the average productivity is higher. This argument has received

greater attention with diverse discussions on proximity dimensions. Besides,

geographical differences in innovation and productivity have long been analysed from

a diffusion point of view (Hägerstrand, 1967). Hägerstrand's view on innovation and

productivity is based on the nature and spatial distribution of information.

Hägerstrand argues that the probability that information is transmitted from one

economic agent to another declines with the distance between the two. Malmberg

and Maskell (2002) expand on this by arguing that when firms collocate, a spatially

defined community is usually constructed. This makes it easier for the firms to bridge

all forms of communication gaps resulting from different knowledge bases and

organizational arrangements. Duranton and Puga (2004) argue that the spatial

concentration of economic activities and skilled workers allows for a more efficient

sharing of local infrastructure and facilities, a variety of intermediate input suppliers,

or a pool of skilled workers. It offers larger markets better matching opportunities

between employers and employees, and buyers and suppliers (e.g. Wheeler, 2001). It

also facilitates learning processes, by promoting the development and widespread

adoption of new technologies and business practices (Puga, 2010). Moreover,

economic activities in larger regions tend to generally benefit from geographical

proximity because they are located in places where the occupational distribution of

workers matches the demand for labour by occupation (Rigby & Brown, 2015).

22

Proximity goes beyond simply geographical proximity. Developing the argument on

the proximity dimensions by the French Proximity Dynamics Group (e.g. Kirat & Lung,

1999; Rallet & Torre, 1999; Shaw & Gilly, 2000; Torre & Rallet, 2005), Boschma (2005)

presents four more proximity dimensions beyond the mere conceptualization of

geographical proximity: cognitive, organizational, institutional, and social. Cognitive

proximity explains the similarities and differences in the capabilities of economic

actors. Here the argument is how people perceive, interpret, understand and evaluate

economic issues based on shared absorptive capacities (Cohen & Levinthal, 1990), as

knowledge is distributed among different economic agents (Antonelli, 2000).

Therefore, for economic agents to learn and create knowledge by combining

complementary knowledge within and outside the firm, the cognitive distance must

be neither too long nor too short. Prior micro-level analyses of cognitive proximity

have shown a relationship between cognitive distance (relatedness) and firm

productivity (Boschma, Eriksson, & Lindgren, 2009; Timmermans & Boschma, 2014;

Östbring, Eriksson, & Lindgren, 2016; Östbring & Lindgren, 2013). Organizational

proximity explains that organizational arrangements expressed through similarities in

intra- or inter-organizational hierarchies have great impact on the ability to coordinate

and avoid uncertainty and opportunism. However, be it intra- or inter-organizational

arrangements, strong ties limit access to various pieces of novel information (Kirat &

Lung, 1999). The search for novelty often requires going beyond the established

channels (Boschma, 2005). Fu, Schiller, and Diez (2012) identified that firms in the

Pearl River Delta rely on organizational proximity to gain access to and absorb

knowledge – by turning to parent companies for key knowledge in their processes of

product innovation.

Institutional proximity (macro-level) describes how shared norms, values, and habits

(informal), as well as rules, conventions, and laws (formal) between economic agents,

can enhance cooperation. A similar institutional framework streamlines behaviours of

economic agents in contract (North, 1992). Analysing the collaboration efforts by

institutions, Ponds et al. (2007) found that even though geographical proximity

matters, it plays a minor role when the collaboration is between institutions of similar

background, even in international collaborations. At the global level, evidence shows

that there is a strong connection between agglomeration and a country’s institutional

context. Firms tend to agglomerate when investing in countries with a collectivist

culture and political/economic uncertainty (Martin, Salomon, & Wu, 2010). Finally,

social proximity (micro-level) is the socially embedded relationships between

economic agents based on kinship/family and friendship (Granovetter, 1985). Trust-

laden relations define socially embedded relationships. The embeddedness literature

suggests that higher interactive learning is associated with firms and individuals that

are socially embedded, contrary to the neoclassical view. This implies that social

relationships facilitate firms’ capacity to learn and absorb external knowledge since

social closeness breeds trust, which in turn lowers transaction costs and facilitates

collaboration. Fu et al. (2012) show that firms in the Pearl River Delta rely on social

23

relations to trigger product innovation ideas. The authors argue that socially

embedded innovators frequently interact with external partners by combining internal

capabilities. Firms rely on their established relations with customers and suppliers to

ascertain both tacit and codified knowledge in their product innovation processes.

Boschma (2005) suggests that the proximity dimensions, in their own ways but also

most likely in combination, will offer the solution to the fundamental problem of

coordination and hence firm performance. Combining different sets of proximities can

result in the co-evolution of different sets of knowledge and opportunities that can

facilitate novelty. Östbring et al. (2017) found that local related flows (cognitive

proximity) are economically beneficial if they cross-firm boundaries (organizational

proximity). This suggests that labour mobility across workplaces or firms with similar

institutional contexts like strong common rules, ethical practices, routines or incentive

structures (institutional proximity) reduces the need for trust-building but facilitates

the recombination of existing knowledge, hence creating a localized learning system

vital for firm performance. Östbring et al. (2016) demonstrated that multiple measures

of cognitive dimensions of employees (level of education and industrial experience)

interact in their influence on firm performance. The results suggest that high human

capital ratios or high levels of similarity in industrial experience reduce the commonly

found negative effects of similarity in the formal knowledge on firm performance.

Another example related to the quest in this thesis is the study by Huber (2012). Huber

revealed that learning processes can take place between cognitively distant economic

actors who are strongly socially related, such as spouses or children. The implication

is that cognitively distant economic actors may require a higher level of social

proximity (familial relationships) in order to function. This thesis attempts to analyse

the problem of firm performance by opening the black box on proximity dimensions

in relation to the role of the family.

2.3. Family and firm performance

This section of the theoretical framework presents discussions on why family

relationships are a unique form of social proximity, and how this affects firm

performance through various mechanisms.

2.3.1. The family and ties that bind

The family is the primary social affiliation an individual can claim (Canning, Mitchell,

Bloom, & Kleindorfer, 1994), and is, therefore, the basic unit of every society. The

family is both an economic and a production unit, while at the same time being a

mechanism for social inclusion (Canning et al., 1994; Ross & Sawhill, 1977). As an

economic unit, the family shares basic resources for the common benefit. For instance,

families use capital resources for the upkeep of the family, e.g. to sponsor the

education of children. Capital allocations between family members allow for risk-

sharing between members. As a production unit, the family organizes the division of

24

labour based on competence and gender, whereby information flows between family

members facilitate the quick execution of tasks. Furthermore, as a social unit, the

family ensures that family members are not permanently separated from society. This

function of the family satisfies the psychological need of belongingness, which

represents commitment and security in an uncertain world. The family is regarded as

a dynamic, ever-changing institution whose boundaries and meaning oscillate over

time (Holtzman, 2008). The family, thus, is a social group that includes relationships

based on consanguinity, conjugality or adoption (Trost, 1990) who share experiences

and emotional ties with varying responsibilities. This conceptualization of the family

assumes both traditional and social expansive status.

It is worth stressing that family relations can also involve step relationships. Martin,

Anderson, and Mottet (1999) argue that step relationships are less cohesive and more

stigmatized than biological ones. Fine, Coleman and Ganong (1998) indicate that

stepchildren regard stepparents as having less authority in their lives. Because of this

pre-conceived notion, there are often artificially established impermeable boundaries

between stepparents and stepchildren that hinder communication (Golish, 2003). Yet,

communication in the family is fundamental in the construction of strong family

relationships (Holstein & Gubrium, 1999). Holtzman (2008) argues that the idea that

humans come together to create, understand, and recreate their social world through

symbolic systems like language shows that family relationships are given meaning in

human interaction. Therefore, cultural identities like shared language and norms in

families are initiators of communication, which is highly critical in the construction of

successful stepfamily and family relationships.

The family can also involve several generations with different experiences and values.

Intergenerational relationships bring to play diverse experiences, which are relevant

for understanding the role of the family in modern society. Intergenerational relations

have invoked many theoretical paradigms or theories, predominant among them is

the exchange theory and altruism theory. The exchange theory, emerging from

theories of economic systems, assumes that family members make decisions based

how to minimize the costs and maximize the benefits of their decisions. The exchange

theory supports the argument that there are different levels of commitment among

family members (Bird, 2014; Wiklund, Nordqvist, Hellerstedt, & Bird, 2013) that

influence different levels of cooperation and exchanges. Moreover, people are more

willing to provide both high- and low-cost help to family members than to friends

(Stewart-Williams, 2007; Xue, 2013). This validates the kin-selection theory (Hamilton,

1964). The exchange theory predicts that people will increase their commitment to a

person if they experience more benefits than costs; however because family relations

have social obligations, the family has the power to ensure reciprocity beyond what

the market might produce. Migration studies have shown a strong association

between distance and support from family members. The foundation of this argument

is that the likelihood of receiving support from a family member decreases with

25

increased distance to that family member. Mulder and van der Meer (2009) found that

the ‘distance decay’ in family support differs between family members. Mothers are

more likely than fathers to render support over longer distances, while siblings are

likely to offer support only when other family members live in close proximity.

The altruism theory is explained as ‘‘a motivational state with the ultimate goal of

increasing another’s welfare’’ (Batson, 1991:6). In other words, altruism refers to

behaviours that benefit others at personal cost to the behaving individual. Becker

(1974) argues that the family has a set of motivations and bonds that guide their

interaction with and care for one another. Such altruistic feelings motivate family

members, especially parents, to invest in their children – for instance in education,

workplace experience, information delivery, etc. – even if there is no plan for

repayment by the children (Bianchi, Hotz, McGarry, & Seltzer, 2007). This act makes

family membership valuable in ways that both promote and sustain the family bond

across generations. Altruism enhances loyalty, as well as commitment, among family

members within and outside the firm. Those who feel greater responsibility for their

family members’ wellbeing are more likely to cover a longer distance to provide

support, i.e. among family members who share strong emotional ties (Mulder & van

der Meer, 2009). Siblings are less likely to provide such support than parents and

children are (Voorpostel & Van Der Lippe, 2007).

Moreover, family relationships within and outside the firm can expose family members

(especially children) to entrepreneurial experience and qualities that can facilitate

their entry into entrepreneurship. Thus, past familial relationships and experience can

be important resources for entrepreneurship. There is strong evidence suggesting that

entrepreneurial families contribute to the development of human capital in the form

of experience and skills or entrepreneurial qualities of family entrepreneurs in the

early years of childhood or adolescence. This process not only enhances the transfer

of complex family wisdom but also prepares individuals for entrepreneurship.

Entrepreneurial families can be referred to as institutions or social structures that can

both drive and constrain entrepreneurial activities (Dyer & Handler, 1994; Nordqvist

& Melin, 2010). Steier (2007) argues that for most successful entrepreneurs there is a

silenced story (sub-narrative) of how their family was pivotal in their entrepreneurial

lives. “Many entrepreneurs are embedded in a social context that includes a family

dimension. For these entrepreneurs, the family represents a rich repository of

resources: economic, affective, educative, and connective” (Steier, 2007: 1106).

Aldrich et al. (1998) suggest that the entrepreneurial family can be seen as an

incubator and a birthplace of entrepreneurial qualities (also; Heck et al., 2006).

Entrepreneurial abilities in the form of specific and general knowledge are referred to

as entrepreneurial capital (EC) (Aldrich et al., 1998). Marshall (1920) expresses this

argument as follows: “the mysteries of the trade become no mysteries; but are as it

were in the air, and children learn many of them unconsciously” (p. 271), through

things they see and hear around them. EC may not only promote the creation of future

26

entrepreneurs but may also facilitate successions, as pertains to the transferral of

ownership and management to the next generation. Despite this, the family has been

virtually neglected as a relevant unit of analysis, even though it could constitute a

genuine contribution to the broader regional science field.

The ability of the family to build and sustain trust makes it different from other social

groups. Sako (1992) defines trust as either ‘contractual’, ‘competence’ or ‘goodwill’.

Contractual trust entails a mutual understanding whereby partners adhere to a

specific written agreement, which controls interpersonal relations. Competence trust

develops through shared abilities and compliance between economic agents. Lastly,

goodwill trust develops over a long period of time. Goodwill trust is shaped by shared

norms and values (Sako, 1992), which makes it sustainable, efficient, effective and

reliable. Unlike contractual trust, goodwill trust requires no periodic renewal. This type

of trust is best produced in an informal, small, closed and homogeneous group, which

is able to enforce normative sanctions (Coleman, 1990); meanwhile, among

heterogeneous groups, formal rules and contractual trust serve as checks on

transactional relationships (Fukuyama, 1995). Trustworthiness in the family can be a

mobilizer and a capitalizer for economic and social gain (Bubolz, 2001; Luhmann, 2000)

even when the sense of intimacy and commitment may not be the same between all

family members (Brannon, Wiklund, & Haynie, 2013; Wiklund et al., 2013).

A very important question has been whether the Industrial Revolution stripped the

family of its economic and production functions, by entrusting these functions to the

welfare state. This notion has led to the conclusion that the family is no longer the

central institution in society (Ross & Sawhill, 1977). In simple terms, a welfare state is

a social system based on the assumption that the government has the primary

responsibility for the wellbeing of its citizens. The relationship between the welfare

state and the family has been described as either crowding-out or crowding-in (Wolfe,

1989). Halla, Lackner, and Scharler (2013) argue that a strong welfare state can

facilitate both the formation and the dissolution of family ties. The implication is that

a strong welfare state risks crowding out help and support between generations and

crowding in help or further responsibilities toward family members. This makes the

effects and role of the family still an empirical question, which the present thesis seeks

to explore in the Swedish context by analysing the effects of family co-occurrence on

firm performance.

2.3.2. How family co-occurrence can affect firm performance

Bubolz (2001) argues that the family is a source, a builder, and a user of social capital.

The relationship among family members creates an ideal environment in which social

capital can be created (Coleman, 1988). Arregle, Hitt, Sirmon, and Very (2007) suggest

that family co-occurrence in the family firm is likely to affect the firm’s social capital,

which is a source of competitive advantage. Since families develop sustainable and

reliable social capital when the family wields power through firm ownership and

27

management, this allows the family’s influence to be deeply engrained in all aspects

of the firm (Arregle et al., 2007). Yet, the effects of the family on the firm’s social

capital are dependent on the strength of the family's social capital. The implication is

that a firm’s social capital is rooted in strong family social capital. If a family is

characterized by weak social capital, the family firm’s social capital development will

be influenced more strongly by other proximate institutions and non-family

employees (Arregle et al., 2007). Therefore, the effects of the family on the family

firm’s social capital are strongly linked to the existence of strong family social capital.

Moreover, strong family social capital can also have detrimental consequences on the

firm’s social capital and possibly firm performance (Adler & Kwon, 2010; Leana & Van

Buren, 1999; Nahapiet & Ghoshal, 1998; Portes, 1998). There is a strong possibility of

transferring dysfunctional family attributes to the firm and a potential risk of the family

social capital dominating the family firm’s social capital. Dysfunctional family

communication can cloud appropriate communication in the firm. Unhealthy

competition within the family can lead to concerns about whom to select for

promotion, and this can create intense internal rivalries, which can impede firm

performance.

Family co-occurrence can also affect the resource base of the firm. The key tenets of

the resource-based view of the firm suggest that firms achieve competitive advantage

by employing valuable and rare resources (Barney, 1991). The reason why certain

resources are of greater value is that they are unique and less available, and are

therefore less likely to be imitated (Aldrich & Cliff, 2003; Habbershon & Williams, 1999;

Sirmon & Hitt, 2003). The theory suggests that firms with valuable and inimitable

assets are able to create a sustainable competitive advantage (Barney, 1991;

Wernerfelt, 1984). Families carry with them a unique set of resources in the form of

human capital in terms of experience and critical judgment (Becker, 1964), social

capital in the form of mutual trust, commitment and cohesion (Coleman, 1988), and

financial and patient capital in the form of financial aid with long-term repayment

plans (Sirmon & Hitt, 2003). The implication is that the family adds an extensive

dimension to the resource base of the firm in terms of its efficiency and reliability.

Moreover, the enduring nature of family relationships gives the family certain

advantages in developing and maintaining a unique bundle of resources that are

important for achieving a competitive advantage and hence increased firm

performance. On the other hand, because the family is characterized by common

values and norms, a higher family co-occurrence in the firm can result in the

accumulation of similar resources that might be detrimental to firm performance.

Additionally, because it is difficult to acquire and manage rare resources (Barney,

2001), there is a likelihood of the family being perceived as more valuable, which can

cause dissatisfaction among other employees; this can affect cooperation and

performance.

28

The family has peculiar assets that can affect a firm’s transactional costs. Gedajlovic

and Carney (2010) argue that firms are characterized by certain assets, generic non-

tradeable (GNT) that are peculiar to certain factors of production. Though these assets

are sticky, they are generic in application and highly common among family members.

The family is an influencer of transactional costs, especially in family firms (Gedajlovic

& Carney, 2010; Verbeke & Kano, 2010). The family holds GNT that are different from

other factors of production in the firm. Gedajlovic and Carney (2010) identify four

types of GNT in family relationships – bonding social capital, bridging social capital,

reputational assets, and tacit knowledge – that are seen as potentially valuable assets.

Regarding the firm as a collection of different factors of production (Alchian &

Demsetz, 1972), the family as a resource or a bundle of factors of production presents

the capacity to mediate transaction costs. Since the family is characterized by common

values and deep interpersonal relations, it facilitates the bonding, orientation, and

adaptation of new employees (family members). Mutual trust in the family can lower

contract and enforcement cost, and hence facilitate the deployment of resources in a

fast, flexible and discrete manner (Yeung, 1997a). The family can promote the

generational transmission of tacit knowledge, especially when the firm owner plans to

bequeath the business and accumulated institutional knowledge to heirs. Therefore,

the family has the capability to overcome information asymmetry and reduce

transaction costs; hence the strong incentive to sustain the survival of the firm (Miller,

Le Breton-Miller, & Scholnick, 2008).

Family co-occurrence can also influence firm performance through reduced agency

cost. An agency relationship is a contract under which the principal engages the agent

to perform some task on his behalf (Jensen & Meckling, 1976). This involves delegating

some decision-making authority to the agent. The theory suggests that, since the

principal and the agent are both utility maximizers, the agent may be tempted to act

in self-interest, contrary to the principal’s interest (Chrisman, Chua, & Litz, 2004; Fama

& Jensen, 1983b; Jensen & Meckling, 1976). To minimize divergence from the

principal’s interest, others suggest that the principal ought to establish appropriate

structural mechanisms or incentives for the agent, thus incurring monitoring costs

(Fama & Jensen, 1983a; Jensen & Meckling, 1976). Agency cost includes monitoring

expenditure by the principal, bonding expenditure by the agent, and residual loss by

the principal (Fama & Jensen, 1983a, 1983b). Moreover, agency cost may differ

between the principal and different agents, as the firm is viewed as sets of contracts

among different factors of production (Alchian & Demsetz, 1972; Gómez-Mejía,

Núñez-Nickell, & Gutierrez, 2001). Generally, it is virtually impossible for the principal

to have zero agency cost; however, some agents have relatively lower agency cost.

Jensen and Meckling (1976) suggest that the separation of ownership from

management is the chief source of agency cost in a firm. But, this cost is eliminated

when the firm’s ownership and management are not separated or when the firm is

managed by a single owner/family (Fama & Jensen, 1983a; Jensen & Meckling, 1976).

With this in mind, it may not be surprising when others argue that family contracting

29

in family firms represents an efficient form of firm governance. Therefore, firm

performance by way of cost minimization and greater efficiency is the outcome of a

principal-agent relationship involving a family agency contract (Corbetta & Salvato,

2004). Yet, some argue that since family agency contracts are based on common

bonds, emotions and sentiments (Dyer, 2006; Schulze, Lubatkin, & Dino, 2003; Schulze

et al., 2001), they are prone to depart from economic rationality (Gómez-Mejía et al.,

2001) and can therefore threaten firm performance (Schulze et al., 2001)5.

Family employment in family firms can affect firm performance through the acts of

stewards (Miller et al., 2008). The stewardship theory concerns the employment

relationship between the principal and the steward (Davis, Schoorman, & Donaldson,

1997; Donaldson & Davis, 1991). The theory suggests that employees’ are ordered as

stewards in their behaviours, such that pro-organizational and collectivistic behaviours

have higher utility than individualistic and self-serving behaviours (Davis et al., 1997;

Donaldson & Davis, 1991). Stewards are organizationally oriented agents, who seek

the best interest of the firm rather than their own interest, as they view the success

of the firm as a factor that will positively affect them (Davis et al., 1997). This suggests

that, given the choice between self-serving and pro-organizational behaviours,

stewards will pursue the interest of the organization. Stewards’ behaviours are

enhanced by the quality of the relationship with the principal and the business

environment (Corbetta & Salvato, 2004; Davis et al., 1997). A quality relationship

facilitates and empowers stewardship. Moreover, stewards’ behaviours are based on

choice, influenced by both psychological factors (intrinsic motivation, identification

and personal power) and situational factors (management, philosophy and culture)

(Corbetta & Salvato, 2004; Davis et al., 1997; Zahra, Hayton, Neubaum, Dibrell, &

Craig, 2008). Workers who are intrinsically motivated by intangible and higher-order

rewards have a high level of identification with the firm and are more likely to act as

stewards as they may feel a strong sense of membership in the firm (Davis et al., 1997;

Vallejo, 2009; Zahra et al., 2008). Given the choice between a family and a non-family

employee, family employees may place a higher value on attaining firm goals6. The

motivations for familial stewardship behaviours extend beyond economic self-interest

(Chrisman, Chua, Kellermanns, & Chang, 2007), but are often influenced by the nature

of the relational contracts between the family firm owners and family managers

(Argyris, 1973; Corbetta & Salvato, 2004; Davis et al., 1997). The stewardship

argument makes family employees lower-risk stewards as they may share in the

5 Schulze et al. (2001) claim that a failed labour market may lead to the employment of family members. This engenders the risk of adverse selection – when applicants hide information about themselves that prospective employers need in order to properly evaluate their quality and worth (e.g., that they lack the ability and skills to competently behave in the scope of the assigned job) (Fama, 1980; Schulze et al., 2001). This in turn may exacerbate the risk of moral hazard – post-contractual opportunism in privately held family firms, which in turn may affect firm performance.

6 A recent study has shown that stewardship behaviour among non-family employees positively and significantly influences the profitability and survival of family firms (Vallejo, 2009).

30

general vision of the family and the family firm, and act with sales and profit

maximization in mind, knowing that the firm’s success is tied to the family’s welfare.

On the contrary, the sense of psychological ownership plagues family stewards.

Because family members have a sense of identity and possessiveness in relation to the

firm, this creates ‘psychological ownership’ (Pierce, Kostova, & Dirks, 2001) of the firm.

This sense of ownership is more likely to affect the sense of subordination to the Chief

Executive Officer (CEO) or the entrepreneur. Such attitudes can create tension

between family members and result in dysfunctional communication, which can cloud

efficient communication in the firm. While the sense of psychological ownership in

itself can relate to the tenets of stewardship theory, how it is manifested can

negatively affect cooperation and firm performance (Pierce et al., 2001).

Finally, family co-occurrence can affect firm performance by influencing localized

learning systems. The family represents a ‘community of practice’ where learning

processes can take place. Learning can be a social process whereby participants are

actively integrated into the learning system (Brown & Duguid, 1991; Lave & Wenger,

1991; Wenger, McDermott, & Snyder, 2002). The learning process has meaning when

it is conducted in the context of a group of people with common experiences and

mutual trust (Jeon, Kim, & Koh, 2011). Wenger (2000) argues that humans have

formed groups that share cultural practices reflecting their collective learning. Such

groups comprise diverse competence bound together by values that influence a

common understanding of their communities, and hold each other accountable in this

sense of ‘joint enterprise’. Through the joint enterprise, family members understand

their stake in the learning system and contribute accordingly. Families continuously

establish norms and relationships of ‘mutuality’ that reflect their interactions and

produce a ‘shared repertoire’ of communal resources (Wenger et al., 2002). The family

as a community of practice presents an opportunity for negotiations through direct

participation without limitations. From this perspective, learning processes are

expedient not only among actors with shared knowledge base (e.g. skill-related

variety, Boschma et al., 2009), but also among actors with a common identity (Lave &

Wenger, 1991; Wenger, 2000), common social arrangements, and mutual trust

(Boschma, 2005; Giuliani, 2005; Huber, 2012; Maskell & Malmberg, 1999a, 1999b;

Nonaka, 1994; Nonaka & Konno, 1998; Reagans & McEvily, 2003).

Wenger (1998) describes the firm as a constellation of different communities of

practice; e.g. advice, trust, and communication (Krackhardt & Hanson, 1993). These

informal groups are formed across different functions and divisions (Ruuska &

Vartiainen, 2003). Through these communities of practice, the firm knows what it

knows and becomes effective and competitive. Family employees may overlap

between these different communities of practice and hence stand to benefit from the

localized learning process while keeping certain specific and complex knowledge

within the family. Since strong emotions influence knowledge sharing (Granovetter,

1973; Reagans & McEvily, 2003), family members have a greater motivation to engage

31

in any learning process. This makes the family an enabler of learning and a manager

of shared knowledge (Nonaka, 1994; Nonaka & Konno, 1998). Moreover, family co-

occurrence can also weaken the learning capacity of the firm. First, Uzzi (1997) argues

that embedded relationships based on loyalty and emotional bonds can lead to the

underestimation of opportunism. Since opportunists’ actions are guided by self-

interested motivations, this can affect the information flow. Second, a family’s

conservative practices can also constrain learning processes. A strong family culture

can lock family members into a particular way of doing things and hence make them

inflexible, resistant to change, and inclined to stick to path-dependent traditions

(Chirico & Nordqvist, 2010) at the expense of their own innovative and learning

capacities (Boschma, 2005). Such strong behavioural patterns can counteract changes

(family inertia – factors preventing the creation of dynamic capabilities). Lastly, family

co-occurrence can also result in the accumulation of similar and suboptimal

knowledge that can affect the learning process in the firm (Boschma et al., 2009) and

slow down growth (Bentolila et al., 2010).

2.4. Family firms and regional economy

This section of the theoretical framework discusses the connection between the

location choices of family firms and the superiority of family firms, and how the effects

of family co-occurrence and EC on firm performance vary across space.

2.4.1. Location preferences of family firms and their superiority

The location choices of firms has puzzled researchers in economic geography and

regional economics for some time now (Kahn & Henderson, 1992). There are two

extreme arguments that have dominated the literature: least cost factors, whereby

classic location theory suggests that firms locate to minimize cost and be closer to

resources and the market (e.g. Bartik, 1985); and attribute factors, whereby firm

location is based on location attributes, like certain infrastructures such as power and

water (e.g. Harding, 1988). Recent studies have shown that entrepreneurs tend to

start their businesses in regions where they are deeply rooted, where they have family

and friends, and that they can call their home region, even when more favourable

conditions exist elsewhere (Dahl & Sorenson, 2012). When examining the location

preferences of family and non-family firms, Kahn and Henderson (1992) found that

proximity to family residence was an important location factor, especially for family

firms. The preference of home region is not random. Entrepreneurs with deep roots

in their home regions may possess local information (knowledge) and connections that

may be of potential value for the survival and growth of the firm. Entrepreneurs may,

therefore, survive most in their home regions, even if these places offer the least

opportunities. Whereas this may have financial repercussions on the venture (Dahl &

Sorenson, 2009), most entrepreneurs appear to start firms not solely as means of

maximizing income but also in the pursuit of non-pecuniary compensation such as

feeling accomplished and having control over self-employment (Benz & Frey, 2008).

32

For such entrepreneurs, proximity to family residence may be an important location

factor. The analysis by Dahl and Sorenson (2012) indicates that locating a business in

the entrepreneur’s home region increases the firm’s survival by 2% (29 days) and its

annual profit by roughly $1,362.

Moreover, the location of new entrants differs along urban-rural dimensions. Apart

from entrepreneurs benefiting from the local connections in their home regions, the

location choices vary along dimensions like the composition, dispersion and turnover

of the region (Stearns, Carter, Reynolds, & Williams, 1995). These different dimensions

affect the survival and growth chances of new firms. Whereas rural regions have a

small number of new firms due to limited supporting resources, larger regions support

different types of new firms due to the size and diversity they offer. However, larger

regions generate greater levels of competition for resources that can affect the

survival of new firms. Contrarily, the diversity in larger regions also enables new

entrants to identify niches that reduce competitive effects (Stearns et al., 1995).

Moreover, Bird and Wennberg (2014) argue that family firms often exhibit an intense

desire to build strong and durable relationships with the local community or the home

region of the entrepreneur. This argument seems to be valid for rural regions, where

families have the opportunity to form alliances and build close connections with the

community to make up for the lack of economic resources and variety (Adler & Kwon,

2010).

2.4.2. Varying geographical effects of family co-occurrence and EC

The importance of family co-occurrence is mostly analysed in family firms because it

is these that tend to be the most frequent employers of family members. The

argument is based on the claim that the integration of family life and business life

creates a conducive atmosphere for the business to thrive. The union of family and

business life creates a bundle of resources that are distinctive to the family firm –

‘familiness’ (Habbershon & Williams, 1999). Familiness presents a unified system of

governance and a distinct family firm over a non-family firm. Family firms are the most

common form of business (Chang, Chrisman, Chua, & Kellermanns, 2008), and for this

reason, their importance cannot be underestimated in the growth and resilience of

modern societies (Astrachan & Shanker, 2003; Bertrand & Schoar, 2006). Family firms

are major contributors to the local economic development in terms of GDP and

employment (Astrachan & Shanker, 2003; Bassanini, Breda, Caroli, & Rebérioux, 2013;

Bjuggren et al., 2011). Using a narrower definition of a family firm (similar to that used

in the attached papers), Bjuggren et al. (2011) found that family firms constitute about

three-fourths of all firms in Sweden and account for about one-fourth of total

employment and one-fifth of GDP. Using Dutch data, Flören (1998) reports that family

firms account for about 43% of all employment in the Netherlands and 54% of GDP. In

the US, family firms account for about 60% of employment and GDP (Shanker &

Astrachan, 1996).

33

The performance of family firms is not homogeneous (Chua, Chrisman, Steier, & Rau,

2012) but is rather moderated by the geographical environment in which they

operate. In other words, the potential effects of family co-occurrence and EC on a

firm’s survival, growth, and productivity may be dependent on the spatial context. For

example, although larger regions are associated with higher levels of entrepreneurship

and EC, we can expect the effects of EC in larger regions to be stifled by intense

competition. It is small and medium-sized enterprises (SMEs) that are greatly affected

when competition in larger regions limits the importance of informal relationships.

Moreover, because SMEs by default have limited internal resources and capacities,

they rely on the scale and scope of resources in their environment (Hoover & Vernon,

1959) and personal networking (past and present family relationships) to mobilize

business resources (Aldrich, Elam, & Reese, 1996). Unlike larger regions, we can expect

greater impact of family co-occurrence on firm performance in smaller regions, where

the co-occurrence and face-to-face interactions between family members facilitate

frequent exchanges of tacit workplace knowledge. While this speculation may be

imperative and relevant in smaller regional settings, it still remains an empirical

question.

Moreover, the geographically varying effects of family co-occurrence and EC on firms’

outcomes may be influenced by the goals that drive family firms. Since family firms are

guided by the values of the managing family, these define the firms’ goals and strategic

economic and business decisions (Hiebl, 2012, 2014). Dunn (1995) argues that it is

more common for family firms to accept lower or longer returns on their investments

or sustain their socioemotional wealth (SEW) than to maximize profit (Berrone, Cruz,

& Gomez-Mejia, 2012; Gómez-Mejía, Takács-Haynes, Núñez-Nickel, Jacobson, &

Moyano-Fuentes, 2007). The implication is that non-economic and family-oriented

goals may be important as economic and business goals to family firms (e.g. Basco,

2017; Chrisman, Chua, & Litz, 2003; Chrisman, Chua, Pearson, & Barnett, 2012) as the

family firm serves the interests of multiple parties. When family firms are motivated

by family-oriented goals, they are likely to be characterized by a high level of family

co-occurrence and EC, especially in rural regions. This may contribute to the

competitiveness of rural areas by reinforcing experience-based knowledge in the form

of tacit knowledge circulation (Chirico, 2008; Chirico & Nordqvist, 2010). In other

words, the economic, social and emotional connections generated by the interaction

between families and firms are able to influence regional cognitive proximity (Basco,

2015) or regional absorptive capacity. This argument finds support in a qualitative

study by Gurrieri (2008), who found that families, familial history, and family firms

jointly determine the cognitive aspects of the textile industry networks in the Apulia

region (Italy). Family co-occurrence and EC can also influence regional trust-based

relations, as family members actively interact economically through the firm and

socially through social groups within and outside the firm (Basco, 2015). Trust-based

relations are likely to affect economic exchanges. Gurrieri found that social proximity

through socio-familial substrates plays a crucial role in Italian clusters of small firms

34

for knowledge transmission. At the same time, the family and family firms can affect

institutional and organizational proximities at the regional level. Moreover, because

the family and family firms continue to participate in the economic and social life of

the regional economy, they can to a certain extent be responsible for creating and

maintaining traditions, conventions and rules that may later serve as the foundation

for institutional and organizational proximity aspects in the region (Basco, 2015). Such

proximities may enhance collaborations not only through the knowledge that there

are explicit rules and arrangements guiding the relationship but also through an

awareness that the level of uncertainty is reduced. However, the competitive nature

of larger regions may force family firms to be more business-oriented (placing less

importance on the interaction between family members, the family and the firm). Yet,

family firms in metropolitan regions exhibiting high levels of family co-occurrence and

EC may be on the grounds of competence and need.

In conclusion, the theoretical framework has posited that family co-occurrence and EC

are geographical products that can affect different dimensions of the firm

(productivity, survival, growth) and partly help explain the varying nature of regional

development. Whereas previous studies have associated increased productivity,

growth, and survival of firms in metropolitan regions with the availability of skilled

labour and performing firms (Combes et al., 2012; Glaeser, 1999), this thesis argues

that family co-occurrence may not only compensate for the agglomeration

diseconomies or matching inefficiencies in rural regions but also enhance the

performance and growth of firms.

3. RESEARCH DESIGN AND CONTEXT

When conducting research, it is important to reflect upon the underlying research

questions in relation to what can be studied, how it can be studied, and the kind of

answers that are likely to be obtained. With this in mind, this part of the thesis presents

a discussion of the data, methodology, ethical considerations and method, and how

these adequately guide the empirical interest.

3.1. Description of Data

The analyses in the three papers are based on data from the ASTRID database, hosted

by the Department of Geography and Economic History at Umea University. The

database combines several registers from Statistics Sweden (SCB) and contains

relational micro-data for all firms, workplaces and individuals from the 1960s onward.

It is possible to connect most socioeconomic attributes of workers in relation to where

they work and in which region, as well as their place of residence, as the database

integrates several registers. The geo-referenced attributes of firms or plants and

people make it possible to conduct relational investigations at several spatial levels.

Moreover, the longitudinal nature of the ASTRID database allows for longitudinal

studies at the firm, industrial and regional levels in the Swedish economy. The basic

35

unit of analysis in the three papers is the plant or firm. In the database, the term plant

represents a separate economic activity part of a firm. The terms plant and firm are

used interchangeably because the analyses in the attached papers draw on only single-

plant firms. In other words, only firms with a single workplace or plant were included

in the analyses. With single-plant firms, we can trace the owners or the entrepreneurs

(usually sole ownership). Every firm and worker in the database has a unique

identification code, which makes it possible to link workers and their workplaces.

3.1.1. Connecting family members in a firm

The ASTRID database holds a longitudinal family register that contains information on

every family in Sweden. The multigenerational nature of the family register in the

database provides information on spousal couples (partners) as well as biological

family members – parents, children, siblings, etc. (the data do not distinguish between

biological and adopted children). More importantly, the family register contains

unique identification codes for every family, family members' indication of the kind of

family relationship, and the workplace identification code for all working family

members. The family and workplace identification codes enable the identification of

family co-occurrence in the same workplace or firm. The process is enhanced by

linking individuals to each other, sometimes using the firm owner or entrepreneur as

the pointer, based on the family information. The present thesis adopts a simple

definition of a family, based on the SCB records, either as consanguineous (blood-

related) and conjugal family relation (marriage/civil registration) (e.g. Brannon et al.,

2013; Trost, 1990). In Paper I, we identified family co-occurrence by (1) randomly

selecting an employee from the employee dataset connected to the firm and

subsequently checking whether any of his or her family members were present in the

same firm. (2) If none of his or her family members were present in the firm, another

random employee was selected. (3) The total number of family members was

summarized on every firm to examine the total effect of family co-occurrence on

labour productivity. The random approach of selecting family members eliminates

systemic bias by giving all families present in the firm an equal chance of being

selected. However, since families are heterogeneous and just one family group is

identified and selected for every firm, there is a higher probability of randomly

selecting a family with specific characteristics (e.g. dysfunctional communication) that

can affect the results. In Papers II and III, we used the entrepreneur or firm owner as

the pointer to connect family members in the firm. With the family identification code

and the employment identification code, we linked all family members related to the

entrepreneur in the firm. In Paper II, the family members are grouped based on the

type of relationship they have with the entrepreneur (spouse, children or siblings).

This approach presented the opportunity to access the impacts of the family and

different familial relationships in family firms. Meanwhile, in Paper III, this allowed us

to analyse the role of present and past familial relationships on the survival and growth

of new entrants.

36

3.1.2. Identifying a family firm

In the family business literature, there is no accepted or universal definition of a family

business (Chua, Chrisman, & Sharma, 1999; Miller et al., 2007; Westhead & Cowling,

1996). While many researchers have tried to offer satisfactory definitions, there is still

no widely accepted definition (Chrisman, Chua, & Sharma, 2005). However, the

involvement of the family in the management and ownership structure of the firm is

unique in the family firm definition (Bird & Wennberg, 2014; Sciascia, Mazzola,

Astrachan, & Pieper, 2012). Reviewing current trends in the family firm literature,

Chrisman et al. (2005) identified two approaches to defining the family firm: the

component-of-involvement approach (or input-based), and the essence approach (or

output-based). The component-of-involvement approach is based implicitly on the

belief that family involvement is sufficient to make a firm a family business whilst the

essence approach, on the other hand, is based on the belief that family involvement

is only a necessary condition. According to Kraiczy (2013), following the components-

of-involvement approach, a firm can be defined as a family firm when (1) a family or a

family member is the firm owner, (2) the firm is family-managed, or (3) the firm is

controlled by a family. And with the essence approach, family involvement must affect

(1) the strategy of the firm, (2) the vision and intention to maintain control and hand

the firm over to the next generation, (3) the firm’s behaviours, and (4) distinctive

familiness. As these two approaches of identifying a family firm are different in nature

and purpose, in the present thesis we used the input-based approach to define a

family firm as a firm (1) having two or more employees who belong to the same family

as the firm owner or entrepreneur, (2) having at least one family member in a

management position, and (3) that serves as the family members’ main source of

income (see, for example Bird, 2014; Bird & Wennberg, 2014; Miller et al., 2008;

Sciascia et al., 2012 for similar approaches). Nonetheless, though the data do not

readily avail the essence-approach effect of the family in the definition of a family firm,

it is possible to speculate that the adopted definition of a family firm based on the

component-of-involvement approach implicitly accounts for the family impact or

influence on the firm (essence approach). Thus, if a family owns and manages a firm,

it is not spurious to expect that the family may be likely to affect the strategy and vision

of the firm and the intention to maintain control and hand the firm over to the next

generation (especially when it is a small business).

3.1.3. Defining entrepreneurial capital (EC)

Unlike Aldrich et al. (1998), who measured or identified EC through several qualitative

questions, the nature of the ASTRID database allows a definition based on binary

outcome. To define EC, we first identified the parents of the entrepreneurs or firm

owners in the sample and traced them from the 1970s, which was as far as the data

would allow. Second, we checked whether any of the parents were entrepreneurs or

firm owners. We identified the self-employed parent(s) from the occupational code in

the sampled firm. Third, with these self-employed parents, we used stricter factors to

37

identify self-employed parent(s), who we argue may offer or provide EC to their

children (or may engage in entrepreneurial relationships that can influence their

children’s future entrepreneurial endeavours). First, the parent(s) must have been

self-employed for a minimum of three years, and second, they must have at least one

employee. The major reason for these stricter definitions is to avoid the selection of

solitary workplaces, where exchanges of knowledge do not take place. Whereas

Aldrich et al. (1998) identified that not having been born to self-employed parents did

not constitute a property barrier, we argue that the sociological processes that take

place between self-employed parent(s) and their children can constitute a resource in

itself (some form of entrepreneurial spillovers) (Lindquist, Sol, & Van Praag, 2015) for

the entrepreneurs’ labour market outcomes. Based on the two binary variables (family

firm and EC), four firm classifications were developed.

Table 1: Firm classifications based on firm type and EC

Firm type/EC Yes EC No EC

Family firm Family firm with EC - Family firms where the

owner has/had self-

employed parent(s)

Family firm without EC - Family firms where the

owner does not/did not

have self-employed

parent(s)

Non-family firm Non-family firm with EC - Non-family firms where

the owner has/had self-

employed parent(s)

Non-family firm without EC - Non-family firms where the

owner does not/did not

have self-employed

parent(s)

3.1.4. Limitations of the database

The ASTRID database has a major limitation related to this type of micro-level analysis.

The identification of family members is based on the family identification code, which

is linked to one’s parents or grandparents. In the database, family members are

identified in chains using the parents or grandparents as pointers (either alive or dead

– which implies that the family register contains records of both dead and living family

members, especially grandparents and parents, for the purposes of identifying family

chain or history). People connected to the same parents are recorded as siblings. The

chain is broken when parents or grandparents are missing in the register (e.g. parents

registered outside Sweden). This potentially underestimates an undisclosed number

concerning family co-occurrence across firms and regions. Despite the longitudinal

nature of the database, it has limitations in historical coverage, and some of the data

covering family members are missing. From this position, it is difficult to conduct

proper longitudinal studies in this respect. For instance, the parents or grandparents

of current older workers and immigrants are missing in the data; this is likely to affect

the density of family co-occurrence in a firm and, by extension, in the region.

38

3.2. Methodological comments

The three papers making up this thesis draw on the critical realist methodology, with

strong abstraction and concrete investigations (Bhaskar, 1978; Collier, 1994; Sayer,

1981; Yeung, 1997b). Each paper started by first reviewing existing related scholarly

studies in economic geography and related fields, like family and family business

studies (abstraction investigation). The literature review continued in an iterative

manner until theoretical saturation had been reached (when new evidence stopped

being obtained). This process helped in the identification of research gaps and the

formulation of the relevant research questions, as well as in placing each paper within

a specific literature(s). The abstraction investigation facilitated the creation of a

conceptual basis, which later assisted in the interpretation of the findings from

empirical analyses (concrete investigation). Guided by the assumption that there is no

fundamental difference between methods applied on data (Sayer, 1992; Yeung,

1997b), some of the results were methodologically validated on related and different

facets of the phenomenon under investigation (methodological and data

triangulation). The results were treated as complementary rather than contradictory.

3.3. Method

3.3.1. Data and empirical model

Even though the data for the three papers are from the same ASTRID database, the

analyses are based on different samples and time periods (see Table 1 for a summary).

The sampled firms (in Papers I-III) and time periods were driven by the research

questions, and consequently, have implications for the results. The sampled firms are

only privately-owned single-plant SMEs with more than one employee. Firms with

more than one employee were used to exclude one-man businesses, for which the

effects of family relations cannot be directly verified. SMEs were used in the analyses

because it is reasonably easy to identify a proxy firm owner or entrepreneur in the

ASTRID database based on the occupational status of either self-employed or regular

employee. This is barely possible in the very large firms. Public firms were excluded

from the analyses as they possess certain characteristics that are not conditioned by

the free market, which makes it difficult to study them, especially in matters

concerning firm performance. Firms without identification, industrial or regional codes

were excluded from the analyses. Firms without performance indicators (value-added

and Företagens och arbetsställenas dynamik (FAD code)) were excluded as well. The

unit of analysis in Paper I was firms between 1995 and 2010; in Paper II, firms between

2002 and 2012; and in Paper III, all start-ups in 2002, followed until 2012. These time

periods cover one major recovery phase of the real estate and financial crisis in the

early 1990s, and the latest global financial crisis in 2008. In light of this, it was

informative to explore family hiring vis-à-vis hiring based on meritocracy and how

family co-occurrence affects performance, controlling for these time periods.

39

For the empirical models, in Paper I we employed ordinary least squares regression

(OLS) (as well as in Paper III, for the growth model) as the main empirical strategy and

fixed effects regression (FE) for methodological triangulation (or robustness check in

this case). The panel nature of the data makes the triangulation technique

complementary to the OLS model. Moreover, because in Paper II we were concerned

about the within effects of entrepreneurial family relationships, we used the FE model.

The shortfall of FE is that it does not account for the between effects. In Paper III, we

used event-history analysis to analyse the relationship between family firms and EC.

We used a common analytical technique for event-history graphical analysis: a Kaplan-

Meier (KM) survival analysis as an explorative tool and a Cox proportional hazards

model as a measure of effects and strength. KM analysis explains the ratio of firms

that exit over firms at risk multiplied by time. Because the event (exit) is recorded in

discrete time in the ASTRID database (the year in which the firm exited), it is difficult

to know the exact time an event occurred. In the analysis, firms that survived at the

end of every observed period are treated as right-censored observations (Klepper,

2007). Since a KM analysis only offers the visualization of univariate or multivariate

curves, which lack statistical strength and significance of the relationship, a Cox

proportional hazards regression was introduced. Although the Cox proportional

hazards model restricts control over time, it is the most appropriate for firm-level

survival analysis in which the general trend tends towards a naturally decreasing

cumulative hazard over time.

3.3.2. Measuring performance

Although non-economic goals are important measures of performance, especially in

family firms (e.g. Basco, 2017; Chrisman, Chua, & Zahra, 2003), most empirical studies

on the performance of the family and family firms have primarily dealt with economic

performance. With this in mind, the discussion in this section is delimited accordingly

(Chrisman et al., 2005). The effects of family co-occurrence on firm performance can

be measured in many ways (Richard, Devinney, Yip, & Johnson, 2009). Theoretically,

family co-occurrence has been linked to different facets of the firm (e.g. learning

system, firm’s social capital, transaction and agency costs, etc.) that affect the firm’s

effectiveness (survival), performance (productivity), and growth (employment). For

instance, the effects of learning in the firm can be measured in many ways. Since

learning involves the acquisition of specific and general knowledge, it manifests itself

through the cognition of employees (McGrath, 2001), changes in cognition and

behaviours (Argote & Miron-spektor, 2011) and changes in knowledge embedded in

routines (Levitt & March, 1988). Furthermore, the effects of localized learning

manifest themselves in the characteristics of an organization’s products and services

(Helfat & Raubitschek, 2000) or its patent stock (Alcácer & Gittelman, 2006), as well

as in changes in the characteristics of performance (productivity), such as its accuracy

or speed (Argote & Epple, 1990).

40

In Papers I and II we defined firm performance as labour productivity, measured as per

capita value added. Labour productivity has been used as a performance measure in

many other studies (e.g. Boschma et al., 2009; Eriksson, 2011; Östbring & Lindgren,

2013). Productivity is a more straightforward measure of industrial output (Rigby &

Essletzbichler, 2002) than other measures such as patents and citations, which exclude

large parts of the economy. Moreover, productivity is a key measure of firm efficiency

(Palia & Lichtenberg, 1999). Labour productivity was estimated by compensating for

the effects of inflation/deflation. Log values of labour productivity were used in the

analyses to control for skewness in the data. In Paper III, we defined firm performance

as the rate of survival and employment growth. Studies have shown that family

ownership and control affect firm survival and employment growth (Bassanini et al.,

2013; Lee, 2006). Whereas survival may reflect the efficiency and effectiveness of the

firm, employment growth may reflect not only the capacity of the firm in terms of

human capital but also regional capacity in certain knowledge bases. We measured

growth as the annual absolute change in employment (Backman & Palmberg, 2015).

The natural log of the values was used in the models to control for skewness. Likewise,

survival as a measure of firm performance is measured using a categorical variable

that captures the existence of the firm. Survival and financial performance outcome

may be closely related, as mergers and acquisitions (M&A) may suggest higher

performance than bankruptcy, especially the acquisition of smaller firms (Richard et

al., 2009). However, M&A can also suggest a loss of control and ownership by the

owning family. Since the ASTRID database does not provide such detailed information

on how the organizational structure within firms changes in relation to either a merger

or an acquisition, M&A were excluded from the survival analyses.

41

Tab

le 2

: Su

mm

ary

of

the

rese

arch

des

ign

of

the

thre

e p

aper

s

Elem

ents

P

aper

I P

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II

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To

an

alys

e th

e ef

fect

s o

f fa

mily

mem

ber

s’

pre

sen

ce o

n f

irm

per

form

ance

To

anal

yse

th

e m

od

erat

ing

effe

cts

of

dif

fere

nt

fam

ilial

re

lati

on

ship

s o

n

skill

vari

ety

on

fir

m p

erfo

rman

ce

To a

nal

yse

the

effe

cts

of

entr

ep

ren

euri

al

cap

ital

on

fir

m s

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an

d g

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42

3.4. The Swedish labour market in context

In Sweden, there are 290 municipalities, which are responsible for a large proportion

of local services, including schools, emergency services, and physical planning. The

municipalities in the north cover large areas of sparsely populated land. The

municipalities are further classified into 72 functional labour market regions, often

referred to as FA regions (see Figure 1A, highlight on the 3 metropolitan regions). The

FA regions normally consist of four to five municipalities, sometimes more (Johansson,

Klaesson, & Olsson, 2002), and constitute integrated housing and labour market areas

where most people can find both a place to live and a place to work. The regions are

grouped together based on the intensity of the commuting flows between

municipalities. The average commuting time is 8-15 minutes within a municipality, 20-

45 within an FA region, and longer than 45 minutes for extra-regional time distance

(Johansson et al., 2002; Johansson, Klaesson, & Olsson, 2003). An overwhelmingly

large share of commuting takes place within the FA regions, which justifies their being

classified as labour market regions and clusters in some form (Johansson et al., 2003).

Most of the large FA regions in terms of employment and number of economic

activities are located in central and southern Sweden, whilst those with large land

areas are found in northern Sweden (see Figure 1B), often most of these FA regions

have the highest per capita productivity (see Figure 1D). Even though Figure 1B and

1D show similarities in the spatial pattern of employment and productivity per capita,

some mid-Sweden regions characterized by moderate employment levels show low

per capita productivity (e.g. Mora, Malung, Torsby, Söderhamn, and Hudikvall) and

some regions in the north that are characterized by low employment show high levels

of per capita productivity (e.g. Luleå, Dorotea, Vilhelmina, Åsele, and Lycksele). Figure

1C does not show north-south spatial pattern of family co-occurrence as Figure 1B

shows for employment, however, it shows relatively higher share of family co-

occurrence in smaller regions across the entire Swedish economy (e.g. Ljusdal,

Harjedalen, Vansbro, Ludvika, Värnamo, Vetlanda, Arvidsjaur, Överkalix, Övertorneå,

and Haparanda). In other words, larger FA regions are characterized by relatively low

share of family co-occurrence.

The Swedish labour market is characterized by active labour policies (Bornhäll,

Daunfeldt, & Rudholm, 2017), safer workplace environments, and the role of workers’

unions. The employment policy, such as the last-in-first-out principle (Skedinger,

2010), implies that in cases of redundancies, firms must dismiss the last-hired

employee first. This may to some extent keep firms from hiring more labour, especially

during economic difficulty, as it may be expensive to revoke one bad recruitment

decision. A reform of the employment protection legislation in 2001 made it possible

for firms with less than eleven employees to exempt two of the employees from the

last-in-first-out principle. The implication is that, while the last-in-first-out policy may

reduce hiring, it also suggests fewer dismissals during a recession but also fewer hires

during recovery, especially for smaller firms. Furthermore, employers’ associations

43

and unions negotiate workers’ minimum wages, layoffs, social security, holidays, etc.

through collective agreements; this means that the government has little involvement

in such labour market issues. In recent years, changes on the Swedish labour market

have brought about changes in the composition of the labour force (Håkanson, 2014).

Observable changes on the Swedish labour market since the 1990s include economic

reform policies and demographic developments. These changes have contributed to

increased percentages of several groups of people on the labour market (i.e. persons

with weaker labour market attachment, like younger and older people and

immigrants). Swedish labour laws allow for a meritocratic style of hiring; however, not

in private sector firms, where family member hiring can be intense.

Figure 1: (A) Swedish FA regions with the 3 metropolitan regions selected; (B) number employees (thousands); (C) family co-occurrence (share), and (D) productivity per capita (hundreds), quartile are shown here (data on firms with maximum of 50 employees, 1995-2010)

44

In a survey, Emling (2000) found that the share of family firms among private firms

with Swedish owners accounted for about 55% in 1999. Bjuggren et al. (2011) also

found that 65% of privately-owned firms in 1999 with 20% voting rights were family

firms. This clearly indicates that family firms constitute a greater portion of the

Swedish economy, which makes the family and family firms more than a peripheral

topic. Family firms account for about one-fourth of total employment and one-fifth of

GDP (Bjuggren et al., 2011). Swedish family firms are relatively active in various sectors

of the economy, but are highly represented in sectors like the agriculture and forestry

industry (90%), retail (62%) and manufacturing (61%), and maintain a higher share in

rural areas (Emling, 2000). The abolishment of the inheritance and gift tax in 2004 has

helped families pass on family firms to the next generations. In the Swedish context, it

is the norm that family members hold key positions in the management of the family

firm. Over 90% of family firms have family members as company leaders (Emling,

2000). The business culture among Swedish family firms is stronger, sustainable over

a longer period of time, and more noticeable and describable for people both within

and outside the business (Hall, Melin, & Nordqvist, 2001). This is common among

SMEs, where ownership is often concentrated in one family or individual.

Finally, since Sweden usually is characterized by having weak family ties compared to

other northern European economies (Alesina & Giuliano, 2010), Sweden makes an

interesting case in two main regards. First, this thesis will be able to depict whether

this assumption of weak family relation actually is true. Second, if indeed family

relations do play a significant role for firm performance in Sweden, it is likely that these

relationships also are relevant in other countries where family relationships are argued

to be stronger. Therefore, analysing the role of family ties on firm performance in

Sweden allows for wider comparison.

3.5. Ethical considerations regarding register data

Ethical considerations in geographic research are critical (Griffith, 2008), and

permeate various stages of the research (i.e. design of the study, data collection,

analysis, and communication of results). Ethical considerations for quantitative

methodologies using register data have long been an issue in academia (Panter &

Sterba, 2011), but have received little attention. Ethical considerations for micro-data

are mainly concerned with complying with laws and standards concerning issues such

as data protection, confidentiality and security (Griffith, 2008). To uphold these ethical

standards, first, we started every paper by applying for the data with specific variables

from the Department of Geography and Economic History. This process ensures that

the variables or attributes that are made available are only those that are correct and

necessary for the research. Second, to ensure confidentiality, the firms and employees

included in the data are identified by workplace and employment identity codes,

respectively. This avoids direct identifiers like specific names and addresses. This is

important, as family relationships constitute a highly sensitive and important topic in

society. Finally, due to the sensitive nature of the data, they are stored and used on

45

Internet-free computers in a secured research laboratory. This means that the

analyses and results are secured from unapproved users on the Internet.

4. SUMMARY OF PAPERS

Paper I Social proximity and firm performance: the importance of family member ties in workplaces

In Paper I, we analysed the role of family co-occurrence across different labour market

regions and industries. The argument in this paper is based on the claim that social

relations between individuals in a firm are beneficial for the exchange of tacit

knowledge (Boschma, 2005; Nonaka, 1994; Nonaka & Von Krogh, 2009) and hence

firm performance. This is a process that is hardly possible to trade on the market

(Maskell & Malmberg, 1999a, 1999b). The literature on regional learning and

organizational learning has argued that proximity, in the form of social relations,

experiences, identity in language, norms and mutual trust, can easily enhance the

transfer and conversion of knowledge (Boschma, 2005; Nonaka, 1994).

This study comes as a significant contribution to the literature on proximity dimensions

at a time when social proximity in the sense of economic geography has come from

the analysis of former co-workers and professional acquaintances. On the whole, while

one strand of the literature argues that social proximity may enhance learning and

performance (Breschi & Lissoni, 2001), another argues that social proximity in any

form is less important in specialized regions (Gordon & McCann, 2000). These findings

are not contradictory, but rather exist in different contexts (or measurements) of

social proximity. In Paper I, we examined the impact of social proximity in the form of

family co-occurrence on firm performance, while considering how this effect differs

across agglomeration types, firm sizes, and firms with higher degrees of human capital.

We expect the effects of family co-occurrence on firm performance to vary across

space and type of firms. This is anticipated because prior studies have shown that firms

operating in larger agglomerations benefit from knowledge spillovers from large pools

of skilled labour and increased efficiency in labour market matching (Glaeser, 1999;

Overman & Puga, 2010), and therefore social proximity in the form of family relations

may have a subordinate role, unlike in smaller regions.

To test this, geo-referenced longitudinal employer-employee micro-data were used.

The analyses included privately owned firms in Sweden between 1995 and 2010, with

a maximum 50 employees in 1995. We analysed the impacts of family co-occurrence

on firm performance, measuring firm performance as the per capita deflated value

added (labour productivity). A simple OLS regression, weighted by employment size

with year, region and sector fixed effects, was used for the analyses. In addition, a

fixed-effect regression was also included in the model to determine the robustness of

the effects of family co-occurrence on firm performance.

46

The results in Paper I show that there is a higher prevalence or co-occurrence of family

members across firms in smaller regions and industries with low entry requirements,

where hiring is predominantly based on social contacts. This result confirms the notion

that because larger regions are characterized by agglomeration externalities, relying

on family networks as a means of hiring may be inefficient. In addition, across all

regions and industries, the results show a gradually diminishing rate in the proportion

of family hiring or co-occurrence over time. The analyses further indicate that family

co-occurrence positively affects firm performance. The results further show that the

effects of family co-occurrence on labour productivity are even positive and significant

in non-family firms (where there may often be a small proportion of family co-

occurrence). Finally, and more importantly, the results indicate that family co-

occurrence chiefly affects firm performance in specialized regions, contrary to the

argument by Gordon and McCann (2000).

In light of these results, Paper I suggests that the family represents an important factor

of production that can explain the contemporary differences in employment and firm

performance across regions and industries, even though its relevance has been

downplayed in economic geography over the years.

Paper II Familial relationships and firm performance: the impact of entrepreneurial family relationships

In Paper II, we analysed the context-dependent nature of family relationships and how

these relationships moderate the effects of skill variety on firm performance. The idea

that human capital is a superior factor of production has been highlighted using the

role of skill variety, which represents cognitive distance and the insight that it should

be neither too great nor too small (Boschma et al., 2009). However, there is divergence

in the existing empirical works on skill variety. Boschma et al. (2009) found related skill

inflows to be beneficial for productivity, whereas unrelated skill inflows were found to

positively impact productivity in capital-intensive industries in Sweden (Östbring &

Lindgren, 2013). Results from the Copenhagen region show that related skill inflows

are detrimental to the productivity of Danish firms (Timmermans & Boschma, 2014).

To fully understand this, we argue that it would be prudent to combine different

resources within the firm since local generation of knowledge is determined by the

combinative capabilities of the firm (Boschma, 2005; Kogut & Zander, 1992). This claim

is completely entrenched in the regional learning literature discussing the relationship

between proximity dimensions and learning (Shaw & Gilly, 2000). Family relation may

be an important contingency in shaping the economic effect of skill variety on firm

performance. While the family may offer ready employment for family firms (Birley,

Ng, & Godfrey, 1999), it is also an important source of resources for the entrepreneur

(Arregle et al., 2015). Though family co-occurrence affects firm performance (Cruz,

Justo, & De Castro, 2012), we still lack sufficient knowledge about which particular

family relation is the most important for firm performance, as family relations are

47

regarded as a set of nested circles reflecting a hierarchy of relationships (Aldrich &

Cliff, 2003; Cantor, 1979). Consequently, in Paper II, we argue that different family

relations may imply different stocks of social and human capital potential for

enhancing or impeding localized learning and performance.

To test this, we used longitudinal micro-data on privately owned firms between 2002

and 2012, with a maximum of 50 employees in 2002. Using the entrepreneur as a

pointer, we connected his or her family members in the firm. (Children, partner,

siblings). With this information, we examined the impacts and interplay between

entrepreneurial family relationships and formal skill variety on firm performance,

measuring firm performance as labour productivity, expressed as the per capita

deflated value added. For the empirical analyses, FE models were applied, weighted

by employment size and with year, region and sector fixed effects to control for

unobserved heterogeneity.

The findings indicate that family relationships involving children and/or spouse in the

firm are more likely than any other family constellations to positively and significantly

affect labour productivity. Moreover, the analyses showed no evidence of sibling

relationships influencing productivity. While the family is argued to be an important

source of capital, it appears that this is only the case when it involves children and/or

spousal relationships. The findings support the suggestion that family firms are not

homogeneous in terms of family co-occurrence and commitment to the firm (Melin &

Nordqvist, 2007), but rather comprise several forms of family relationships with

different levels of ties, which consequently affect the economic outcomes (Wiklund et

al., 2013). Furthermore, the results indicate that family relationships involving children

and/or spouse abate the negative effects of skill similarities and differences on labour

productivity. Consequently, entrepreneur-spouse relations in the firm positively affect

productivity at every level of similarity and/or unrelatedness in formal education. The

results corroborate the argument that learning processes can take place between

cognitively distant economic agents who are strongly socially related (Huber, 2012).

In conclusion, Paper II makes a strong case for the literature on why some employers

may be more selective when hiring, relying more on close family members, aware that

this is less expensive but also cognizant that there is a social dimension between

related variety and firm performance.

Paper III Family firm and entrepreneurial capital: the importance of entrepreneurial capital for firm survival and growth

In Paper III, we analysed the effects of current family relations (family firm) and past

family relations (EC) on the survival and growth of new entrants, taking into account

the regional context and the effects of the 2008 global financial crisis. There are

persistent regional differences in job creation and growth, as many peripheral regions

in the most advanced economies have struggled with the restructuring of the

48

manufacturing sectors. These differences have been attributed to the processes of

firm selection and agglomeration economies (Combes et al., 2012). This strand of

literature suggests that firms and workers are on average more productive in

metropolitan regions, which has contributed to an uneven regional development

(Combes et al., 2012; Glaeser & Maré, 2001). Still, there are also numerous exceptions

to this dominating picture, as social capital is often attributed to the resilience of

peripheral regions. Johannisson et al. (2007), for example, argue that family and

tradition jointly construct shared values that guide firms in the prosperous Gnosjö

region in Sweden.

However, the family and EC are often neglected factors in the empirical literature. EC

represents the entrepreneurial practices and experiences inherited from self-

employed parents (Aldrich et al., 1998). We argue that the family and EC may affect

the staying power and growth of firms, especially in rural regions where the family and

family firms are deeply rooted. We test for the relationship between family firms and

EC not because family firms constitute a bulk proportion of firms in the regional and

national economies (Chang et al., 2008), but because they are also important actors

in the regional and national development framework (Basco, 2015). This study aims to

bridge the disconnection between family firms’ survival and job creation in regional

development literature by emphasizing the role of EC.

For the analyses, we employed longitudinal employer-employee matched micro-data

of privately owned start-ups in 2002 with a maximum of 50 employees and followed

them until 2012. Considering the nature of the data, we defined a family firm as one

having two or more employees belonging to the same family as the firm owner, having

a family member of the firm owner in a management position, and serving as the main

source of income for the family members (e.g. Sciascia et al., 2012). A firm has EC if

the parent(s) of the entrepreneur were self-employed. We employed a Cox

proportional hazards model for the survival model and an OLS model for the growth

model. Together with a group of control variables, the effects of current and past

family relations on the survival and growth of new entrants were determined.

The results indicate that although family firms are somehow more resilient than non-

family firms, this effect is confounded by EC even when other co-determinants of firm

survival are controlled for. The implication is that it is not family firms per se that are

more resilient but rather those with entrepreneurial experiences, or EC, from self-

employed parents. This finding is contrary to what has previously been reported about

the resilience of family firms. Moreover, the effect is highly predominant in rural or

smaller regions. Additionally, the results show that family firms grow more than non-

family firms; however, the sample could not identify any clear regional effects of the

role of the family firm in job creation. In conclusion, Paper III makes a strong

contribution to the literature on regional development and the resilience of family

firms by arguing that current and past family relations explain different facets of

49

regional development. This finding should pave the way for further empirical studies

on the resilience of family firms in relation to the role of EC.

5. CONCLUDING DISCUSSIONS

This section of the thesis discusses the implications of the major findings from the

three papers in relation to existing theory and earlier findings. This section further

discusses the implications of the findings for policy planning, regional development,

and future studies.

5.1. Findings and discussions

The thesis set out to investigate three main research questions linking economic

geography and family business studies. The research questions are reiterated below

for the purposes of following the discussions:

1. What are the effects of family co-occurrence on firm performance, and how

prevalent is family co-occurrence across different regions? (Paper I)

2. What are the impacts of entrepreneurial family relationships on firm

performance, and how do they interplay with in-house skill variety affect firm

performance? (Paper II)

3. What are the effects of entrepreneurial capital on the survival and growth of

family firms? (Paper III)

In the literature on proximity dimensions and firm performance, the importance and

roles of cognitive and geographical proximity have been extensively highlighted (e.g.

Abramovsky & Simpson, 2011; Boschma, 2005; Boschma et al., 2009; McCann & Folta,

2008; Ponds et al., 2010; Timmermans & Boschma, 2014). Evidence on geographical

proximity indicates that being spatially close to other economic agents facilitates the

development of social capital and cooperation. These factors are difficult to trade

through the market but important for firm performance. The literature on proximity

dimensions and firm performance also indicates that for economic agents to learn and

create knowledge, their absorptive capacities must be complementary to facilitate the

easy absorption, interpretation, and evaluation of economic issues. Howells (2002)

suggests that geographical proximity may play only a subtle role in influencing

collaboration and the development of social capital. The implication is that

geographical proximity in itself is neither a prerequisite nor a sufficient condition for

learning processes or knowledge exchanges to take place. Although social proximity

(e.g. family relations or co-occurrence) has been argued to enhance learning processes

and collaboration within the firm, it has received little attention in the empirical

literature. Despite this evidence, Ross and Sawhill (1977) suggest that the family’s

major responsibility in today’s economic setup is the creation and socialization of

children. This suggests that the family has lost its economic and production functions

of the pre-industrial era, and is thus no longer the central institution in society.

50

Moreover, the increase in family start-ups (Chang et al., 2008) has shown that social

relations and family relations are important in the analysis of the space economy (e.g.

Basco, 2015; Boschma, 2005; Gilly & Torre, 2000).

Common to the above research questions is the link between the family, the family

firm, and the regional economy. This link has often been neglected in the discussion

on regional development. Therefore, this part of the concluding discussion focuses on

how the findings in the three papers consolidate the relationship between family,

family firm and regional economy. The thesis has advanced the proximity dimension

discussions by arguing that social proximity-invoked by family relationships can partly

explain variations in regional development in relation to firm performance. Primarily,

the findings have demonstrated that family relationships are as important as any other

resources available in the firm (Papers I, II & III). The findings corroborate prior claims

that family ties facilitate trustworthiness, a resource that is difficult to trade through

the market but important for localized learning and increased firm performance

(Boschma, 2005; Maskell & Malmberg, 1999b). In the same vein, the findings have

advanced the two main streams of research within the family business field; that is,

studies comparing family and non-family firms (Paper I & II) and studies discussing the

heterogeneity within family firms (Paper III). Previous studies have distinguished

between family firms and non-family firms with arguments such as family firms have

peculiarities in distinct resource endowment (Arregle et al., 2007; Habbershon &

Williams, 1999; Sirmon & Hitt, 2003), business attachment (Berrone et al., 2012;

Gómez-Mejía et al., 2007), specific governance mechanisms (Carney, 2005), and long-

term strategic goals and business culture (Miller & Le Breton-Miller, 2005; Zahra,

Hayton, & Salvato, 2004). The present thesis has advanced this line of research with

the findings in Papers I and II. Other studies have also shown considerable differences

between family firms; not all family firms behave in the same way (Chua et al., 2012).

This thesis contributes to this line of argument with the analysis of EC in Paper III.

5.1.1. The family, the family firm and the regional economy

The findings from the study demonstrate that family co-occurrence (be it a family or

non-family firm) influence different dimensions of the firm. Although interactive

learning processes cannot be pinpointed using micro-data, it is reasonable to expect

that the socializing process between co-workers usually involves some type of

knowledge transfer. In this regard, it is assumed that family members are more likely

to learn and exchange knowledge through socialization and internalization processes,

as proposed by Nonaka (1994). This effect is clear on the impacts of family co-

occurrence on firm performance. To some extent, this shows that family ties and

supports transcend welfare arrangements by the state and defy previous findings, by

emphasizing that even in today’s Western welfare states, where globalization and

labour mobility (or migration) have resulted in structural changes in the family,

solidarity between family members remains strong and resilient (Mulder & van der

Meer, 2009).

51

At the firm level, the results indicate that family co-occurrence positively affects firm

performance. For instance, the results show that having family members in the same

firm affect the firm’s performance (labour productivity). Moreover, the results reveal

that family firms, in particular, benefit the most from having family members

employed in the firm, particularly when this involves specific family relations like

spouse and/or children. The implication of this finding is that certain specific family

relationships are more important when it comes to impacting labour productivity. It is

not surprising to see why certain specific familial relationships co-occur in family firms

and positively impact labour productivity. Obviously, this result helps explain that the

presence or co-occurrence of strong family ties in the workplace creates a positive

social work environment where family members can support each other in job-related

tasks. Such a social work environment fosters intimate personal knowledge among the

family (Haugen & Westin, 2016), which strengthens cooperation to the benefit of

everyone, as well as firm performance. This finding also shows that family firms are

particularly dominated by certain types of family members – in this case, nuclear

family members. The dominance of certain family members also shows that the hiring

and co-occurrence of family members in firms may not necessarily be an absolute act

of nepotism, but rather a process to facilitate the transfer of specific family wisdom

(Cabrera-Suárez, Saá-Pérez, & García-Almeida, 2001; Chevalier, 2001).

The analyses further indicate that, at the firm level, some familial constellations have

the potential to moderate the effects of skill variety on labour productivity. The

implication of this finding is that the effects of skill variety on labour productivity are

highly associated with, or conditioned on, the presence or co-occurrence of certain

familial relationships, especially in family firms, something previously not known. In

particular, the results show that the co-occurrence of an entrepreneur and his/her

spouse in the same firm positively impacts labour productivity but also moderates (or

abate) the negative effects of highly similar and different skills on labour productivity

(Paper II). This relationship has previously been found to negatively affect labour

productivity (e.g. Boschma et al., 2009). Entrepreneur-child relationships in the firm

also moderate the negative impacts of highly similar skills in the firm. The results imply

that spousal and/or child relationships or co-occurrence in the firm may be important

moderators of highly similar and different skill portfolios at the workplace, especially

in family firms. This finding finds support in the argument by Huber (2012), who argues

that learning processes can take place between cognitively distant economic actors

who are strongly socially related, such as a spouse or children. The results show that

different cognitive capabilities require a higher level of social proximity in order to

function. The findings in Papers I and II indicate that, although family co-occurrence in

firms may be an important source of capital for firm performance, it appears that this

is only the case when the relationship involves children and/or a spouse. These

findings further confirm the suggestion that family firms are not a homogenous set of

firms but rather comprise several forms of familial relationships with different levels

of ties, which consequently affect their economic outcomes (Melin & Nordqvist, 2007;

52

Wiklund et al., 2013). The implication of the results is that spousal and child

relationships in the firm are likely and better able, to flexibly adapt both the family and

business roles to leverage their familial relationships to generate a competitive

advantage, while sibling relationships may be burdened by or shrouded in pre-existing

conflicts.

Furthermore, at the regional level, the analysis shows a relatively higher share of

family co-occurrence among firms in smaller or rural regions compared to firms in

larger regions; however, the proportion of family employment shows continuous

reduction over time (Paper I). The reduction in the proportion of family employment

can either be the result of the general decrease in employment rates or a decrease in

family ties, as argued by others (e.g. Alesina & Giuliano, 2010, 2014). At the same time,

the regional difference in family co-occurrence in firms can be attributed to the spatial

sorting of workers and firms. The spatial sorting of workers has resulted in the

limitation of highly skilled labour in rural or smaller regions, which has occasioned the

relatively higher family co-occurrence in firms, especially family firms. Additionally,

this picture of family employment in firms in smaller regions can partly be associated

with agglomeration diseconomies and labour market matching inefficiencies in

smaller regions. As compensation for these processes, social connections (e.g. family

ties) are used as sources of employment.

Moreover, the results show how the regional context matters when it comes to the

impacts of family co-occurrence on firm performance. In particular, the results

indicate that the impact of family co-occurrence is greater in smaller and specialized

regions than in diverse and larger regions. Consequently, the findings establish that it

is mainly in smaller, specialized regions that family co-occurrence positively affects

labour productivity. This finding has implications on or may hold for, smaller regions

characterized by specialized family firms, especially in ‘one-firm regions’. The findings

justify the argument that the geographical differences in firm performance can partly

be attributed to the spatial sorting of skilled labour and economic activities, as well as

the differentiated spatial sorting of family co-occurrence or employment and family

firms. While Gordon and McCann's (2000) claim that social proximity is less relevant

in specialized regions, the findings from the present thesis indicate that social

proximity invoked by family relations is indeed associated with higher performance in

specialized regions. It is no coincidence that most specialized regions in Sweden are

smaller regions with a relatively higher proportion of family firms and family

employment. To a larger extent, the results from Papers I and II point to the conclusion

that family co-occurrence in both family and non-family firms affects different levels

of analysis (individual, firm and region). These findings should bring some clarity to the

anecdotal evidence on hiring family members and how family co-occurrence enhances

the superiority of family firms across different types of regions.

Apart from extensively showing that family co-occurrence is highly viable for analysing

firm performance and uneven regional development, this thesis has also shown the

53

effects of current familial relations (family firm) and past familial relations (EC) on the

survival and growth of new entrants. The results have shown that past familial

relationships can expose family members to entrepreneurial capabilities, which has a

higher propensity to influence strategic decisions later in entrepreneurship. The

results show that entrepreneurs who have had self-employed parents (EC) are more

likely than other entrepreneurs to engage in strategic entrepreneurial decisions that

can drive entrepreneurial successes like firm survival, even when the regional context

and times of economic instability are controlled for (Paper III). Further analyses show

that this empirical evidence is valid for firms in rural regions. A possible interpretation

of this finding is that firms in rural regions develop and rely on durable past

entrepreneurial experiences from self-employed parents to surmount the resource

shortage that often characterizes rural regions. This finding advances the claim by

Aldrich et al. (1998), who argued that EC is an incentive for entering into self-

employment. However, the findings in the present thesis suggest that EC goes beyond

being simply a resource for entering into self-employment, also serving as a resource

for the staying power of new entrants, especially in rural regions. More importantly,

the thesis has demonstrated that the resilience of family firms is confounded by EC

(past familial relations), although it has previously been reported in the literature that

family firms (current familial relations) are more resilient due to cost internalization,

etc. (e.g. Braun & Latham, 2009; Mackie, 2001). The implication is that family firms per

se are not more resilient but that it is rather firms with entrepreneurial experience

from self-employed parents (or EC) that are. Furthermore, the findings also indicate

that family firms are more likely to create more jobs than non-family firms. However,

the results show no clear regional effect on the role of family firms in relation to job

creation. The results have shown that both present and past familial relationships

influence different facets of regional economic development (firm survival and

employment growth), a finding for regional policy planning.

Finally, this thesis has shown that family co-occurrence and EC have greater levels of

spatial variation, as well as positive effects on firm performance (e.g. labour

productivity, firm survival) and regional development (e.g. employment growth).

Support for this result is found in the recent work by Holm et al. (2017), who found a

higher share of family co-occurrence or kinship density in rural regions. While their

analyses suggested and expected diversity in the workforce at the firm level to be

potentially important and to interplay with the family dimension, especially in

metropolitan regions, the current thesis found this to be true in small specialized

regions. This confirms the underpinning assumption that the family is a bundle of

diverse resources that are important for increased firm performance, but most

importantly in firms (especially in family firms) in smaller or rural regions.

5.2. Implications for theory and methodology

The findings from this thesis have implications for theory and methodology in research

within economic geography and family business studies. First, the findings suggest that

54

proximity invoked by family ties may be as relevant as any proximity dimension in the

firm. The implication is that a comprehensive conceptual understanding of what the

family is and how it develops shared values should further be developed. A

comprehensive theorization of the family and family relations has the potential to

facilitate a deeper understanding of the mechanisms that drive mutual cooperation in

the family, and the possible effect on firm performance. Second, this study has laid

the foundation for understanding more important questions relating to how past and

present family relationships can affect different economic outcomes. These questions

may broaden our knowledge regarding the scope and role of social proximity. The

present thesis also has some methodological implications. The data provided by SCB

contain unique information on the family and family linkages, which allowed for the

construction of different family co-occurrences and the identification of family firms

based on ownership and management information. This approach of accounting for

the effects of family co-occurrences on firm performance is potentially more

informative than a mere binary variable indicating whether family members co-occur

in the same firm or not. The micro-level nature of the information on the family and

family linkages enabled the construction of some key variables that allowed us to

investigate the research questions on large samples, which increased the precision

and estimation power while reducing potential selection bias. Lastly, in the empirical

analysis, we relied on panel data, which allowed us to examine differences across

observations as well as differences within observations over time, providing stronger

claims of causality. This systematic methodological approach should facilitate and

guide future attempts in this regard, especially in different regional contexts.

5.3. Implications for policy and regional development

The present findings have implications for policy planning and regional development.

First, identifying the impacts of family co-occurrence on firm performance, especially

in family firms, is a great step toward understanding how to encourage

entrepreneurship while taking into account the role of the family. These findings

should not only provide policymakers with knowledge of the role of family co-

occurrence on firm performance but also aid policymakers in understanding the

importance of social context in the lives of entrepreneurs. Second, the findings have

implications for why certain family members co-occur in some workplaces. This should

feed policymakers not only with the general rhetoric of nepotism but also with the

knowledge of which familial relationships are the most beneficial in terms of impacting

firm performance, and their trade-offs. This makes a strong case for why some

employers may be more selective when hiring (mostly in private firms), relying more

on close family members, while also being aware that this is less expensive. In this regard,

policymakers should rather see such exercises as trade-offs. Third, the thesis has

demonstrated that geography is crucial in the analysis of the role of present and past

familial relationships in relation to the survival and growth of new entrants. This is an

interesting finding that should trigger different paradigms of policy planning, since the

55

creation of an entrepreneurial ecosystem not only facilitates entry into entrepreneurship

but also enhances entrepreneurial spillovers that ensure prudent decisions and strategies

that facilitate the survival of firms, especially in smaller regions. The implication is that,

although smaller regions may not have the same capacity as larger regions to promote

entrepreneurship, firms in smaller regions are more likely to leverage EC to enhance firm

survival. Finally, whereas the findings confirm the importance of the family, it is worth

noting that disparities in family structures still exist, e.g., across Europe, and have

contributed to the differences in social and economic development. This should inform

policymakers about the need to deal with the institutional barriers related to inherited

family structures and cultures that are particularly resistant to change (Duranton et al.,

2009).

5.4. Limitations and recommendations for future research

A discussion of some caveats and suggestions for future research is warranted in this

regard. Even though the data used in this study offer several benefits in relation to

their longitudinal nature, wide coverage, and ability to capture most aspects of the

firm and the region, they are also associated with a number of limitations, all of which

present important avenues for future research. First, the measurement of the family

effect on firm performance was mainly an investigation of the co-occurrence of family

members in the same firm. The nature of the data does not allow an examination of

the mechanisms that could be at play, how these mechanisms might contribute to a

better understanding of the synergistic familial relationships, or how they influence

firm performance. Failure to understand the underlying synergistic relationships only

allowed for the use of inferences, which rely on theoretical justifications. While there

is no problem with such an approach, a fine-grained dataset that captures synergistic

family relationships would contribute to understanding why certain familial

relationships are predominant in certain family firms and regions. Second, we are

aware of the limitations posed by how EC was measured. The underlying assumption

was that self-employed parents pass on entrepreneurial abilities and capabilities to

their children through familial socialization and involvement in family firms. The data

only allowed the use of a simple binary measure of EC, which is likely to miss more

interesting aspects of the argument. Future studies in this regard may consider a wider

definition of EC. Furthermore, such measurement of EC can enhance the examination

of how it could influence M&A deals since M&A is one of the most preferred processes

for implementing a firm’s strategic goals (e.g. increasing market share). Third, firm

performance was measured in the analysis as labour productivity, survival and

employment growth because these are effective measures of firm success. Moreover,

examining the impacts of family co-occurrence on non-economic indicators would also

be of great theoretical and practical value, as family firms are driven by both economic

and non-economic goals. Finally, future studies could explore individual family

members’ labour market outcomes in terms of how being employed in a family firm

affects one’s wages, career development, satisfaction, etc. vis-à-vis family members

56

employed in non-family firms. This could bring clarity to the argument of whether

family members’ successful labour market outcomes are tied to family firms only.

5.5. Conclusions

The present thesis set out as one of the few studies to investigate the economic

importance of family co-occurrence and EC for firm performance, and the

consequences of this influence in the analysis of the economic landscape. In the

analysis of firm performance and uneven regional development, extensive attention

has been given to geographical and cognitive proximities, to the neglect of other

proximity dimensions like social proximity. Many studies have confirmed the

importance of geographical proximity on firm performance in arguments referring to,

for instance, enhancing cooperation and the development of social capital. Others

have shown the relationship between cognitive proximity and firm performance

through factors like skills, education, and experience. Moreover, though evidence

shows that social relations are important for collaboration and firm performance, little

attention has been devoted to this in the empirical literature. In an attempt to

demonstrate that social proximity can partly explain the uneven regional development

from the level of the firm, we employed a longitudinal dataset from Sweden to address

three research questions. The thesis has laid the theoretical and empirical foundations

for understanding how social proximity affects firm performance; in this case, how and

why family co-occurrence is an important resource in the setup of the firm. The

present findings suggest that, apart from the family being an important resource

within the firm setup, certain family relationships are more able to leverage their

unique attributes to invoke economic importance in similar and unrelated skills for

firm performance. Further, the analyses show that the effects of family co-occurrence

on performance are more pronounced among firms in small, specialized regions.

Finally, the analyses show that past familial relationships (EC) constitute an important

resource for firm survival, especially in rural regions. This finding suggests that family

firms per se are not more resilient but that is rather firms with entrepreneurial

experience from parents that are. However, family firms grow more than non-family

firms. Moreover, it cannot be concluded that regions characterized by higher family

co-occurrence are the most prosperous regions, but, however, the findings contribute

to the discussions on the spatial variation of firm performance.

These findings contribute to the discussion in economic geography by providing

different perspectives for understanding the mechanisms behind economic growth

and development in various regions and industries. Likewise, the analyses bring some

understanding to the consistent heterogeneity of firm performance between different

firms within the same regions and industries, by assessing the impacts of family co-

occurrence and EC. All this should offer new perspectives for explaining and

supporting why the family constitutes an important part of the firm’s production

setup, particularly in family firms and in rural or smaller regions. The findings should

challenge policymakers to consider whether it might not be imperative to encourage

57

the development and sustenance of entrepreneurial families and family firms

(Benedict, 1968). Moreover, while reflecting on the importance of the family in

relation to firm performance, we should also not lose sight of the fact that there is a

latent risk in family co-occurrence in firms: it is not a problem—until it becomes a

problem (Haugen & Westin, 2016).

6. SAMMANFATTNING PÅ SVENSKA (SUMMARY IN SWEDISH)

Bakgrund/Forskningsläget

Trots familjens centrala roll och rapporter som visar på vikten av familjetypologier för

att förstå regional utveckling i form av BNP per capita är familjens roll relativt lite

undersökt i relation till regionala skillnader i ekonomisk utveckling. Basco (2015)

argumenterar exempelvis för att studier i regional utveckling har förbisett att studera

familjens roll i relation till företagsbeteende och därmed den roll familjen spelar för

regionens ekonomiska och sociala utveckling. Den regionala utvecklingslitteraturen

visar på vikten av socialt kapital för att förstå konkurrensfördelar, medan

familjerelationers potentiella roll primärt har behandlats i fallstudier. Länken mellan

familjen och regionala socioekonomiska utfall förtjänar mer uppmärksamhet i

litteraturen då den kan erbjuda betydelsefulla insikter om varför vissa regioner har

lyckats bättre, eller har lättare för att ställa om vid kristider än andra, då det i stort sett

inte finns någon aspekt av samhället som inte är påverkad av familjen (Alesina &

Giuliano, 2014).

Med tanke på den tidigare beskrivna luckan ger denna avhandling ett bidrag till den

regionalekonomiska litteraturen genom att analysera familjens roll i företag. Mer

specifikt så undersöks hur olika konstellationer av familjerelationer på arbetsplatser

(samförekomst) och entreprenörskapital (EC) påverkar företagets konkurrensförmåga

och potential att förklara ojämn regional utveckling. Medan familjesamförekomster

innefattar familjerelationer som finns i ett företag representerar EC entreprenörens

nedärvda erfarenheter från föräldrars entreprenörskap. Analysen sker i interaktionen

mellan agglomerations och närhetsdimensionslitteraturens (’proximity’) utforskande

av relevansen av olika typer av närheter, å ena sidan, och familjeföretagslitteraturen,

å andra sidan. Denna avhandling fokuserar på den sociala dimensionen av ”närhet” –

i form av familjen, och hur sådana relationer bland många är viktiga för att förstå

geografiska olikheter i företags konkurrenskraft. Avhandlingen utgår ifrån antagandet

att familjen är en resurs som är viktig för att öka företags konkurrensförmåga,

framförallt i regioner som karaktäriseras av agglomerationsnackdelar eller regioner

som saknar de fördelar som kommer av samlokalisering av företag, vilket vanligtvis är

små regioner.

Effekten av familjesamförekomster och EC på företags konkurrensförmåga och

regional utveckling har en viktig geografisk dimension. Denna dimension har inte fått

tillräcklig uppmärksamhet inom ekonomisk geografi. Den roll familjerelationer och

58

dess samförekomst spelar påverkas av regionen, dvs. det finns en potentiell variation

i utfallet av familjerelationer beroende på kontexten. På grund av att storstadsregioner

karakteriseras av exempelvis hög agglomeration av både specialiserade och

diversifierade sektorer och arbetskraft, finns det potential för en effektivare

arbetsmarknadsmatchning mellan jobb och arbetstagare i dessa regioner. Detta

betyder att i storstadsregioner läggs mindre vikt vid nyanställningar genom

familjerelationer i jämförelse med i landsbygdsregioner där agglomerationsfördelarna

är svagare. Då landsbygdsregioner karakteriseras av problem med

arbetsmarknadsmatchning och en brist på t.ex. variation avseende kompetenser

förefaller det som att familjesamförekomst i företag möjligen är mer utbredd där.

Följaktligen påverkar geografin förekomsten av familjerelationer, men också den roll

som dessa familjeband spelar. Dessutom finns det belägg för att agglomerationer inte

är homogena utan snarare varierar i flera olika dimensioner, och att olika resurser

inom företaget påverkar konkurrensförmågan. Detta tyder på ett behov av empiriska

analyser kring effekten av familj och familjeföretag, vilket är det som denna avhandling

avser att göra.

Forskningsfrågor

För att uppnå avhandlingens syfte har tre olika men relaterade frågor analyserats: den

första analyserar förekomsten av familjesamförekomst mellan olika regioner och hur

den påverkar företags konkurrenskraft; den andra undersöker å ena sidan relationen

mellan entreprenörers familjerelationer (samförekomst av olika familjerelationer) och

olika uppsättningar av kompetenser, och å andra sidan hur dessa relationer påverkar

företags konkurrensförmåga; och den tredje undersöker effekterna av

familjerelationer (familjeföretag) och entreprenörskapital (EC) för överlevnad och

tillväxt hos nyetablerade företag.

Data och metoder

Analysen i de tre artiklarna är baserade på data från ASTRID databasen, som finns vid

Institutionen för geografi och ekonomisk historia vid Umeå universitet. I denna

datainfrastruktur kombineras flera olika register från Statistiska Centralbyrån (SCB).

Den innehåller relationell mikro-data för alla företag, arbetsplatser och individer från

1960 och framåt. Eftersom ASTRID data sträcker sig över en längre tid möjliggörs

longitudinella studier av företag, sektorer och regioner i den svenska ekonomin. Varje

företag och anställd i databasen har en unik identifieringskod, vilken dessutom gör det

möjligt att länka individer och arbetsplatser. ASTRID innehåller även longitudinella

familjeregister som innehåller information om varje familj i Sverige. Familjeregistret

innehåller information om varje individs eventuella partner och biologiska

familjemedlemmar – föräldrar, barn, syskon, etc. (ingen distinktion görs mellan

biologiska och adopterade barn). Det som möjliggör dessa studier är att

familjeregistret dessutom omfattar unika identifikationsnummer för varje familj, samt

upplysningar om vilken typ av familjerelation det handlar om, och om dessa är länkade

59

till respektive arbetsplats för varje enskild familjemedlem. Familjens och

arbetsplatsens identifikationsnummer möjliggör identifiering av familjesamförekomst

i en och samma arbetsplats eller företag.

I artikel I och II definieras företags konkurrenskraft som arbetsproduktivitet, mätt som

förädlingsvärde per capita. Produktivitet är ett mera rättframt mått av

industriproduktion än andra mått som mäter patent och citeringar, vilket exkluderar

stora delar av ekonomin. Arbetsproduktiviteten har estimerats med hänsyn tagen till

inflation/deflation. Loggade värden av arbetsproduktiviteten har använts för att

kontrollera för snedfördelning i data. I artikel III definieras företags

konkurrensförmåga som graden av överlevnad och sysselsättningstillväxt. Studier har

visat att familjeägande och kontroll påverkar företags förmåga att överleva och dess

sysselsättningstillväxt. Medan överlevnad kan anses reflektera företagets effektivitet,

så är sysselsättningstillväxten kanske inte bara ett mått på företagets kapacitet

gällande humankapital, utan även den regionala kapaciteten i specifika kunskapsbaser.

Tillväxt mäts som årlig sysselsättningsförändring i absoluta tal. Den naturliga

logaritmen av värdena har använts i modellerna för att kontrollera för snedfördelning.

Analysenheten i artikel I är observationer av företag mellan 1995 och 2010; i artikel II,

företag mellan 2002 och 2012; och i artikel III, alla nyetableringar 2002, som följs upp

till 2012. Dessa tidsperioder rymmer en stor återhämtningsperiod av bostads- och

finansmarknaden under tidigt 1990-tal, och den senaste globala finanskrisen 2008. I

ljuset av detta är det informativt att undersöka familjeanställning gentemot

anställning baserad på meritokrati och hur familjesamförekomst påverkar

konkurrenskraften (kontrollerat för dessa tidsperioder). För de empiriska modellerna

i artikel I används en OLS-regression (såväl som i artikel III) som den huvudsakliga

empiriska strategin och fixed effects (FE) som robusthetskontroll. Att vi har paneldata

innebär att FE-modellen kompletterar OLS-modellen. I artikel II används FE-modellen.

I artikel III används event history-analys för att analysera relationen mellan

familjeföretag och EC. Vi använder Kaplan-Meier (KM) överlevnadsanalys för att

utforska sambandet och en Cox proportional hazards-modell som ett mått på effekter

och styrkan.

Resultat

Resultaten i artikel I visar att det finns en högre andel samförekomst av

familjemedlemmar i företag i mindre regioner och sektorer med låga inträdeskrav, där

anställning primärt är baserad på sociala kontakter. Detta resultat bekräftar

uppfattningen att större regioner karakteriseras av överspillningsfaktorer som

kommer av agglomerationer av företag och människor, vilket innebär att det kan vara

ineffektivt att förlita sig på familjenätverk som anställningsmedel. Oavsett region och

sektor visar resultaten att med tiden minskar andelen familjeanställningar och

familjesamförekomster successivt. Analysen indikerar dessutom att

familjesamförekomster påverkar företags konkurrenskraft positivt. Resultaten visar

60

också att effekten av familjesamförekomst på arbetsproduktiviteten till och med är

positiv och signifikant i icke-familjeföretag (där det ofta kan finnas en liten andel av

familjesamförekomster). Slutligen indikerar resultaten att familjesamförekomster

främst påverkar företags konkurrenskraft i specialiserade regioner, i motsats till vad

Gordon and McCann (2000) argumenterar för.

Resultaten i artikel II indikerar att där det finns familjerelationer inom företag som

involverar barn och/eller en partner är det mer troligt med positiva och signifikanta

effekter på arbetsproduktiviteten. Vidare uppvisar resultaten inga effekter från

syskonrelationer på produktiviteten. Medan familjen anses vara en viktig källa för

kapital, verkar det som att detta bara är fallet när den inbegriper barn och/eller

partnerrelationer. Resultaten stödjer idéen att familjeföretag inte är homogena vad

gäller familjesamförekomster och deras åtagande gentemot företaget, utan istället

innefattas flera typer av familjekonstellationer, som påverkar det ekonomiska utfallet.

Vidare indikerar resultaten att familjerelationer som involverar barn och/eller partner

dämpar de negativa effekterna av likheter i kompetenser och olikheter i

arbetsproduktivitet. Således påverkar partnerrelationer till entreprenörer i företag

produktiviteten positivt oavsett nivån av likheter och/eller olikheter i den formella

utbildningen. Resultaten stödjer argumentet att lärandeprocesser kan äga rum mellan

kognitivt olika individer som är socialt nära varandra (Huber, 2012).

Resultaten i artikel 3 tyder på att det inte är familjeföretagen per se som är mer

motståndskraftiga utan att det är entreprenörserfarenheter eller EC från

egenföretagande föräldrar som spelar roll. Detta resultat går emot tidigare

rapporterade resultat om mer motståndskraftiga familjeföretag. Denna faktor har

vidare större betydelse för företag på landsbygden och i mindre regioner. Resultaten

visar också att familjeföretag växer mer än andra företag. Däremot kunde inte

identifieras några tydliga regionala effekter av familjeföretag på jobbskapande.

Sammanfattningsvis bidrar artikel III till litteraturen om regional utveckling och

motståndskraften hos familjeföretag genom att visa att nuvarande och förflutna

familjerelationer förklarar olika aspekter av regional utveckling. Denna resultat banar

förhoppningsvis väg för ytterligare empiriska studier om motståndskraften hos

familjeföretag i relation till entreprenörskapitalets roll.

Avslutande diskussion

Avhandlingens syfte är att bidra till det underteoretiserade forskningsfältet om den

ekonomiska nyttan av familjesamförekomster och EC för företags konkurrenskraft,

och de konsekvenser detta får för analysen av det ekonomiska landskapet. I analysen

av företags konkurrenskraft och ojämn regional utveckling, har stor uppmärksamhet

riktats mot geografiska och kognitiva avstånd, medan andra dimensioner såsom

sociala avstånd har åsidosatts. Många studier har bekräftat vikten av geografisk närhet

för företags konkurrenskraft i argument som refererar till exempelvis ökat samarbete

och utveckling av det sociala kapitalet. Andra har visat på relationen mellan kognitiv

61

närhet och företags konkurrenskraft genom faktorer såsom kompetenser, utbildning

och erfarenhet. Trots att det finns belägg för att sociala relationer är viktiga för att

samarbeta har väldigt lite uppmärksamhet riktats mot denna dimensionen i den

empiriska litteraturen. I ett försök att visa att den sociala närhetsdimensionen delvis

kan förklara den ojämna regionala utvecklingen utifrån ett företagsperspektiv,

använder vi longitudinella svenska data för att besvara tre forskningsfrågor. Denna

avhandling har lagt den teoretiska och empiriska grunden för att förstå hur social

närhet påverkar företags konkurrenskraft; i detta fall hur och varför

familjesamförekomster är en viktig resurs för företag. Resultaten tyder på att förutom

att familjen är en viktig resurs, så kan vissa familjerelationer kompensera för de

negativa effekterna av lika eller orelaterade kompetenser för företagets

konkurrenskraft. Analysen visar dessutom att effekten av familjesamförekomster på

konkurrenskraften är större bland företag i små specialiserade regioner. Slutligen visar

analysen att EC utgör en viktig resurs för företags överlevnad, speciellt i

landsbygdsregioner. Dessa resultat innebär att det inte är familjeföretag i sig som är

mer motståndskraftiga utan att det handlar om företag som har

entreprenörserfarenhet genom föräldrar som har varit eller är egenföretagare.

Familjeföretag växer emellertid mer än andra företag. Detta innebär att nuvarande

familjerelationer främjar tillväxt hos nyetableringar. Detta bidrar till diskussionen inom

ekonomisk geografi genom att olika perspektiv tillhandahålls för att förstå

mekanismerna bakom ekonomisk tillväxt och utveckling i olika regioner och sektorer.

Genom att bedöma effekten av familjeförekomster och EC bidrar analysen därutöver

till en förståelse för den variation vi ser i företags konkurrensförmåga mellan olika

företag i samma regioner och sektorer. Allt detta torde kunna erbjuda nya perspektiv

för att förklara och ge underlag till varför familjen utgör en viktig del av företagets

produktionsstruktur, speciellt i familjeföretag på landsbygd och i mindre regioner.

62

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Department of Geography and Economic Histroy Umeå University, SE-901 87 Umeå www.geoekhist.umu.se

Why some firms are superior performers than other firms, and why some regions are more prosperous than other regions are key questions in policy planning and research. Economic geographers and regional economists often strongly associate these questions with agglomeration economies and proximity dimensions chiefly on geographical proximity and cognitive proximity to the neglect of other proximity dimensions, such as social proximity – family relationships (or family co-occurrences). In this thesis, using a Swedish longitudinal register data, a systematic analysis of the role of family co-occurrence on firm performance and how it contributes in explaining the uneven regional development is in focus.

Department of Geography and Economic Histroy Umeå University, SE-901 87 Umeå www.geoekhist.umu.se

GERUM 2018:1 ISBN 978-91-7601-839-2 ISSN 1402-5205

Why some firms are superior performers than other firms, and why some regions are more prosperous than other regions are key questions in policy planning and research. Economic geographers and regional economists often strongly associate these questions with agglomeration economies and proximity dimensions chiefly on geographical proximity and cognitive proximity to the neglect of other proximity dimensions, such as social proximity – family relationships (or family co-occurrences). In this thesis, using a Swedish longitudinal register data, a systematic analysis of the role of family co-occurrence on firm performance and how it contributes in explaining the uneven regional development is in focus.