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Do family firms care for their stakeholders? Evidence from the customer-supplier relationship

  • So Yeon Kim Yonsei University School of Business
  • S. Saeyeul Park Yonsei University School of Business
  • Hyun-Han Shin Yonsei University School of Business
We examine how the presence of family control affects the manner in which afirm collaborates with its supplier firms. We find that supplier firms that have a family firm as a major customer exhibit higher overall profitability, higher gross margin, more efficient asset management, and longer duration of the relationship than other supplier firms (without a family customer). Using the difference-in-difference approach, we confirm that our results are not driven by family firms¡¯preference for profitable suppliers to begin with. Our findings indicate that family customer firms maintain a generous and cooperative attitude in their relations with supplier firms, the behavior which is consistent with theories regarding family firms in the finance and management literature.

  • So Yeon Kim
  • S. Saeyeul Park
  • Hyun-Han Shin
We examine how the presence of family control affects the manner in which afirm collaborates with its supplier firms. We find that supplier firms that have a family firm as a major customer exhibit higher overall profitability, higher gross margin, more efficient asset management, and longer duration of the relationship than other supplier firms (without a family customer). Using the difference-in-difference approach, we confirm that our results are not driven by family firms¡¯preference for profitable suppliers to begin with. Our findings indicate that family customer firms maintain a generous and cooperative attitude in their relations with supplier firms, the behavior which is consistent with theories regarding family firms in the finance and management literature.