Family ties and firm performance empirical evidence from East Asia

We investigate the impact of family ties on the performance of family firms in East Asia. To measure family ties, we used both objective and subjective indicators from the World Value Survey. Our findings indicate that family firms that are nurtured in a society with strong family ties tend to have better performance compared to family firms that operate in a culture with weak family ties. Furthermore, family firms that have strong familial relationships are more likely to gain a competitive advantage over nonfamily firms. Conversely, family firms with weak ties tend to underperform nonfamily firms. Our results are robust across various measures of firm performance, classifications of family firm, considerations of heteroskedasticity and endogeneity, and different econometric methods. ●We investigate how family ties as part of a country's culture influence family firm performance in East Asia.●Family firms in strong family ties cultures exhibit superior performance over those in weak ties cultures.●Strong ties family firms also outperform nonfamily firms, while weak ties underperform.●The results suggest family relationships shape performance differences between family and nonfamily firms.●Only family firms fostered in environments with strong ties gain competitive advantage.