Comparative performance of foreign and domestic family fi rms in Czech Republic

Abstract

A number of previous studies have been focused on performance differences between multinationals and domestic firms, the same is not true for family business research. The goal of this paper is to investigate the performance differences between domestic and foreign family firms operating in Czech Republic. We hypothesize that foreign family firms outperform their Czech counterparts in terms of return on assets and labor productivity. Using the Student’s t-test for mean differences, regression analysis and matched-pair testing on the sample of 573 domestic and 154 foreign family firms, we found that foreign family firms outperform domestic family firms in profitability and labor productivity. One of the major factors explaining these performance gaps is the size and capital intensity of foreign family firms. We argue that the aspect of “foreignness” has been neglected in past family business studies dealing with performance of family firms, and that it actually makes a difference. Researchers should concern whether family firms in their research samples are wholly or partially foreignly owned or controlled.