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This is an empirical study of family firm size, as measured by the number of employees, and the relationship of a firm's size to a variety of management activities, styles, and characteristics. A statistical analysis of data drawn from 159 American family businesses indicates significant differences by size with regard to the number of nonfamily members in top management, use of outside advisors, time spent engaged in strategic management, use of sophisticated methods of financial management, proportion of women family members involved in firm management, and level of conflict between family members. Implications are offered for family firm ownermanagers, for those who assist such businesses, and for researchers in the field of family business.
In almost all countries, families are central to the ownership and management of the majority of businesses (Dennis 2002). Within the U.S. economy, family businesses comprise an estimated 80 percent of the total 15 million businesses (Carsrud 1994; Kets de Vries 1993). They contribute more than 50 percent of the total Gross National Product (McCann, Leon-Guerrero, and Haley 1997), 50 percent of employment (Morris et al. 1997), and have higher total annual sales than nonfamily businesses (Chaganti and Schneer 1994). Furthermore, it is estimated that 35 percent of Fortune 500 firms are family owned (Carsrud 1994) and one-third of S&P 500 companies have founding families involved in management (Weber and Lavelle 2003).
Certainly an understanding of the various issues and aspects of family business are of interest to those who own and manage such companies, to those who advise and assist them, and to those who study them. Yet most of the family business literature is conceptual or involves nonquantitative research (Dyer and Sanchez 1998; Litz 1997).
Searches of the family business literature find little prior and specifically focused investigation of issues of firm size, as measured by number of employees or any other measure. Even a broader search of the literature in business and management in general generates only modest results .All of these studies were preliminary investigations, and the total set of quite mixed results underline the complexity of this basic issue. While a company's number of employees may influence managerial and firm activity and performance, considerably more research is needed before solid conclusions and meaningful implications...