The influence of family ownership in the profitability of vertically integrated companies. Evidence from the Spanish agri-food industry

  1. Gallizo, José L.
  2. Moreno, Jordi
  3. Salvador, Manuel
Revista:
Spanish journal of agricultural research

ISSN: 1695-971X,  2171-9292

Año de publicación: 2019

Volumen: 17

Número: 2

Tipo: Artículo

DOI: 10.5424/SJAR/2019172-14215 DIALNET GOOGLE SCHOLAR lock_openDialnet editor

Otras publicaciones en: Spanish journal of agricultural research

Resumen

The aim of this paper is to analyse whether the family control exerts a significant influence on profitability in agri-food companies that have been vertically integrated. This assumption is based on the idea that family-owned firms better overcome the internal conflict that arises in a company by reducing transaction costs. We have analysed the determinants of the profitability and its annual increase, considering the kind of company and its sector. Our results show that family firms tend to perform better, both from an economic and a financial perspective, than their counterparts, obtaining higher levels of efficiency with lower levels of debt. These factors lead to a higher profitability of family firms mainly attributable to the reductions of costs and financial expenses. Even though efficiency and size tend to grow if the family business is also vertically integrated, its levels of financial risk and commercial credit also increase and its sales margin decreases, which cause a trend to decrease in its profitability. These trends are independent of the year and the subsector.

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The aim of this paper is to analyse whether the family control exerts a significant influence on profitability in agri-food companies that have been vertically integrated. This assumption is based on the idea that family-owned firms better overcome the internal conflict that arises in a company by reducing transaction costs. We have analysed the determinants of the profitability and its annual increase, considering the kind of company and its sector. Our results show that family firms tend to perform better, both from an economic and a financial perspective, than their counterparts, obtaining higher levels of efficiency with lower levels of debt. These factors lead to a higher profitability of family firms mainly attributable to the reductions of costs and financial expenses. Even though efficiency and size tend to grow if the family business is also vertically integrated, its levels of financial risk and commercial credit also increase and its sales margin decreases, which cause a trend to decrease in its profitability. These trends are independent of the year and the subsector. Additional keywords: integration strategy; family firms; firm performance. Abbreviations used: CI (confidence interval); EU (European Union); FF (family firms); I (integrated); IF (integrated family); INF (integrated non-family); NF (non-family); NI (non-integrated); NIF (non-integrated family); NINF (non-integrated non-family); ROA (return on assets). Authors’ contributions: Conception and design of the study: JLG. Data recollection and preparation: JM. Statistical analysis: MS. All authors interpreted the results, and wrote, read and approved the final manuscript. Citation: Gallizo, J. L.; Moreno, J.; Salvador, M. (2019). The influence of family ownership in the profitability of vertically integrated companies. Evidence from the Spanish agri-food industry. Spanish Journal of Agricultural Research, Volume 17, Issue 2, e0108. https://doi.org/10.5424/sjar/2019172-14215 Supplementary material (Table S1 and Figs. S1-S4) accompanies the paper on SJAR’s website. Received: 04 Nov 2018. Accepted: 18 Jun 2019. Copyright © 2019 INIA. This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International (CC-by 4.0) License. Funding: Spanish Ministry of Economy and Competitiveness (Project ECO2016-79392-P); Institute of Social and Territorial Development (INDEST). Competing interests: The authors have declared that no competing interests exist. Correspondence should be addressed to José L. Gallizo: gallizo@aegern.udl.cat

Financiadores

    • ECO2016-79392-P

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