世界银行-功能失调的家族管理：家族经营企业与管理实践的质量（英）

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PolicyResearchWorkingPaper10684

DysfunctionalFamilyManagement

Family-ManagedBusinessesandtheQualityofManagementPractices

AsifM.Islam

RobertaGatti

WORLDBANKGROUP

MiddleEastandNorthAfricaRegion

OfficeoftheChiefEconomist

January2024

PolicyResearchWorkingPaper10684

Abstract

Bettermanagedfirmsperformbetter.Existingevidencehasshownthatfamily-managedfirmshavepoorerman-agementpractices.Severalreasonshavebeenproposed.Limitingtofamilymembersreducesthetalentpoolofpotentialmanagers.Familymanagementcreatesdisincen-tivesforothertalentedworkersgiventhattheenvironmentisnotmeritocratic.Familymanagersthemselvesmaybelessmotivatedgiventhattheymaynothavetocompetefortheposition.Thisstudyscalesuptheevidencebyexploring

therelationshipbetweenfamilymanagersandmanagementpracticesforabout9,000mediumandlargefirmsacross41developingandadvancedeconomies.Thestudycontrib-utestotheliteraturebyinvestigatingseveralinternalandexternaloperatingfactorsthatattenuateoraccentuatetherelationshipbetweenfamilymanagementandthequalityofmanagementpractices.Theengagementofgovernmentsintermsofcorruptionandpoliticalconnectionsisfoundtobeinfluential.

ThispaperisaproductoftheOfficeoftheChiefEconomist,MiddleEastandNorthAfricaRegion.ItispartofalargereffortbytheWorldBanktoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebat

/prwp.The

authorsmaybecontactedataislam@.

ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.

ProducedbytheResearchSupportTeam

DysfunctionalFamilyManagement:Family-ManagedBusinessesandtheQualityofManagementPractices

AsifM.IslamandRobertaGatti

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Keywords:ManagementPractices,MiddleEastandNorthAfrica,GovernmentOwnership

JELcodes:L20,L22,L23,O12,M10,G32

1RobertaGattiistheChiefEconomistoftheMiddleEastandNorthAfricaregionattheWorldBank.AsifM.IslamisaSeniorEconomistintheChiefEconomistOfficeoftheMiddleEastandNorthAfricaattheWorldBank.The

opinionsexpressedinthispaperdonotrepresenttheviewsoftheWorldBankGroup,itsBoardofDirectors,ortheGovernmentstheyrepresent.Allerrorsandomissionsaretheauthors’responsibility.

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DysfunctionalFamilyManagement:Family-ManagedBusinessesandtheQualityofManagementPractices

I.Introduction

Firmsareacrucialengineofeconomicgrowth.Howthesebusinessesaremanagedwilldeterminehowtheyperform.TheseminalworkbyBloomandVanReenen(2007)initiatedalargeliteraturethatdocumentedthepositiveeffectsofgoodmanagementpractices.Firmsthatarebettermanagedaremoreproductive,havehigheroperatingprofits,aremoreoutwardoriented,andinvestmoreinresearchanddevelopment(Bruhnetal.,2018;Bloometal.,2019;seeScuretal.,2021forasummary).Theproductivityofskilledlabormayalsoincrease(Gosnelletal.,2020).Thefirmsarealsomorelikelytotraintheirworkers(IslamandGatti,2023).Experimentalresearchhasvalidatedthesefindingswithrigorousidentification

strategies(Bloometal.,2013a;Bloometal.,2020).

Familymanagedfirmsareexpectedtohavepoorermanagementpractices(seeTsoutsoura,2021forareviewoftherecentliterature).Therearenumberofreasonsforthis.

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First,choosingmanagersonlywithinthefamilyrestrictsthetalentpoolofpotentialmanagers,increasingthechancesthatfamily-managedfirmswillmissoutonbetterqualitymanagers(Bennedsenetal.,2007;BloomandVanReenen,2007).Second,familymembersthatareexpectedtobecomemanagersofthefamilyfirmmayhavedisincentivestoworkhardgiventhattheywillattainthepositionregardlessofeffort.Thus,thelackofcompetitioncreatesdisincentivestoexcel.VillalongaandAmit(2006)findthatindescendant-CEOfirms-wheretheCEOisfromthefamilybutisnotthefounder-theconflictbetweenfamilyandnonfamilyshareholderfirmsismorecostlythantheowner-managerconflictinnonfamilyfirms.Third,othermanagersorworkersmayviewthisformofnepotismunfavorably,therebydiscouragingtheireffort,andcreatingincentivesforthemtoworkelsewhere.Thereisalsothepossibilityoffamilyconflictsplayingout,thatcoulddemotivateemployees.Therecouldbereasonstoexpecttheopposite–familymanagementcouldresolvetheclassicagencyproblembetweenownersandmanagers(JensenandMeckling,1976;Fama,1980).Ownersmayfinditeasiertomonitorfamilymemberswhoaremanagers,andthusthefamilyCEOsareunlikelytodeviatefromtheprincipal’sobjectives.However,theexistingempiricalevidencehaslargelypointedto

family-managedbusinesseshavingpoorermanagementpractices.Bloometal(2015)showthatfamily-run

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/2011/03/family

-firms-need-professional.

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firmsdotendtohavepoorermanagementpracticesforasampleof10,000publicandprivatesectormanufacturingfirmsacross35economies.LemosandScur(2019)alsofindasimilarrelationshipinasampleof2,710firmsacross18economiesandimplementaninstrumentalvariableidentificationstrategy

for912firms.

Webuildonthisliteraturebyusinguniquedatafromthe2019EBRD-WIB-WorldBankEnterpriseSurveys(WBES).Thisdatahasaspecialmoduleonfamily-managedfirmsandpoliticalconnectionsontopofthecomprehensiveinformationoninternalandexternaloperatingenvironmentofbusinessesfoundintheregularWorldBankEnterpriseSurveys.Thesesurveyswererolledoutacrossasimilartimeframe(2018-2019)fordevelopingandadvancedeconomiesacrossEurope,theMiddleEastandNorthAfrica,andMongolia.Themoduledefinesoursampleandenablesthisstudytomakeauniquecontributionbyexaminingtherelationshipbetweenfamilymanagersandmanagementpracticesforasetofeconomies,manyofwhichhavenotbeenexploredbefore.Thisstudyadditionallycontributestotheliteraturebyleveragingthesurveystouncoverfirmcharacteristicsandbusinessenvironmentfactorsthatmaystrengthen

orweakentheeffectsoffamilymanagementonmanagementpractices.

Foraround9,000mediumandlargefirmsacrossmanufacturingandservicesectorsin41countries,welargelyconfirmthefindingsofBloometal(2015)thatfamilymanagementisnegativelycorrelatedwiththequalityofmanagementpractices.Thisisanimportantfindinggiventhedifferencesofoursample–weexplorebothmanufacturingandservicefirms,whileBloometal(2015)onlystudymanufacturingfirms.OursamplealsoconsistsoffirmsinEasternEuropeandtheMiddleEastandNorthAfricathatarelargely

omittedintheBloom(2015)sample.

TheextensivenatureoftheWBESallowsustoenrichtheanalysisinseveralways.First,thesurveyscollectedinformationontheshareofmanagersthatarefamily,providingsomenuanceonwhetheranyfamilymanagementorallfamilymanagementisdetrimentaltomanagementpractices.Wefindevidencetowardsthelatter.Second,thesurveysallowfortheexplorationofwhethercertainfactorseitherexacerbateoralleviatethenegativerelationshipbetweenfamilymanagersandthequalityofmanagementpractices.Theseincludearangeofinternalandexternaloperatingfactors.Third,thesurveysallowustoexplorespecificallywhattypesofmanagementpracticesarelackinginfamily-runbusinesses.Finally,thesurveys

provideinformationthatdescribesthenatureoffamilyrunbusinesses.

Thisstudyuncoversthefollowingkeyfindings.First,familymanagementisnegativelycorrelatedwith

managementpractices,moresoifallmanagersinthefirmarefromthesamefamily.Thisistrueinthe

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sampleregardlessofincomeclassificationorregionalclassification.Second,briberyandpoliticalconnectionstendtoexacerbatethenegativeeffectsoffamilymanagementonthequalityofmanagementpractices.Thisislikelybecausebriberytendstodisincentivizegoodmanagementpractices(AthanasouliandGoujard,2015),compoundingthenegativeeffectsoffamilymanagersonthequalityofmanagementpractices.Theweakerthecompetitiveforces,thelesspressurefamilymanagersfacetoimproveperformanceandadoptgoodmanagementpractices.Politicalconnectionsaccentuatethenegativerelationshipbetweenfamilymanagementandmanagementpractices,possiblyhighlightingtheattenuationofcompetitiveforcestoincreasemanagementpracticesduetopoliticalconnections.Similarly,thefindingsshowthatlackofperceivedcompetitors-servingasaproxyofcompetition–alsoaccentuatesthenegative

effectoffamilymanagementonthequalityofmanagementpractices.

Onecanalsoexpectthatifthepooloftalentedmanagersisrestrictedforallfirms,thenthenegativeeffectsoffamilymanagementonmanagementpracticesmaybeamelioratedasallfirmsdrawfromalimitedtalentpool.Weproxyforthisusingthevariablethatcaptureswhetherfirmsperceivelaborregulationstobeamajororsevereobstacletooperations.Themorestringentthelaborregulations,thegreaterthedifficultyinhiringandfiring,imposingconstraintsonthepotentialofhiringtalentedmanagers.Thus,wefindthatforfirmsthatfindlaborregulationsburdensome,therelationshipbetweenfamilymanagementandqualityofmanagementpracticesisalleviated.Thereisalsosomeevidencethatinnovativefirmsarelesslikelytobehamperedbyfamilymanagers.Itisalsoworthnotingthatfamilyownership,firmsize,exporterstatus,foreignownership,manufacturingsector,andfemalemanagersdonotplayanysignificantrole(neitherexacerbatenorattenuate)intherelationshipbetweenfamilymanagementandmanagementpractices.Finally,whenallmanagersarefromthesamefamily,thesefirmsperformpoorlyinthemanagementpracticedimensionsofthenumberofperformanceindicatorsmonitored,knowledgeofproductionor

serviceprovisiontargets,andnotsurprisingly,thebasisofbonuses.

Insummary,thisstudycontributestotheliteratureinseveralways.Itcomplementsanalysisintheliteraturebyinvestigatingtherelationshipbetweenfamilymanagementandqualityofmanagementpracticesforasamplethathasnotbeenexploredbypreviousstudies.Itthenextendstheanalysisbyshowinghowcertainkeyfactors,includingcorruption,competition,andpoliticalconnections,accentuate,whilestringentregulationsandinnovationamelioratethisrelationship.Italsoprovidessomenuance–showingthatamixoffamilyandnon-familymanagersmaynotbeasdetrimentaltomanagementpracticesashavingallmanagementbefamilymembers.Therestofthepaperisstructuredasfollows.SectionIIdescribesthe

data.SectionIIIexplainstheempiricalstrategy.SectionIVpresentstheresults,andSectionVconcludes.

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II.Data

Themainsourceoffirm-leveldataistheEBRD-EIB-WorldBank’sEnterpriseSurveys(WBES)conductedaround2018-2019.ThechoiceofthisparticularsetofWBESisbecausetheycontainquestionsonfamilymanagementthatarenotavailablefortheregularEnterpriseSurveyscarriedoutbytheWorldBank.ThissetofsurveyswereajointventurebetweentheEuropeanBankforReconstructionandDevelopment(EBRD),theEuropeanInvestmentBank(EIB)andtheWorldBank(seeEIB-EBRD-WB2022).Dataisavailablefor41economiesencompassingdevelopingandadvancedeconomiesinEurope,theMiddleEastandNorthAfrica(MENA)region,andMongolia.Thesurveyshaveasectiononmanagementpracticesthatwasonlyimplementedformediumandlargefirms(thosewithatleast20permanent,full-timeemployees),wheremanagementpracticesweremorelikelytomatter.ThesurveysalsocontainthestandardWorldBankEnterpriseSurveysmodules,collectinginformationonarepresentativesampleofformal(registered)privatefirmsoperatinginmanufacturingorservicesectors.TheWBESdataarefullycomparableacrosscountriesandarecollectedviaface-to-faceinterviewswithbusinessownersortopmanagersbyusingaglobalmethodology.Thedatahavebeenwidelyusedbyseveralstudiestoexploretheprivatesectorindevelopingeconomies(Paunov,2016;BesleyandMueller,2018;ChauvetandEhrhar,2018;HjortandPoulsen,2019).Oneadvantageofthisroundofsurveysisthattheyconsistofasetofeconomiessurveyedaroundasimilartimeframe,employingaconsistentsurveyinstrumentandmethodology.Thesesurveys

werelargelycompletedbeforetheCOVID-19pandemicoutbreak.

Thekeyoutcomevariableisthequalityofmanagementpractices,followingthemethodologyimplementedbyBloometal.(2013b).Thisconsistsofeightcomponents:(i)Problemresolution,(ii)Numberofperformanceindicatorsmeasured,(iii)Levelofeaseordifficultytoachieveproductionorserviceprovisiontargets,(iv)Knowledgeofproductionorserviceprovisiontargets,(v)Basisofmanagerbonuses,(vi)Lengthoffocusofproductiontargets,(vii)Promotionofnon-managers,and(viii)Dismissalofunderperformingmanagers.ThescoringforeachcomponentisprovidedintableA4.Themanagementpracticesmoduleisonlyimplementedformediumandlargefirms.Figure1providesthemanagement

practicesscoresfortheeconomiesinthesample.

Themainvariableofinterestisthepresenceoffamilymembersinmanagement.Thespecificquestionaskedinthesurveyinstrumentis“Whatpercentageofthekeymanagementpositionsofthisfirmareoccupiedbymembersofthisfamily?”Weusetwovariablesintheanalysis.First,weusethisexactvariable

tocapturetheintensityoffamilymanagement.Second,wecapturefirmswhereallmanagementisfamily.

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Thisisachievedthroughabinaryvariablethatattaintsavalueof1iftheresponsetothequestionis100percent,and0otherwise.Usingbothvariablesallowstheanalysistomakeadistinctionbetweenfirmsthatareentirelymanagedbyfamily,andthosethatarepartiallymanagedbyfamily.Theaverageshareoffamilymanagersisabout40.7percent.Around32percentofmediumandlargebusinessesinthesampleareentirelymanagedbyfamily(Table1).Figure2providesthecountryaveragesforthepercentageoffirmsthatareentirelyfamilymanaged.Theshareoffamilymanagementforeachcountryispresentedinfigure

3.

DataforthecontrolvariablesarealsoobtainedfromtheEnterpriseSurveys.Theseencompassstandardfirm-levelcharacteristicsandtheoperatingenvironmentincludingfirmsize,age,outwardorientation,qualitycertification,accesstofinance,managerexperienceinthesector,andperceptionsoflaborregulationsasaconstraint.Whetherthefirmisownedbythesamefamily,andthepresenceofpoliticalconnectionsarealsoincludedascontrolvariablesandarenotcollectedinthestandardESbutwerepartoftheextendedquestionsinthisroundofthesurveys.Thespecificinformationonfamilyownershipisobtainedfromthesurveyquestion:“Whatpercentageofthefirmisownedbythesamefamily?(Ifmorethanonefamily,refertotheonewithlargestownership).”Theinformationonpoliticalconnectionsisobtainedfromthefollowingsurveyquestion:“Hastheowner,CEO,topmanager,oranyoftheboardmembersofthisfirmeverbeenelectedorappointedtoapoliticalpositioninthiscountry?”Therationaleforthecontrolvariablesisdetailedintheempiricalstrategysection.Summarystatisticsareprovidedin

table1.

TableA1providessomedescriptionofthenatureoffamily-managedfirms.Entirelyfamily-managedfirmshavelowermanagementscoresthanotherfirms.About81percentoffullyfamily-managedfirmsareofmediumsize,comparedto72percentforotherfirms.Around12percentoffullyfamily-managedfirmsarelarge,comparedto24percentofotherfirms.Entirelyfamily-managedfirmsarealsolesslikelytobeforeign-owned(5.53vs.13.89percent),andmorelikelytohavefemalemanagers(17.57vs13.50percent).Furthermore,fullyfamily-managedfirmshavealargershareoffamilyowners(96vs32percent)andhavemoremanagerialexperience(24vs20years).Theyarehoweverlesslikelytobepoliticallyconnected(5vs9percent).Thesedifferencesarestatisticallysignificantatleastatthe5percentlevel.Therearenostatisticallysignificantdifferencesbetweenentirelyfamily-managedfirmsandtherestwithregardstoexportingstatus,accesstofinance(intermsofloansorbankaccounts),firmage,qualitycertification,perceptionsoflaborregulationsasamajororsevereconstraint,innovation,bribery,whetherthefirmstarted

formallyorwhethertheyhaveoneornocompetitor.

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Asetofextendedquestionsinthesurveyexplorehowmanagersoflargefirmsusetheirtime.Weleveragethisinformationtoexplorewhetherfamilymanagersbehavedifferentlyfromnon-familymanagers.Managertimeallocationiscapturedintermsofhowfrequentlytheyinteractwithotherdecisionmakersintheorganization(COO,CAO,boardmembers),suppliers,andemployees.Frequencyofengagementisrecordedinfivebuckets:(i)Never,(ii)Onceaweek,(iii)Between2and4timesaweek,(iv)Daily,and(v)Morethanonceaday.TableA2showsthatthatthereisnostatisticallysignificantdifferencebetweenfamilymanagersandnon-familymanagersacrossthefivebucketsalongthedimensionsofotherdecisionmakers,suppliers,andemployees.Thissuggeststhatthedifferenceinthequalityofmanagementpracticesisnotduetodifferentiallevelsofengagementacrosstheorganizationsbetweenfamilymanagersandvariousactors.Oratleast,familymanagersoflargefirmsappeartoallocatetheirtimesimilarlytothoseofnon-familymanagers.Notethatthissampleisnotexactlycomparablewiththepreviousresultsasitonlypertainstolargefirmsinthesampleofanalysis.However,thereisanegativerelationshipbetweenfamilymanagementandmanagementpracticesforthissampleoflargefirms.

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III.EmpiricalStrategy

Thefollowingequationisestimatedforthepooledcross-sectionsampleusingOrdinaryLeastSquares

(OLS).

MGMTi=β0+β1FmlyMgi+β2Fmlyowni+β3sizei+β4Agei+β5ManageTExPi

+β6polconcti+β7Manfi+βzzi+δ1Dc+Ei(1)

WhereMGMTistheaveragemanagementpracticesscore.Thefamilymanagementvariable(FmlyMg)iseither(i)theshareofkeymanagersthatarefamilymembersor(ii)abinaryvariableequalto1ifallkeymanagersarefamily,andzerootherwise.Tocontrolforasmanyconfoundingfactorsaspossible,severalfirm-levelvariablesareaccountedfor.Theseincludetheshareoffamilyowners(Fmlyown),firmsizeasmeasuredbythenumberoffull-timeemployees(size),firmage(Age),managerexperienceinthesamesector(ManageTExP),politicalconnectionsintermsofwhethertheowner,CEO,topmanager,oranyoftheboardmembersofthefirmhaveeverbeenelectedorappointedtoapoliticalpositionintheircountry

(polconct).Wealsoaccountforwhetherthesectorofactivityisinthemanufacturingsector(Manf).

3Thefindingsareavailableuponrequest.

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Othercontrolvariables(z)includewhetherthefirmisanexporter(definedasfirmswith10%ormoreofsalesdirectlyexported),isforeignowned(definedasfirmswith10%ormoreprivateforeignownership),thepresenceofacheckingorsavingsaccount,qualitycertification,bribery,competition,andwhetherthefirmperceiveslaborregulationstobeamajororsevereconstrainttooperations.Countryfixedeffects(Dc)areincludedtoaccountfortimeinvariantcountry-specificomittedvariables.Eiisthestandarderrortermwiththeusualdesirableproperties.Surveyweightsareused,andthestandarderrorsareclusteredatthe

location-sector-sizestratalevel.

Theidentificationstrategyistoexploitcross-sectionalvariationinfamilymanagementandthequalityofmanagementpracticestoestablishtherelationshipbetweenthetwo.Theassignmentoffamilymanagementtofirmsmaynotberandom,therebyraisingendogeneityconcerns.Whileonecannotcompletelyruleoutthepossibilityofsimultaneitybias,itisunlikelythatthepresenceoffamilymanagementisdeterminedbythequalityofmanagementpractices.Agreaterconcernisomittedvariablebiasthatmaybecorrelatedwithfamilymanagementandmanagementpractices.Toaddressthis,weaccountforasmanypossiblecontrolvariablesaspossible.Animportantdeterminantofthequalityofmanagementpracticesisthedegreeofcompetitionthefirmisexposedto.Thesecancomeintheformofforeigndirectinvestmentandtradethatincreaseexposuretocompetitionandtherebythequalityofmanagementpractices(Bloometal.,2016).Theseareproxiedbyexporterstatusandforeignownershipintheestimations.Weaccountforfamilyownershipasitislikelytoinfluencethequalityofmanagementpracticesastheownershipstructurewilldeterminetheperformanceincentivesinthefirm(Tsoutsoura,2021;Bloometal.,2015).Familyownershipcouldresolveprincipal-agentproblemsifthemanagerisafamilymember(VillalongaandAmit,2006;BurkartandPanunzi,2006).Family-ownedfirmsmayalsofacilitatelaborcontractsasownershiptendstobeconcentratedandthusmorecredibleandlesslikelytochangeduetothelowprobabilityofhostiletakeovers(ShleiferandSummers,1988;MuelerandPhilippon,2011;SraerandThesmar,2007;Elluletal.,2018).Ontheotherhand,family-ownedfirmsmayextractprivatebenefitsatthecostofothershareholders(ShleiferandVishny,1986).Family-ownedfirmsmayalsobelesssusceptibletohostiletakeovers,andthushavefewerincentivestomaximizevalue(Fama,1980).Thismaybereflectedintheadoptionofpoor

managementpractices.

Thepresenceofpoliticalconnectionsandcorruptioncandisincentivizefirmperformancebylesseningcompetitiveforces(Rijkersetal.,2017;AthanasouliandGoujard,2015).Thismayinturndistortincentivestoadoptgoodmanagementpractices.Firmsmayinvestinqualitycertificationtoincreasethereturnsto

innovation(Paunov,2016).Thus,qualitycertificationmayalsoencouragecertainmanagerialbehaviorsin

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thefirm,andtherebyencouragegoodmanagementpractices.Rigidlaborlawscancreateobstaclestothe

adoptionofmanagementpracticeswithregardstopeoplemanagement(Bloometal.,2019).

IV.Results

Table2providesthemainestimationresults.Thecoefficientoftheshareoffamilymanagementisnegativelycorrelatedwiththequalityofmanagementpractices(column1),statisticallysignificantatthe5percentlevel.Incolumn2,wereplicatethesameestimationusingfullfamilymanagementinsteadoftheshareoffamilymanagement.Thecoefficientissimilar,butthestatisticalsignificanceincreasestothe1percentlevel.Thisimpliesthattherelationshipmaybestrongerforfirmswhereallmanagementisfamilyversusfirmsthathavepartialfamilymanagement.Theothercovariatesbehavelargelyasexpected.Exporterstatusandforeignownershiparepositivelycorrelatedwithgoodmanagementpractices.Largerfirmshavebettermanagementpractices,whileolderfirmsdonot.Accesstofinance,intermsofhavingaloan,andISOcertificationarealsopositivelycorrelatedwithgoodmanagementpractices.Allthesefindingsarestatisticallysignificantatleastatthe5percentlevel.Perceptionoflabormarketstringencyisnegativelycorrelatedwithgoodmanagementpractices–themoreafirmperceivesstringentlaborregulationsasanobstacle,thelowerthemanagementpracticesscore.However,thisrelationshipisnotstatisticallysignificant.Thecoefficientofpoliticalconnectionsisalsonegative,butnotstatistically

significant.

Thesampleofanalysiscanbelargelysplitintothreeregionalgroups:(i)developingMENA,(ii)EasternEuropeandCentralAsia,and(ii)WesternEuropethatonlyincludesfourcountries–Italy,Portugal,Greece,andCyprus.Intable3,weexplorewhethertherelationshipbetweenfamilymanagementandthequalityofmanagementpracticesstandsforeachofthesesubgroups.Thereisanegativecorrelationbetweentheshareoffamilymanagementandthequalityofmanagementpracticesforeachoftheseregionalsubgroups,althoughthecoefficientisonlystatisticallysignificantfordevelopingMENAandEasternEuropeandCentralAsia,butnotforWesternEurope.However,forfullfamilymanagement-allkeymanagementpositionsareheldbyfamily-thecoefficientisnegativeandstatisticallysignificantatleastatthe5percentlevelforallthreeregionalsubgroups(columns4-6,table3).ThefindingssuggestthatforthefourWesternEuropeaneconomies,onlyfullfamilymanagementisdetrimentalforthequalityofmanagementpractices.ThecoefficientofpoliticalconnectionsisnegativeandonlystatisticallysignificantfortheWesternEuropesubgroupoffoureconomies,possiblysuggestingthatpoliticalconnectionsmightbemoredetrimentalfor

managementpracticesforWesternEconomiesthanintherestoftheworld.

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Intable4weexploretherelationshipbyincomegroups.UsingWorldBankincomeclassifications,economiesareclassifiedinto(i)low-andmiddle-incomeeconomiesand(ii)highincomeeconomies.Wefindthattheshareofmanagementpracticesisnegativelycorrelatedwiththequalityofmanagementpractices,althoughthisisstatisticallyinsignificantforhighincomeeconomies,andbarelystatisticallysignificantforlow-andmiddle-incomeeconomies(10percentlevel).However,thecoefficientforfullyfamily-managedfirmsisne