ABSTRACT This paper contributes to the literature on comparative performance of family and non-family businesses by accounting for self-selection and by comparing performance within and across sectors. Using an extensive data set of Dubai businesses in the four different major sectors in the Dubai economy (construction, manufacturing, services, and trading); we find that the sector matters. Family businesses outperform nonfamily businesses in trading, followed by construction as a far second. Performance of family businesses is weakest in manufacturing and services, only in trading did family businesses outperform nonfamily exporting businesses in other sectors. Reasons for that are discussed and policy implications are drawn. We also find strong evidence of self-selection bias.
Cite this paper
nullB. Rettab and A. Azzam, "Performance of Family and Non-family Firms with Self-Selection: Evidence from Dubai," Modern Economy, Vol. 2 No. 4, 2011, pp. 625-632. doi: 10.4236/me.2011.24070.
 Jaskiewicz, P. and S. Klein. (2005). Family Influence and Performance – Theoretical Concepts and Empirical Results. Paper presented at the FERC Conference, Portland, Oregon.
Dyer, W. G. Jr. (2006). Examining the “Family Effect” on Firm Performance, Family Business Review, 19 (4): 253-273.
Kotey B. (2005). Are Performance Differences between Family and Non-family SMEs Uniform across All Firm Sizes? International Journal of Entrepreneurial Behaviour & Research 11: 394-421.
Anderson R., and Reeb D. (2003). Founding-family Ownership and Firm Performance: Evidence from the S&P 500.” Journal of Finance 58(3): 1301-1328.
Lauterbach B., and Vaninsky A. (1999). Ownership Structure and Firm performance: Evidence from Israel. Journal of Management and Governance 3: 189-201.
Westhead P., and Cowling M. (1997). Performance Contrasts Between Family and Non-family Unquoted Companies in the UK. International Journal of Entrepreneurial Behaviour & Research 3:30-52.
Daily, C. and Dollinger, M. (1992). An Empirical Examination of Ownership Structure in Family and Professionally Managed Firms. Family Business Review 5: 117-136.
Heckman, J. J. (1979). Sample Selection Bias as Specification Error. Econometrica 47: 153-161.
Davis, J., Pitts, E., and Cormier, K. (1997), Challenges Facing the Family Companies in the Gulf Region. SAMA (2006G): Saudi Arabian Monetary Agency. Forty –Second Annual Report. Research and Statistics Department.
Shleifer, A. and Vishny, R. (1997). Management Entrenchment: the Case of Manager-Specific Investment. Journal of Financial Economics 25: 123-139.
Jensen, M. and Meckling, W. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics 3: 305-360.
Romano, C., Tanewski, G. and Smyrnios, K. (2000). Capital Structure Decision Making: A Model for Family Business. Journal of Business Venturing 16: 285-310.
Mustakallio M., 2002, Contractual and Relational Governance in Family Firms: Effects on Strategic Decision-Making Quality and Firm Performance. Helsinki University of Technology, Doctoral Dissertations 2002/2.
Morck R., D. Wolfenzon and B. Yeung, (2005) Corporate Governance, Economic Entrenchment, and Growth, Journal of Economic Literature, Vol XLIII, pp. 655-720.
Young, N. M., M. W. Peng, D. Ahlstrom, G. D. Bruton, and Yi Jiang, (2008), Corporate Governance in Emerging Economies: A Review of the Principal-Principal Perspective, Journal of Management Studies 45:1.
Mueller, D. C., (2006). Corporate Governance and Economic Growth, International Review of Applied Economics, Vol. 20, No. 5, 623-643.
Morck R., and Yeung B. (2004). Special Issues Relating to Corporate Governance and Family Control. Global Corporate Governance Forum, Discussion paper No.1, Washington DC.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A and Vishny, R. (2000). Investor Protection and Corporate Governance. Journal of Financial Economics 58: 3-27.
Demsetz, H. and Lehn, K. (1985). The Structure of Ownership: Causes and Consequences. Journal of Political Economics 931155-1177
Jagannathan, M. (1996). Internal Control Mechanisms and Forced CEO Turnover: An Empirical Investigation, PhD Dissertation, Virginia Polytechnic Institute and State University.
Erdener C., and Shapiro D. (2005). The International of Chinese Family Enterprises and Dunning's Eclectic MNE paradigm. Management and Organization Review 1: 411-436.
Schulze W., and Dino R. (1998). “The Impact of Distribution of Ownership on the Use of Financial Leverage in the Family Firms.” Proceedings of the 12th Annual Conference of the United States Association for Small Business and Entrepreneurship.
Zellweger T. (2006). Risk, Return and Value in the Family Firm. Dissertation no. 3188, The University of Saint Gallen.
McConaughy D., Matthews C., and Fialko A. (2001). Founding Family Controlled Firms: Efficiency, Risk and Value, Journal of Small Business Management 39: 31-49.
Jorissen A., Laveren E., Martens R., and Reheul A. (2005). Differences between Family and Non-family Firms 'Real' Versus ‘Sample-Based’ Differences. Family Firm Institute 18, Issue 13.
Lee J. (2006). Family Firm Performance: Further Evidence Family Business Review: 19: 103-114.
Suehiro, A. (2001). Family Business Gone Wrong? Ownership Patterns and Corporate Performance in Thailand. Asian Development Bank Institute, Working Paper 19, ABD Institute, Tokyo.
Chua, J. H. Christman, J. J., and Sharma, P. (1999). Defining the Family Business by Behaviour. Entrepreneurship Theory and Practice 23: 19-38.
Gersick, K., Davis, J., McCollom Hampton, M., and Lansberg, I. (1997). Generation to Generation: Life Cycles of the Family Business. Harvard Business School Press.
Rettab B. (2008) “Dubai Family Enterprises: Definition, Structure and Performance”, in V. Gupta (et al. eds). A Compendium on the Family Business Models Around the World, Hyderabad: ICFAI University Press, 2008.
Chatterjee, S., and B. Price. (1991). Regression Analysis by Example, 2nd, ed. New York:Wiley & Sons.
Little, R. C., G. A. Milliken, W. W. Stroup, R. D. Wolfinger, and Ol Schabenberger. (2006). SAS for Mixed Model, Seond Editions. SAS Institue Inc., North Carolina.