%0 Journal Article
%J Small Business Economics
%D 2023
%T Are Family Firms More Efficient? Revisiting the U-Shaped Curve of Firm Scale and Efficiency
%A Elston,Julie
%A Zhang,Yingchao
%A Chen,Ku-Hsieh
%A Chen,Pei-Hwa
%K Finance
%K OSU-Cascades
%X This study applies a stochastic frontier model to examine the relationship between firm size and efficiency using a novel approach. The first novelty is that this study examines large and small firms separately to allow for heterogeneity between firm group sizes in terms of measuring the size-efficiency relationship. The second is that we use a modified frontier model which explicitly includes a family firm variable when measuring firm efficiency. Empirical results reveal that firms are in fact heterogeneous, with small-and-medium-sized enterprises (SMEs) exhibiting a U-shaped scale efficiency curve, while large enterprises (LE) exhibit an efficiency curve which is positive and linear. Robust results also confirm that family firms are relatively more efficient than non-family firms. In addition, while controlling for family firms does not appear to change the firm’s size-efficiency dynamics, failure to control for family firms leads to a bias in characterizing the nature of the firm’s production returns to scale.
%B Small Business Economics
%8 2023
%G eng
%2 a
%4 254543572992
%$ 254543572992