Family business, servitization, and performance: Evidence from Portugal

Abstract

Drawing on the servitization and family business literature, we ask whether family governance improves or worsens performance through servitization. Given the preference to preserve socio-emotional wealth, servitization in family firms presents a double-edged sword. That is to say, a preference to preserve socio-emotional wealth facilitates the development of relationships with service-related stakeholders, but it may also prevent family firms from diluting their socio-emotional wealth through greater service-related collaboration with outsiders. In a sample of 35,329 manufacturing firms (13,755 family firms and 21,574 non-family firms from 2010 to 2018) in Portugal, we find that family firms have lower levels of servitization, and they achieve lower performance through servitization. These findings are robust to alternative performance measures and carry important implications for the servitization and family business literature.

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