The impact of family business professionalization on financial performance: a multidimensional approach

Abstract

Purpose This study aims to broaden the multidimensional conceptualization of family business professionalization, and to investigate how professionalization influences the financial performance of family firms, in the context of private family firms. Design/methodology/approach Taking a quantitative research approach, the study empirically examines the effect of professionalization on family firm performance, using a sample of 111 privately held Turkish family firms. The hypotheses were tested using regression analysis and the independent samples t-test. Findings The results indicate that the professionalization of family businesses has a positive effect on their financial performance, and the professionalization of employees is the prominent dimension of professionalization in this effect. Research limitations/implications This study advances the understanding of how professionalization influences family firm performance by providing additional empirical evidence regarding the positive influence of multifaceted family business professionalization on financial performance. Practical implications The professionalization framework depicted in this study helps owners, managers, or consultants of family businesses assess the professionalization level of their firm and understand the performance effects of each of the family business professionalization dimensions on financial performance. It can also serve as a roadmap for family firms to professionalize and achieve better performance. Originality/value Unlike previous studies, this study incorporates employees, organizational culture and work environment, often neglected in the family business literature, into the multidimensional family business professionalization construct, thus extending previous research. The study contributes to a deeper understanding of the relationship between family businesses professionalization and firm performance.