Regional Economy as a Determinant of the Prevalence of Family Firms in the United States: A Preliminary Report

The formation of family firms, as well as their scale and scope, is likely to be influenced by the characteristics of the environment. This study presents preliminary findings on the relationship between economic development and the prevalence of family vs. nonfamily firms in the United States. We use three samples consisting of 15,918 firms aggregated at the state level and two methods of estimating the proportion of family businesses in each state. Our results indicate that regardless of the method of estimation, there is a negative relationship between the proportion of family firms in a state and gross state product per capita. Implications and research directions are provided.