Although scholars have reported that most family
firms are small- and medium-sized enterprises (SMEs)
(Daily and Dollinger 1993; Kirchhoff and Kirchhoff
1987; Poza 2007), existing studies on the relationship
between family ownership and firm performance
mainly use data collected from large firms, such as
the Fortune 500 and S&P 500. Empirical studies that
explicitly examine how family ownership influences
the performance of SMEs are still missing. This is
probably due to the difficulties in collecting reliable
and systematic data on SMEs. Given that SMEs play a
dominant role in the economic development of many
industrialized regions (Julien 1993) and most family
firms are SMEs (Daily and Dollinger 1993), a research
work that systematically investigates the association
between family ownership and SME performance is of
academic significance. Kole (1995) reports that the
positive relationship between firm performance and
family ownership is sustained at a high level for small
firms, implying that the potential advantages of family
ownership are likely to be realized in SMEs; thus, a
positive association between family ownership and
SME performance can be predicted. Although this
proposition has been developed for over a decade,
empirical evidence is still limited.