The Moderating Effect of Family Ownership on Entrepreneurial Orientation and Firm Performance

Abstract

This study eximines the moderating effect of family owned companies, which constitutes 95% of all Turkish enterprises, and its corresponding effect on the relationship between entrepreneurial orientation and financial performance. Family owned companies not only contain an organizational structure that supports innovation and change, but they are also known to encourage entrepreneurship. Moreover, these firms stand out in terms of their rapid decision making and growth potential. The related literature also suggests that entrepreneurial orientation, which is defined as a key component of organizational success, has a positive impact on the company's financial performance. The contribution of family owned companies to the economy is an undeniable fact, thus the improved continuity of their operations is key for maintaining the Turkish success. The rise of various policies and programs aiming to develop companies' competitiveness and entrepreneurial characteristic closely concerns these firms- further highlighting the importance Turkish firms attach towards entrepreneurship. The purpose of this study is to take into account the BIST Manufacturing Sector firms partnership structure and empirically calculate the entrepreneurial orientation, while examining the effect on firm performance. The sample consists of 94 companies listed in the Manufacturing Sector in 2018, and the data collected from annual reports were tested employing use of a moderated multiple regression. The results of the study indicate that firms with high entrepreneurship orientation avoid risk and form more cautious decisions.

Keywords

• family owned company
• financial performance
• bist
• moderator relationship
• entrepreneurship orientation