TY  - JOUR
AU  - Mehrotra,Vikas
AU  - Morck,Randall
AU  - Shim,Jungwook
AU  - Wiwattanakantang,Yupana
TI  - Must Love Kill the Family Firm?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16340
PY  - 2010
Y2  - September 2010
UR  - http://www.nber.org/papers/w16340
L1  - http://www.nber.org/papers/w16340.pdf
N1  - Author contact info:
Vikas Mehrotra
University of Alberta
School of Business
Edmonton, AB, Canada T6G2R6
E-Mail: vmehrotr@ualberta.ca

Randall Morck
Faculty of Business
University of Alberta
Edmonton, AB  T6G 2R6
CANADA
Tel: 780/492-5683
Fax: 780/492-3325
E-Mail: randall.morck@ualberta.ca

Jungwook Shim
Business School
National University of Singapore
Mochtar Riady Building
Singapore 119245
E-Mail: bspv11@nus.edu.sg

Yupana Wiwattanakantang
National University of Singapore Business School
BIZ 1 2-7, 15 Kent Ridge Drive, Singapore 119245
Tel: +6565165321
E-Mail: bizyw@nus.edu.sg
AB  - Family firms depend on a succession of capable heirs to stay afloat.  If talent and IQ are inherited, this problem is mitigated.  If, however, progeny talent and IQ display mean reversion (or worse), family firms are eventually doomed.  This is the essence of the critique of family firms in Burkart, Panunzi and Shleifer (2003).  Since family firms persist, solutions to this succession problem must exist.  We submit that marriage can transfuse outside talent and reinvigorate family firms.  This implies that changes to the institution of marriage – notably, a decline in arranged marriages in favor of marriages for “love” – bode ill for the survival of family firms.  Consistent with this, the predominance of family firms correlates strongly across countries with plausible proxies for arranged marriage norms.  Interestingly, family firm dominance interacted with arranged marriage norms also correlates with lower GDP per capita, suggesting that cultural inertia may also impede convergence to more efficient economic organization.
ER  -