Mr. Ahmad Farhad Fakhry
Volume 4 Issue 2 | Jun 2021
DOI: 10.31841/KJEMS.2021.4
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Abstract
This paper aims to investigate the relationship between family ownership and the performance of SMEs based in Kabul. A sample of 335 SMEs was surveyed, classified as family-owned, considering the family participation in the capital and the board of directors. Four variables of performance, three of accounting and one of the markets, were considered. Correlation and regression analysis were used to analyze the relationship between family participation and firm performance. The test of mean was used to compare performance and other variables. Graphical analysis was used to verify the extent to which family involvement contributes to better performance. The results show that family-owned companies have low performance. Furthermore, the results indicate a positive relationship between family participation (ownership) and the performance of SMEs. It is also revealed that the performance of family-owned companies is maximized when family involvement reaches 60 and 65 percent. The survey conducted on Afghan SMEs shows partially consistent results with those observed by Shyu (2011) in Taiwanese companies. Similarities were found in the relationship between family involvement and the performance of the company. However, the results differ concerning the performance of family-owned companies and the optimal level of family participation that can maximize performance. The researcher recommends that the family-owned businesses follow a formal business structure, hire expertise and technical staff other than family members, and seek credits from commercial banks rather than relying only on family capital to improve their business performance.
Keywords: Family Ownership, SME’s, Firm Performance, Access to Finance and Expertise