Legacy vs. Liability: Are Family Businesses More Likely to Turn Zombie?
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2025-07-07
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en
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This paper feeds the literature on zombie firms by examining the ownership characteristics that lead to their emergence. Specifically, the understanding of zombie firms is expanded upon by investigating the relationship between family ownership and the likelihood of firms becoming zombies, with socioemotional wealth theory (SEW) as the main driver of family firm behavior. The data of family firms and zombie firms is gathered from the Benelux region in the period 2016 to 2023 and undergoes a combination of descriptive analysis and multivariate regressions to assess the likelihood and sustained existence of zombified family firms under two distinct zombie definitions. The results indicate that family firms show a higher resistance to becoming zombified, as the preservation of dynasty, effective endowment, and a risk-averse approach create a protective barrier against the initial stages of financial underperformance. But in contrast, zombified family firms retain their zombie status due to the desire to keep unprofitable operations from disbanding to safeguard personal emotions, reputation, and control. The study highlights the importance of organizational structure when addressing economic stagnation in policy development. Future research can expand on zombie firms' knowledge by analyzing corporate governance and shareholder pressure on organizational decision-making and resistance to financial distress.
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Faculteit der Managementwetenschappen