Comparing Family and Nonfamily Firms’ Strategic Effects on Regional Development: Evidence from Kenya

Family firms, by being major economic and social actors, contribute to employment, revenue, gross domestic products and socially oriented activities worldwide. Scholars argue that family firms outperform nonfamily firms, but little is known on how and why family firms contribute differently to regional development in comparison to non-family firms. This chapter addresses this knowledge gap by examining two interrelated questions: 1) Do family and nonfamily firms contribute differently to regional development? 2) What are the firm underlying strategic behaviours which help explain the differentiated contribution by both set of firms? The empirical evidence is drawn from the quantitative analysis of survey data from 307 firms operating in Kenya. The findings of the study showed that the strategic behaviours (entrepreneurial orientation, decision making process and social network use) are different in both types of firms. These differences in their strategic behaviour explain the extent to which these firms contribute to regional development and the moderating role of family involvement. The chapter discusses the theoretical and practical implications of the findings as well as the study limitations.