Abstract
Purpose: This study examines the influence of family ownership and presence of founder Chief Executive Officer (CEO) on labor productivity. Moreover, the study also examines the effects of hiring of non-family CEO on labor productivity after the departure of founder CEO.
Design/methodology/approach: We employed 2,926 firm year observations of non-financial firms listed on Pakistan Stock Exchange over the period 2012-2022. We used ordinary least squares regression to test the hypotheses and confirmed the validity of results using generalized method of moments estimation, fixed effects analysis and difference in difference estimation. Findings: Using the lens of social identity theory, we report that for the sake of family’s affective needs, and due to their empathic attitude towards labor, the presence of family ownership is positively associated with labor productivity. In addition, the presence of founder CEO further strengthens this relationship, however, the appointment of non-family CEO after the departure of founder CEO results in negative effects on labor productivity.
Originality/value: The study extends the family business literature by examining the social behavior of family owners on labor productivity, and influence of founder CEO and non-family CEO on this relationship in context of an emerging economy.