Family Ownership, Product Market Competition and Firm Performance: Empirical Evidence From Vietnam

Purpose: This study analyzes the interaction effect of family ownership and product market competition on firm performance. Design/methodology/approach: The sample consists of 47 family firms listed on the Ho Chi Minh City Sotck Exchange (Vietnam) during 2010 - 2022. This research employs the capital approach to define a family firm. This research uses the Fixed Effect Model for panel data to analyze the relationship between family ownership and firm performance. To address the issues of heteroscedasticity and autocorrelation, this study employs the Huber-White estimator for the variance of the estimates. Findings: This study finds a nonlinear correlation between family ownership and firm performance. It also observes that competition in the product market inversely affects firm performance. The complementary effect emerges when competition is combined with family ownership, suggesting that competition serves as a motivator for family mem-bers to enhance firm performance. The market’s evaluation indicates that competition does not supplant the gover-nance mechanisms of firms, and family members may prioritize the interests of the firm over those of the family. The involvement of additional family members can lead to more democratic business decisions, which in turn can boost performance. Research limitations/implications: These results can only be generalized for large-size firms. In addition, product market competition is measured using estimation methods, which are limited by certain assumptions and application contexts. Therefore, in subsequent studies, it could be beneficial to expand the measurement of competition using other methods. Originality/value: This research is the premier exploration of the combined influence of family ownership and prod-uct market competition on firm performance. While competition in the product market is a well-established research direction in corporate governance mechanisms, previous studies have primarily concentrated on analyzing the influence of competition on firm performance without considering family ownership and its complementary or substitution effects.