Enterprise risk management in family firms: evidence from Austria and Germany

Family firms are the most prevalent type of firm worldwide. Nevertheless, the existent enterprise risk management (ERM) literature is silent on the adoption of ERM in family firms. Family firms exhibit specifics likely to influence the adoption of ERM. Most importantly, they often feature lower levels of agency conflicts, which should make them less prone to invest in mechanisms to control such problems. Consequently, it is expected that family firms are less prone to invest in ERM. This paper aims to explore this basic expectation. This study is based on a survey of 430 firms from Austria and Germany. It is observed that family firms show a lower adoption of ERM, especially in family firms where there is a family CEO. The results suggest that future empirical ERM research should more closely analyze or at least control for family influence. This study is among the first to analyze ERM adoption in family firms.