Are family firms good neighbours? A spatial analysis of Italian technology-intensive firms

Purpose A burgeoning body of evidence points out the importance of spatial proximity in influencing firm efficiency besides internal characteristics. Nevertheless, the family status of the firm has been traditionally overlooked in that debate. Therefore, this study aims to investigate productivity spillovers stemming from the geographical closeness to innovators and family firms. Design/methodology/approach Using secondary data on Italian technology-intensive manufacturing firms, the paper exploits spatial econometric models to estimate productivity spillovers across firms. Findings As regards the presence of spatial dependence, this study reveals that a firm's level of efficiency and productivity is influenced by that of nearby firms. Specifically, three main results emerge. First, spatial proximity to innovators is beneficial for the productivity of neighbouring firms. Second, closeness to family firms is a source of negative externalities for spatially proximate firms. However, and this is the third result, the adverse effect vanishes when the nearby family firms are also innovators. Research limitations/implications As the study relies on cross-sectional data, future research should explore productivity spillovers in a longitudinal setting. Additionally, the channels through which productivity spillovers occur should be measured. Practical implications The study highlights the importance of co-location for public policy initiatives to strengthen the competitiveness of firms and, indirectly, that of localities and regions. Moreover, the findings show the crucial role of innovation in mitigating the productivity gap between family and non-family firms. Social implications Notwithstanding the advent of the digital era, spatial proximity and localized social relationships are still a relevant factor affecting firms' performance. Originality/value By exploring the role of family firms in influencing the advantages of geographical proximity, this study contributes to the growing efforts to explore family enterprises across spatial settings.