Abstract
We examine the effect of family involvement on employment security (proxied through employment adjustments) over time in different institutional environments. Using an unbalanced panel of 3,322 listed firms from 40 countries over a 10-year period, we find that family firms on average are less likely to reduce employment compared to their non-family counterparts. Moreover, the superior ability of family firms to protect labor continues to hold even in weak institutional environments, characterized by high political, socioeconomic and investment risks. We also find that the negative effect of family involvement on employment reduction varies significantly across different types of family firms in different institutional environments. These findings challenge prior research on the effect of family involvement on employment practices and hold important implications for theory and practice.