Comparative Business Practices and Productivity Performance between Family and Non-family Firms: Perceptions and Poverty Reduction Effects in Cameroon

"The current paper attempts to explain productivity performance between Family and Non-family Firms in Cameroon, and also to determine whether the relative contribution to the social and economic development of a country by family firms as opposed to non family firms is related to differences in production technologies and production efficiency. The study made use of quantitative data from the World Bank enterprise survey and a self-explorative survey which was collected using qualitative methods. Based on the former data we estimated total factor productivity via a Cobb–Douglas production function while accounting for the correlation between input levels and productivity. Further analysis allows us to show the main features of the corporate governance model of Cameroonian firms. As concerns management and control of firms, generally, family members are heavily involved in family firms than those of non family firms which are mostly managed externally. As concerns the key conventional input variables of labour and capital that affects firm level output, it is observed that non family firms employ more labour and invests more in capital compared to family owned and managed firms. Using the two-staged least-squares technique, the econometric analysis shows that family firms and even those managed by families are, on average less productive than externally managed firms and non family owned firms after controlling for sector as well as other characteristics, such as age, export status, access to credit and some business environment obstacles (competition, tax rates and tax administration). Pertaining to the qualitative survey, results showed that there exists some similarities between family and non family firms, and at the same time some significant differences in performance between the two are unveiled in terms of profitability, income generation, job creation and poverty reduction. The paper provides evidence-based policy recommendations to enhance the productivity and competitiveness of family and nonfamily enterprises in Cameroon."