The development of MASEM (Cheung & Chan, 2005; Van Essen, Van Oosterhout, et al., 2012) and the availability of strategy-related control variables in the existing empirical estimates provide an opportunity to harvest and analyze their mediating effects on the family control-firm performance relationship in PFFs.
We used MASEM, which combines the techniques of structural equation modeling with those of meta-analysis (Cheung & Chan, 2005; Viswesvaran & Ones, 1995), to test the relationship between PFFs and their strategic decisions (Fernandez & Nieto, 2005) and to examine the mediating role of strategy in the family control-firm performance relationship.
The advantage of MASEM is that it avoids biased estimates due to possible correlations among dependent variables.
The MASEM results in Table 5 show that PFFs' undercommitment of resources to international diversification and R&D hurts their performance, since internationalization (.02) and R&D (.13) are significantly and positively related to firm performance.
Our MASEM results indeed show that the focal relationship is mediated by strategic choices.