Nuances matter: how alternative family firm definitions shape the observed relationship with financial performance in SMEs

Purpose - This study aims to examine how alternative operational definitions of family firm status shape the observed relationship between family involvement and financial performance in small- and medium-sized enterprises (SMEs). Design/methodology/approach - Drawing on agency theory, stewardship theory, behavioral agency arguments and the resource-based view, the study applies five operational definitions of family firms to the same sample of 184 Italian SMEs. Using a four-year panel dataset for 2014-2017, ordinary least squares regressions with industry and year fixed effects are estimated, controlling for firm age, size, generational change, sales growth, total assets and leverage. Findings - Definitional choices materially affect empirical conclusions. Family firm status is positively associated with ROA under definitions based on majority ownership or voting rights, negatively associated under broader or lower-threshold definitions and not significantly associated under an intermediate definition. Thus, family firm definitions should not be treated as interchangeable classification devices. Research limitations/implications - The study focuses on privately held Italian SMEs in a specific regional context and relies on accounting-based performance measures. Future research should test whether definitional sensitivity also affects non-financial and socioemotional outcomes. Practical implications - Researchers, policymakers and practitioners should define family firm status transparently to avoid misleading performance comparisons, inappropriate benchmarking and ineffective support measures. Originality/value - The study shows that definitional thresholds act as a methodological lens shaping family firm-performance evidence within the same SME sample.