Comparative efficiency of family and corporate farms: does family labour matter?

Abstract

We examine the comparative efficiency of family relative to corporate farms, using FADN data for the Czech Republic, Hungary, Romania and Spain. We estimate a non-parametric non-separable farm production function, and derive efficiency scores for both family and corporate farms. We decompose efficiency into two distinct sources - organisational differences and management capabilities. We find evidence for organisational efficiency gains from family farming, relative to corporate farming, and these appear to increase with family involvement. However, with regard to the management capabilities, family farms do not compare so favourably. Furthermore, family involvement does not seem to have any systematic effect on the efficiency derived from management capabilities. Our findings suggest that further investigation of the way family farms employ and build management capabilities is needed to substantiate any ‘superiority’ claims.