Pablo Balan

The paper might be of interest to students of corporate power and family firms (@danielascur.bsky.social @spachibeusa.bsky.social) and to students of kinship and politics @nathannunn.bsky.social @jonathanschulz.bsky.social @yuhuawang.bsky.social @juanfeliperiano.bsky.social ) 17/n

Overall, the paper tries to translate insights from multiple fields on how kinship promotes cooperation into political economy (strategic setting + micro-foundations + causal identification) to study how capitalism works in many parts of the world, and how "the state" and "society" interact. 16/n

Family ties can also be a source of institutional weakness—the gap between policy goals and outcomes. They deflect policies like campaign finance reform, leading to unintended consequences. This is a growing research area, but we’re only beginning to understand these interactions. 15/n

All this suggests we should see family firms as *kinship-based economic institutions*. Their political power stems from family ties—a fundamental source of corporate power. This helps explain their political activism and resilience in the face of shocks. 14/n

To be clear, we trace the political advantage of family firms *to the level of family ties*, above and beyond any other possible confounders. We also show *when* family networks and familial collective action are activated. 13/n

To our knowledge, this is the first paper to show how family ties solve a high-stakes cooperation problem in a contemporary setting, not just historically or in small-scale societies, but in large corporations facing strategic dilemmas. Kinship in action! 12/n

Is this really driven by family ties? This is a bit tricky—individuals belong to multiple networks. We reconstructed alternative networks—same firm, same university—and even simulated random ties. But this pattern doesn’t appear there: not all social ties are the same. 11/n

Crucially, the ban activated cooperation among family members: we find evidence of influence (“peer effects”) in their contribution decisions. It altered the social logic of contributions, turning them into strategic complements. 10/n

Zooming in on individuals, using data on over 12K businesspeople, members of controlling families started contributing as private citizens after the ban. This behavior was driven by those in firms that had made corporate contributions before the ban. 9/n

Yes—and here’s how. Family firms replaced corporate contributions with individual ones, while non-family firms didn’t. This result holds across a rich set of controls, including ownership concentration. 8/n

Kinship ties may help solve this problem. Across disciplines, evidence shows family ties foster cooperation: providing informal insurance, promoting exchange and supporting public goods. Kinship also affects development and institutions.But can it solve high-stakes cooperation in corporations? 7/n

To understand what happened, we need to see how these policies interact with organizations. If contributions raise firm value, they’re a collective good. When corporate donations were banned, individuals had to decide whether to contribute, creating a classic free-riding problem. 6/n

But this isn’t the whole story. In our @thejop.bsky.social paper, we uncover a hidden side of the puzzle: how family firms overcome negative shocks. In Brazil, the Supreme Court banned corporate contributions after the Car Wash Scandal. Will family firms keep their political edge after the ban? 5/n

In our World Development paper, we showed that family firms can craft long-term relational contracts with politicians thanks to their long time horizons. This turns them into political heavyweights: more likely to fund political campaigns and extract rents: doi.org/10.1016/j.wo... 4/n

Family firms are less productive but also long-lived and a staple of capitalism in developing countries. Why? The answer to this puzzle may lie in politics. We identify two mechanisms that may explain family firms’ political behavior: *long time horizons* and *collective action capacity*. 3/n

Market economies are embedded in social institutions. In this project, we try to illuminate a long-standing feature of capitalism in the Global South and elsewhere—the prevalence of family-based capitalism. Project summary
@promarket.bsky.social: www.promarket.org/2023/07/24/f...

🚨Thrilled🚨 that my paper "Family Ties as Corporate Power" (with @jdodyk.bsky.social and I. Puente) is now available as "just accepted" at the @thejop.bsky.social . Working Paper: doi.org/10.1086/736563