Hypothesis 3a: The difference between the actual growth rate (AG) and the internal growth rate (IG) in first-generation family firms is higher compared with second- and third-generation family firms.
The first subsample contains only those firms that grow faster than their internal growth rate, and the second subsample consists of firms that grow faster than their sustainable growth rate.
Table 5 shows the OLS results based on a group of family firms that grow faster than their internal growth rate and a group that grows faster than their sustainable growth rate.
For both second- and third-generation family firms with faster growth than their internal growth rate, the extent to which they are willing to exceed this internal growth rate proves to be six to seven percentage points lower compared with first-generation companies.
Our results show that next-generation family firms are characterized by significantly lower differences between their actual growth rate and their internal growth rate compared to first-generation family firms (hypothesis 3a), which indicates that next-generation family firms avoid large increases in additional debt financing.