Should You Be in Business With Your Spouse?

Happy Valentine’s Day! On a day committed to love and partnership, we wondered: how does working with your loved one affect both business and household incomes? W. Gibb Dyer and W. Justin Dyer of Brigham Young University, and Richard G. Gardner, Texas A&M University, discuss this in their paper, “Should My Spouse Be My Partner? Preliminary Evidence From the Panel Study of Income Dynamics” published in the July 2012 issue of Family Business Review.

The abstract:

This study examines how firm performance and family income are affected when an “owner-managed” firm transitions to a “copreneurial” business. Data from the Panel Study of Income Dynamics were used to track changes in firm performance and family income from 1996 to 2006 during which time an owner-manager decided to partner with his spouse. The findings suggest that (a) involvement of one’s spouse in the business had no significant impact on firm profits and (b) working with one’s spouse had a significant impact on family income. The authors hypothesize that the lack of spousal influence on firm performance is because of their inability to influence their spouses, their lack of education and skills needed by the firm, and organizational “imprinting.” Moreover, since it is hypothesized that many spouses work for little or no pay, there would not be a significant impact on family income as the result of one’s partnering with a spouse. However, this hypothesis was not confirmed.