TY - JOUR
T1 - Revisiting the impact of families on family firm performance
AU - Jaskiewicz, Peter
AU - Combs, James G.
AU - Uhlenbruck, Klaus
AU - Datta, Amlan
N1 - Publisher Copyright:
© 2023 The Authors. European Management Review published by John Wiley & Sons Ltd on behalf of European Academy of Management (EURAM).
PY - 2023
Y1 - 2023
N2 - Family owners monitor managers, attenuating principal–agent conflicts and improving firm performance. However, family owners also appropriate resources, creating principal–principal conflicts that harm firm performance. Although these effects occur simultaneously, research does not explain when one outweighs the other. We theorize that agency costs are minimized when the family's involvement on the board of directors is proportional to its ownership; too little board involvement fuels principal–agent conflicts, and too much fuels principal–principal conflicts. Consistent with our theorizing, evidence from French panel data shows firm performance increases as family board involvement and family ownership jointly increase, and performance is maximized when family board involvement and family ownership are proportional.
AB - Family owners monitor managers, attenuating principal–agent conflicts and improving firm performance. However, family owners also appropriate resources, creating principal–principal conflicts that harm firm performance. Although these effects occur simultaneously, research does not explain when one outweighs the other. We theorize that agency costs are minimized when the family's involvement on the board of directors is proportional to its ownership; too little board involvement fuels principal–agent conflicts, and too much fuels principal–principal conflicts. Consistent with our theorizing, evidence from French panel data shows firm performance increases as family board involvement and family ownership jointly increase, and performance is maximized when family board involvement and family ownership are proportional.
KW - agency theory
KW - family board involvement
KW - family business
KW - family ownership
KW - firm performance
UR - http://www.scopus.com/inward/record.url?scp=85171369340&partnerID=8YFLogxK
UR - https://www.mendeley.com/catalogue/987bd3ae-e90d-30e7-956e-f05675b28aa1/
U2 - 10.1111/emre.12606
DO - 10.1111/emre.12606
M3 - Article
AN - SCOPUS:85171369340
SN - 1740-4754
VL - 21
SP - 678
EP - 700
JO - European Management Review
JF - European Management Review
IS - 3
ER -