This article examines whether agency or stewardship is the more effective form of managerial governance within family firms. Synthesizing arguments regarding the differential tendencies of nonfamily versus family managers and the bifurcated manner in which they are likely to be governed, we propose asymmetric responses to agency versus stewardship mechanisms. Our empirical results provide evidence challenging common assumptions regarding the behavior exhibited by nonfamily versus family managers and the mechanisms by which each is governed. Although our findings also provide evidence of response asymmetry, they nevertheless point to the greater effectiveness of stewardship over agency governance irrespective of a manager’s family affiliation.
This article represents a call to family scholars for help in examining the effects of business ownership on families. To demonstrate the importance of this call, we illustrate the extent to which new venture creation is encouraged by policymakers and estimate the number of families engaged in entrepreneurial activity around the globe. We then summarize emergent critiques questioning the glorification of entrepreneurship in general and review the limited body of scholarly work examining the effects on families in particular. We conclude by outlining potential research agendas for several domains of family scholarship, providing examples of the provocative questions that arise when business ownership is explicitly acknowledged as a factor likely to impact family dynamics and well‐being.
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