We explain why family–centered noneconomic goals and bounded rationality decrease the willingness and ability of small– and medium–sized family firms to hire and provide competitive compensation to nonfamily managers even in a labor market composed of stewards rather than agents. Family–centered noneconomic goals attenuate the ability to attract high–quality, nonfamily managers by promoting inferior total compensation packages, fewer opportunities for advancement, idiosyncratic strategies, and higher performance expectations. Furthermore, bounded rationality limits nonfamily managers’ ability to meet performance expectations when hired. The result is the “winner's curse,” where neither the economic nor noneconomic goals of family owners are fully achieved.

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PurposeThe purpose of this paper is to use the socio‐emotional wealth perspective to examine how the level of family involvement reduces the propensity to use incentives to non‐family managers in small to medium‐sized enterprises (SME) family firms.Design/methodology/approach – Primary data were collected from US firms. To evaluate the hypotheses, a logit model was employed on a final sample of 2,019 small family firms.FindingsResults suggest that family influence and control and intra‐family transgenerational succession intentions are negatively related to the propensity to use incentives. Also, the interaction effects of family management and ownership reduce the propensity to use incentives.Originality/valueThe paper’s empirical findings imply that despite their potential economic benefits, family involvement reduces the probability that incentives will be offered to non‐family managers because such incentives are perceived to be inconsistent with the preservation of the family’s socioemotional wealth. Also, choices that reflect a preference for socioemotional wealth may not only be a function of decision framing and loss aversion but also by the size of the economic pay‐offs that might be available. The findings suggest that non‐family managers in SME family firms may be affected by a family’s preoccupation with its socioemotional endowments. Thus, the authors expect that this paper provides further avenues to explore the decisions about attaining non‐economic and economic goals and other strategic issues in family firms.

Proponents of educational reform often call for policies to increase competition between schools. It is argued that market forces naturally lead to greater efficiencies, including improved student learning, when schools face competition. In many parts of the country, public schools experience significant competition from private schools; however, the literature is not clear as to whether public versus private competition generates significant improvements in technical efficiency. A major hurdle for researchers examining this issue is determining a workable definition of competition by which they can measure the degree of competition within local markets. I address this challenge by developing a School Competition Index (SCI) for Mississippi through implementation of several Geographical Information System (GIS) tools. The SCI reveals the degree of competition for each public school based on their spatial location relative to peer private schools operating within their service area. GIS is a unique way to measure the degree of competition among public schools and private schools. Including components of market structure is not sufficient to measure the effects of competition in a market; market characteristics, which vary between locations, are also important. Market Template Created By: James Nail 2010 characteristics such as, religiosity, school location, and social capital are used in this dissertation as exogenous variables. Two stage stochastic frontier analysis and single equation stochastic frontier analysis are both employed to evaluate school efficiency.This dissertation finds that higher degrees of competition from private schools significantly increase public elementary school efficiency, as measured by the proficiency rates in different examinations. At the same time, competition from private schools does not improve public high schools efficiency. The results suggest that a ruralurban student academic achievement gap persists, and that community social capital stock is also important to some extent. Regardless of model or estimation procedure, students' race and socio-economic status significantly reduce public school efficiency. It is anticipated that the current results will inform policymakers regarding the viability of competition-based reforms after considering all these factors.

Purpose Entrepreneurial innovation has been the most important source for improvement in firm performance. Innovation in family firms has become the focal issue in firm strategy. In today’s high-velocity environment, the dynamic organizational adaptation is essential for sustainable competitive advantage. The purpose of this paper is to investigate the nature of changes in external environment and the relationship between changes in the economic environment and family firms’ innovation in response to the environmental shift. Design/methodology/approach The authors designed a survey questionnaire to obtain primary data for the study. The survey consists of family firm structure, innovation drivers, governance, core competence and performance. Authors applied a random stratified sample method in selecting samples to reflect the population in family firms. Findings The study identified market conditions, technology and regulation as innovation drivers. The authors found that these innovation drivers have positive effects on family firm performance, although the technology variable is the only statistically significant variable at the conventional statistical significance level. Research limitations/implications The authors expected to have better response rate, and wish to have more observations. The authors would have stronger results if you could get more data. Practical implications Family firms need to respond to the high velocity of environment and to develop capabilities that understand the nature of changes in economic environment and take effective steps. The study findings offer guidelines for the managers of how to manage the firms in the dynamic environment. Social implications Family firms should use this results to develop strategies to deal with various economics situations. Originality/value The study identifies innovation drivers in family firms. The study contributes to finding and empirical testing of family firm innovation drivers. Findings of the study are valuable for managing the high velocity of today’s economic environment: changes in markets, technologies and regulations.