An Empirical Examination of Ownership Structure in Family and Professionally Managed Firms

Abstract

The literature applying agency theory to management has focused on the performance advantages to be gained when ownership and control of the firm are aligned. This article investigates that premise by comparing family‐owned and ‐managed and professionally managed firms. The article presents the results of a field survey that examined the extent to which family‐owned and ‐managed firms differ across structural, process, and performance dimensions from their professionally managed counterparts. Significant differences exist between these two groups on both structural and process dimensions, and there is evidence that family‐owned and ‐managed firms exhibit performance advantages as a result of the unification of ownership and control.

Entrepreneurial Cognition

“…My (Dean) colleague and I argued that individuals with a stronger promotion focus are more likely to undertake identity play to escape the negative emotions stemming from identity loss-from rock bottom-than individuals with a weaker promotion focus. iDentity conflict in family firms anD an expeDiteD entrepreneurial process Many businesses are run and owned by family members (Heck and Trent 1999;Rogoff and Heck 2003;Wortman 1994), which can lead to tension within both the family and the firm (Daily and Dollinger 1992;Harvey and Evans 1994;Kellermanns and Eddleston 2004). Family conflict can be the outcome of business issues, such as different goals related to financial targets or product/service offerings.…”

Entrepreneurial Identity

“…iDentity conflict in family firms anD an expeDiteD entrepreneurial process Many businesses are run and owned by family members (Heck and Trent 1999;Rogoff and Heck 2003;Wortman 1994), which can lead to tension within both the family and the firm (Daily and Dollinger 1992;Harvey and Evans 1994;Kellermanns and Eddleston 2004). Family conflict can be the outcome of business issues, such as different goals related to financial targets or product/service offerings.…”

Are altruistic leaders worthy? The role of organizational learning capability

“…Since altruistic behaviors seek to assist or cooperate with others, they also offer the possibility for contact and interaction with others, thereby favoring information exchange and communication. Indeed, the literature suggests that altruism is positively related to cooperation (Yen and Niehoff, 2004), information exchange (Daily and Dollinger, 1992) and communication (Gersick et al, 1997). Alegre and Chiva (2013) show that organizational learning capability affects organizational performance through innovation.…”