Markets, Hierarchies, and Families: Toward a Transaction Costs Theory of the Family Firm

48 Pages Posted: 4 Oct 2009 Last revised: 14 Jun 2011

See all articles by Eric Gedajlovic

Eric Gedajlovic

Simon Fraser University (SFU) - Strategy and Business Economics

Michael Carney

Concordia University, Quebec - John Molson School of Business

Date Written: October 2, 2009

Abstract

Why do family businesses exist? What factors explain their versatility, limitations and success within and across different industrial and geographic contexts? We develop a transaction-cost framework that addresses these questions. In doing so, we identify a class of asset we term generic non-tradables (GNTs), that are firm-specific, but generic in application. We reason that family firm governance provides relative advantages in developing, sustaining, and appropriating value from GNTs through combinations with other types of assets. We propose that these advantages as well as some concomitant disadvantages explain the versatility, limitations and success of family business enterprise.

Keywords: Family firm, corporate governance, competitive advantage, transactions cost

Suggested Citation

Gedajlovic, Eric and Carney, Michael, Markets, Hierarchies, and Families: Toward a Transaction Costs Theory of the Family Firm (October 2, 2009). Available at SSRN: https://ssrn.com/abstract=1481792 or http://dx.doi.org/10.2139/ssrn.1481792

Eric Gedajlovic

Simon Fraser University (SFU) - Strategy and Business Economics ( email )

2053 Main Mall
Vancouver, BC V6T-1Z2
Canada

HOME PAGE: http://www.gedajlovic.com

Michael Carney (Contact Author)

Concordia University, Quebec - John Molson School of Business ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada

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