Entrepreneurial Risk Taking in Family Firms

Posted: 17 Nov 2009

See all articles by Shaker A. Zahra

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: 2005

Abstract

The purpose of this study is to identify the conditions under which family firms encourage entrepreneurial activities, particularly risk taking.Following a discussion of agency theory and entrepreneurial risk taking, it is hypothesized that being a founder and CEO, long CEO tenure, family ownership, and family involvement are positively associated with risk taking. A series of alternative hypotheses suggests that the same factors are negatively associated with risk taking.Data from a survey of 209 family-owned U.S. manufacturing firms are used to examine these competing scenarios and to test the hypotheses.Analyses of the data indicate that family ownership and involvement lead to more entrepreneurial risk taking. A long CEO tenure, however, is likely to inhibit risk taking behaviors. The duality of being a founder and CEO does not appear to have any bearing on entrepreneurial risk taking.Clearly, founder- and family-related variables exert an important influence on risk taking in ways that have not been captured in previous research. (SAA)

Keywords: Experimental/primary research, Family firms, Founders, Manufacturing industries, Risk orientation, Chief executive officers (CEOs), Family-work relations, Agency theory

Suggested Citation

Zahra, Shaker A., Entrepreneurial Risk Taking in Family Firms (2005). Family Business Review, Vol. 18, Issue 1, p. 23-40 2005. Available at SSRN: https://ssrn.com/abstract=1506800

Shaker A. Zahra (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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