Commentary on: 'Toward a Theory of Agency and Altruism in Family Firms.'
Posted: 1 Dec 2009
Date Written: 2003
The article titled 'Toward a theory of agency and altruism in family firms' by Schultz et al. uses the agency theory to better understand the dynamics of family firms. However, it is sometimes confusing as to whether the authors are attempting to further develop agency theory or whether they are using an innovative approach to understanding the dynamics of family business. The authors also over-simplify some of the more defining concepts of agency theory such as power and the conceptualization of motivation as driven solely by self-interest. This is especially problematic because it tends to treat economic exchanges independent of the constraining forces of the social context within which they occur. Though the paper enhances our understanding of family dynamics, two assumptions made in this paper should be examined in future research: first, the behavior of family members is critical to a firm's performance, and second, that firms are assumed to have agency problems.(VRS)
Keywords: Altruism, Family firms, Agency theory, Firm performance, Organizational behavior
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