Ownership versus Management Effects on Performance in Family and Founder Companies: A Bayesian Reconciliation
Journal of Family Business Strategy, Vol. 2, No. 4, pp. 232-245
45 Pages Posted: 10 Jun 2010 Last revised: 29 Jan 2013
Date Written: June 9, 2010
We employ agency theory to argue that the effects of family (and founder) ownership vs. management will be quite different: the former is expected to contribute positively to performance, the latter is argued to erode performance. Previous studies, due to problems of multicollinearity have been unable to distinguish these effects. Using a Bayesian approach that avoids these problems, we find that whereas family and founder ownership are associated with superior performance, the results for family and even founder management are more ambiguous. Our study is the first to assess the distinctive performance effects of family and founder presence in both ownership and management.
Keywords: family firms, founder firms, performance, Bayesian analysis, agency theory
JEL Classification: C11, G34, M13
Suggested Citation: Suggested Citation