Does Size Matter? The Moderating Effects of Firm Size on the Employment of Nonfamily Managers in Privately Held Family SMEs

23 Pages Posted: 6 Sep 2016

See all articles by Hanqing Fang

Hanqing Fang

Mississippi State University

Robert Randolph

University of Nevada, Las Vegas

Esra Memili

University of North Carolina - Department of Marketing, Entrepreneurship, Hospitality and Tourism, Bryan School of Business and Economics

James J. Chrisman

Mississippi State University - College of Business

Date Written: September 2016

Abstract

Family firms' decisions to hire nonfamily managers are influenced by agency costs, socioemotional wealth concerns, and the availability of high‐quality nonfamily managers in the labor pool. We hypothesize that owing to these factors, family ownership and intrafamily succession intentions will be negatively associated with the proportion of nonfamily managers in private small‐ and medium‐sized (SME) family firms. However, firm size is hypothesized to positively moderate those relationships because as family firm size increases, the benefits of hiring nonfamily managers rise faster than the costs. Tobit regression analyses of 7,299 private SMEs support our hypotheses.

Suggested Citation

Fang, Hanqing and Randolph, Robert and Memili, Esra and Chrisman, James J., Does Size Matter? The Moderating Effects of Firm Size on the Employment of Nonfamily Managers in Privately Held Family SMEs (September 2016). Entrepreneurship Theory and Practice, Vol. 40, Issue 5, pp. 1017-1039, 2016. Available at SSRN: https://ssrn.com/abstract=2834153 or http://dx.doi.org/10.1111/etap.12156

Hanqing Fang (Contact Author)

Mississippi State University ( email )

Mississippi State, MS 39762
United States

Robert Randolph

University of Nevada, Las Vegas ( email )

4505 S. Maryland Parkway
Las Vegas, NV 89154
United States

Esra Memili

University of North Carolina - Department of Marketing, Entrepreneurship, Hospitality and Tourism, Bryan School of Business and Economics ( email )

P.O.Box 26170
Greensboro, NC 27412
United States

James J. Chrisman

Mississippi State University - College of Business ( email )

Mississippi State, MS 39762-0964
United States

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