A family firm variant of the behavioral agency theory

Family Involvement and Sustainable Family Business: Analysing Their Effects on Diversification Strategies

“…Paradoxically, and in contrast to previous arguments, empirical results offer mixed findings regarding diversification in family firms [8][9][10]. Family firms have been seen as risk averse [11].…”

Agency theory and the family business

“…In this case, agency costs sometimes also stem from prioritising non-financially oriented goals, such as keeping control in the family instead of pursuing more auspicious business opportunities (Chrisman et al, 2004). However, literature discussing the BAM model has not yet agreed on whether risk-taking is indeed lower when family ownership is present (Chrisman & Patel, 2012;Lim, Lubatkin, & Wiseman, 2010;Naldi, Nordqvist, Sjöberg, & Wiklund, 2007;Zahra, Hayton, & Salvato, 2004;Zellweger & Sieger, 2012).…”

“…This heterogeneity describes the family's participation in business in different constellations, from a founder-controlled business to a post-founder business (such as a sibling partnership) to a cousin consortium where more extended family is active (Eddleston & Kellermanns, 2007;Gersick, 1997;Lim et al, 2010;Massis et al, 2013;Schulze et al, 2003a). When comparing the effects of these management constellations and generational stages of family firms on performance, it is suggested that these effects be measured and explained through agency costs using the scales by Schulze et al (2001) and Schulze et al (2003b) as well as Chrisman et al (2007) and Sieger et al (2013).…”

A socioemotional wealth perspective on innovativeness and performance of family businesses.

“…The present chapter provides the theoretical foundations used for the development of the research model. First, I present the behavioral agency model (BAM) which researchers recognize as the precursor of SEW (Cruz and Nordqvist, 2012) and then delve deeper into the SEW perspective which has been characterized by scholars as the family business variant of BAM (Lim, Lubatkin and Wiseman, 2010;Nordqvist et al, 2015).…”

“…However, the BAM makes several assumptions that do not always hold in the case of family firms (Lim, Lubatkin, and Wiseman, 2010). For instance, under behavioral agency theory, the ownership is separated from the management of a firm in such a way that agents are expected to behave in a self-interested way seeking to maximize their own wealth at the expense of the wealth of the principals that they are assumed to serve.…”