Industry and Information Asymmetry: The Case of the Employment of Non-Family Managers in Small and Medium-Sized Family Firms
As family firms begin to professionalize, they face an important crossroads in deciding whether to employ non-family managers. To preserve socioemotional wealth and minimize agency costs, family owners may resist employing non-family managers. However, industry sector may play a role that influences the employment of non-family managers. We argue that the family's reluctance will be stronger in industries where information asymmetries make monitoring managers more difficult. For industries where monitoring is easier, the benefits of employing non-family managers may offset the loss in socioemotional wealth and increase in agency costs. Results based on a sample of 965 small and medium-sized retail and manufacturing firms confirm our predictions.
Fang, C., Memili, E., Chrisman, J. J., & Penney, C. (2017). Industry and Information Asymmetry: The Case of the Employment of Non-Family Managers in Small and Medium-Sized Family Firms. Journal of Small Business Management, 55(4), pp. 632-648. John Wiley & Sons.
The definitive version is available at https://doi.org/10.1111/jsbm.12267
Business and Information Technology
International Standard Serial Number (ISSN)
Article - Journal
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01 Oct 2017