Title

Industry and Information Asymmetry: The Case of the Employment of Non-Family Managers in Small and Medium-Sized Family Firms

Abstract

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.

Department(s)

Business and Information Technology

International Standard Serial Number (ISSN)

0047-2778

Document Type

Article - Journal

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2016 International Council for Small Business, All rights reserved.

Publication Date

01 Oct 2017

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