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Bounded Rationality and Bounded Reliability: A Study of Nonfamily Managers’ Entrepreneurial Behavior in Family Firms

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  • Josip Kotlar
  • Philipp Sieger

Abstract

We use transaction cost economics to explain the individual-level entrepreneurial behavior of family and nonfamily managers in family firms. We argue that nonfamily managers exhibit lower entrepreneurial behavior than family managers, particularly after the founder’s departure from the business. Moreover, we identify an expanded set of factors through which family firms can facilitate nonfamily managers’ entrepreneurial behavior, including monitoring, incentives, distributive justice, access to the top management, and job control perceptions. We test these hypotheses in a sample of 296 family firm managers, contributing new insights on nonfamily managers and corporate entrepreneurship in family firms.

Suggested Citation

  • Josip Kotlar & Philipp Sieger, 2019. "Bounded Rationality and Bounded Reliability: A Study of Nonfamily Managers’ Entrepreneurial Behavior in Family Firms," Entrepreneurship Theory and Practice, , vol. 43(2), pages 251-273, March.
    • Handle: RePEc:sae:entthe:v:43:y:2019:i:2:p:251-273
    DOI: 10.1177/1042258718796085
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    3. Istipliler, Baris & Ahrens, Jan-Philipp & Bort, Suleika & Isaak, Andrew, 2023. "Is exposure to the family firm always good for the next CEO? How successor pre-succession firm experience affects post-succession performance in family firms," Journal of Business Research, Elsevier, vol. 167(C).
    4. Pramodita Sharma & James J. Chrisman & Jess H. Chua & Lloyd P. Steier, 2020. "Family Firm Behavior From a Psychological Perspective," Entrepreneurship Theory and Practice, , vol. 44(1), pages 3-19, January.
    5. María del Pilar Casado-Belmonte & María de las Mercedes Capobianco-Uriarte & Rubén Martínez-Alonso & María J. Martínez-Romero, 2021. "Delineating the Path of Family Firm Innovation: Mapping the Scientific Structure," Review of Managerial Science, Springer, vol. 15(8), pages 2455-2499, November.
    6. Aldrich, Howard E. & Alvarez, Sharon A. & Brumana, Mara & Campopiano, Giovanna & Minola, Tommaso, 2023. "Entrepreneurship in family firms: What’s next? Multilevel embeddedness and individuals’ cognition," Journal of Family Business Strategy, Elsevier, vol. 14(3).
    7. Madawala, Kalani & Foroudi, Pantea & Palazzo, Maria, 2023. "Exploring the role played by entrepreneurial self-efficacy among women entrepreneurs in tourism sector," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).

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