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Altruism, agency, and the competitiveness of family firms

Author

Listed:
  • William S. Schulze

    (Weatherhead School of Management, Case Western Reserve University, 10900 Euclid Avenue, Cleveland, OH 44106-7235, USA)

  • Michael H. Lubatkin

    (Department of Management, School of Business Administration, University of Connecticut & EM Lyon, 2100 Hillside Road, Unit 2041 MG, Storrs, CT. 06269-2041, USA)

  • Richard N. Dino

    (Department of Management, School of Business Administration, University of Connecticut 2100 Hillside Road, Unit 2041 D, Storrs, CT 06269-2041, USA)

Abstract

The core belief among agency theorists is that when a firm is both owned and managed by family members, its governance structure is efficient. We argue that this belief over-simplifies the complexity of exchanges that occur among the family firm's decision agents, and does not conform to reality. We develop an alternative agency view of family firm governance that accounts for agency problems that are understated in extant agency models. These problems are rooted in the firm's ownership structure, as well as the altruistic relationships that exist between the firm's decision agents. We conclude with four propositions that address the competitive implications of this alternative view. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • William S. Schulze & Michael H. Lubatkin & Richard N. Dino, 2002. "Altruism, agency, and the competitiveness of family firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(4-5), pages 247-259.
    • Handle: RePEc:wly:mgtdec:v:23:y:2002:i:4-5:p:247-259
    DOI: 10.1002/mde.1064
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    References listed on IDEAS

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