To Be or Not to Be: When Should a Threshold Firm in an Emerging Market Move to Professional Management?
Recent research emphasizes the importance of the separation of ownership and control for growing threshold firms. Demand for specialized management knowledge by growing owner-run SMEs is usually resolved through the separation of ownership and control, using top management labor market and agency contracts. Under certain environmental institutional conditions, owners of SMEs from emerging markets face difficulties separating ownership and control. For example, the majority of Russian companies are run by their primary owners. In rare situations when separation of ownership and control formally occurs, high risk of economic fraud and owner’s fear often revert management succession to a default owner-control scenario. These conditions pose a threat for a growing threshold firm needing professional management knowledge assets. Using a dataset of 500 entrepreneurial companies from fast growing industries in St. Petersburg and Moscow, this study defines and studies threshold firms and also analyzes how various perceived characteristics of the institutional environment are influencing the probability of separation of ownership and control in threshold firms. According to the estimation results institutional factors such as poor security of ownership rights and misfit of company with formal regulatory norms have a negative impact on the probability of separation of ownership and control in threshold firms. As a result, threshold firms limit their growth possibilities since their access to specialized knowledge is limited to the knowledge base of the owner.
|Date of creation:||02 Apr 2013|
|Date of revision:|
|Contact details of provider:|| Postal: EERC Research Network, Russia and CIS, 92/94, Dmytrivska Str., suite 404, Kyiv, 01135 Ukraine|
Web page: http://www.eercnetwork.com
|Order Information:|| Postal: EERC Research Network, Russia and CIS, 92/94, Dmytrivska Str., suite 404, Kyiv, 01135 Ukraine|
Web: https://eercnetwork.com/paper Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- North, Douglass C, 1994.
"Economic Performance through Time,"
American Economic Review,
American Economic Association, vol. 84(3), pages 359-68, June.
- Wennekers, Sander & Thurik, Roy, 1999. "Linking Entrepreneurship and Economic Growth," Small Business Economics, Springer, vol. 13(1), pages 27-55, August.
- Mike W Peng & Denis Y L Wang & Yi Jiang, 2008. "An institution-based view of international business strategy: a focus on emerging economies," Journal of International Business Studies, Palgrave Macmillan, vol. 39(5), pages 920-936, July.
- Hibbs, Douglas A., 2009.
"Tax Toleration and Tax Compliance: How Government Affects the Propensity of Firms to Enter the Unofficial Economy,"
15897, University Library of Munich, Germany.
- Douglas A. Hibbs, Jr. & Violeta Piculescu, 2008. "Tax Toleration and Tax Compliance: How Government Affects the Propensity of Firms to Enter the Unofficial Economy," Discussion Papers 7_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
- Michael N. Young & Mike W. Peng & David Ahlstrom & Garry D. Bruton & Yi Jiang, 2008. "Corporate Governance in Emerging Economies: A Review of the Principal-Principal Perspective," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 196-220, 01.
- Klaus E Meyer & Mike W Peng, 2005. "Probing theoretically into Central and Eastern Europe: transactions, resources, and institutions," Journal of International Business Studies, Palgrave Macmillan, vol. 36(6), pages 600-621, November.
- John McMillan & Christopher Woodruff, 2002. "The Central Role of Entrepreneurs in Transition Economies," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 153-170, Summer.
- David Smallbone & Friederike Welter & Artem Voytovich & Igor Egorov, 2008. "Government and entrepreneurship in transition economies: the case of small firms in business services in Ukraine," The Service Industries Journal, Taylor & Francis Journals, vol. 30(5), pages 655-670, May.
- Ruta Aidis, & Saul Estrin & Tomasz Mickiewicz, 2007.
"Institutions and Entrepreneurship Development in Russia: A Comparative Perspective,"
79 Key Words: Entrepreneu, CENTRE FOR THE STUDY OF ECONOMIC AND SOCIAL CHANGE IN EUROPE,School of Slavonic and East European Studies,University College London (SSEES,UCL).
- Aidis, Ruta & Estrin, Saul & Mickiewicz, Tomasz, 2008. "Institutions and entrepreneurship development in Russia: A comparative perspective," Journal of Business Venturing, Elsevier, vol. 23(6), pages 656-672, November.
- Saul Estrin & Ruta Aidis & Tomasz Mickiewicz, 2007. "Institutions and Entrepreneurship Development in Russia: A Comparative Perspective," William Davidson Institute Working Papers Series wp867, William Davidson Institute at the University of Michigan.
- Ruta Aidis & Saul Estrin & Tomasz Mickiewicz, 2007. "Institutions and Entrepreneurship Development in Russia:A Comparative Perspective," CEDI Discussion Paper Series 07-03, Centre for Economic Development and Institutions(CEDI), Brunel University.
- Hildy Teegen & Jonathan P Doh & Sushil Vachani, 2004. "The importance of nongovernmental organizations (NGOs) in global governance and value creation: an international business research agenda," Journal of International Business Studies, Palgrave Macmillan, vol. 35(6), pages 463-483, November.
- Walid Ben-Amar & Paul André, 2006. "Separation of Ownership from Control and Acquiring Firm Performance: The Case of Family Ownership in Canada," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3-4), pages 517-543.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
- Simeon Djankov & Edward Miguel & Yingyi Qian & Gérard Roland & Ekaterina Zhuravskaya, 2005.
"Who are Russia's Entrepreneurs?,"
Journal of the European Economic Association,
MIT Press, vol. 3(2-3), pages 587-597, 04/05.
- Igor Filatotchev & Steve Toms & Mike Wright, 2006. "The firm's strategic dynamics and corporate governance life-cycle," International Journal of Managerial Finance, Emerald Group Publishing, vol. 2(4), pages 256-279, September.
- Denis, David J. & Denis, Diane K. & Sarin, Atulya, 1997. "Ownership structure and top executive turnover," Journal of Financial Economics, Elsevier, vol. 45(2), pages 193-221, August.
- Bert Flier & Frans A. J. Van Den Bosch & Henk W. Volberda, 2003. "Co-evolution in Strategic Renewal Behaviour of British, Dutch and French Financial Incumbents: Interaction of Environmental Selection, Institutional Effects and Managerial Intentionality," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 2163-2187, December.
- Meek, William R. & Pacheco, Desirée F. & York, Jeffrey G., 2010. "The impact of social norms on entrepreneurial action: Evidence from the environmental entrepreneurship context," Journal of Business Venturing, Elsevier, vol. 25(5), pages 493-509, September.
- Eric Gedajlovic & Michael H. Lubatkin & William S. Schulze, 2004. "Crossing the Threshold from Founder Management to Professional Management: A Governance Perspective," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 899-912, 07.
- Commander, Simon & Svejnar, Jan & Tinn, Katrin, 2008. "Explaining the performance of firms and countries: What does the business environment play?," Working Papers 22, Graduate School of Management, St. Petersburg State University.
- Zahra, Shaker A. & Filatotchev, Igor & Wright, Mike, 2009. "How do threshold firms sustain corporate entrepreneurship? The role of boards and absorptive capacity," Journal of Business Venturing, Elsevier, vol. 24(3), pages 248-260, May.
- André Stel & Martin Carree & Roy Thurik, 2005.
"The Effect of Entrepreneurial Activity on National Economic Growth,"
Small Business Economics,
Springer, vol. 24(3), pages 311-321, 02.
- Andre van Stel & Martin Carree & Roy Thurik, . "The effect of entrepreneurial activity on national economic growth," Papers on Entrepreneurship, Growth and Public Policy 2005-04, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- André van Stel & Roy Thurik & Martin Carree, 2005. "The effect of entrepreneurial activity on national economic growth," Scales Research Reports N200419, EIM Business and Policy Research.
- Beata S. Javorcik & Shang-Jin Wei, 2009.
"Corruption and Cross-Border Investment in Emerging Markets: Firm-Level Evidence,"
062009, Hong Kong Institute for Monetary Research.
- Javorcik, Beata S. & Wei, Shang-Jin, 2009. "Corruption and cross-border investment in emerging markets: Firm-level evidence," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 605-624, June.
- Kiss, Andreea N. & Danis, Wade M. & Cavusgil, S. Tamer, 2012. "International entrepreneurship research in emerging economies: A critical review and research agenda," Journal of Business Venturing, Elsevier, vol. 27(2), pages 266-290.
- Mike W. Peng & Yi Jiang, 2010. "Institutions Behind Family Ownership and Control in Large Firms," Journal of Management Studies, Wiley Blackwell, vol. 47(2), pages 253-273, 03.
- Filatotchev, Igor & Wright, Mike & Uhlenbruck, Klaus & Tihanyi, Laszlo & Hoskisson, Robert E., 2003. "Governance, organizational capabilities, and restructuring in transition economies," Journal of World Business, Elsevier, vol. 38(4), pages 331-347, November.
- A. Iakovlev & Iu. Simachev & Iu. Danilov, 2009. "The Russian Corporation," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 52(6), pages 63-75, October.
When requesting a correction, please mention this item's handle: RePEc:eer:wpalle:13/01e. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anton Pashchenko)
If references are entirely missing, you can add them using this form.