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Abstract
By complementing agency theory with behavioral assumptions, we explore the effects of family involvement on small and medium enterprises’ (s) performance. We identify three separate dimensions of family involvement and hypothesize nonlinear, direct, and interaction effects on the performance of an . The evidence on 787 suggests that an inverted ‐shaped relationship exists between family ownership and performance, and ownership dispersion among family members negatively affects performance. Balancing family and nonfamily members in the top management team () is found to be beneficial to s’ performance, but the family ratio in the becomes crucial only at high levels of family ownership.
Acknowledgments
The authors are indebted to the Associate Editor, Eddy Laveren, and the anonymous reviewers for their insightful and developmental feedback, which led to substantial improvements in our work. The authors are also thankful to Joseph Astrachan, Jess Chua, and Mattias Nordqvist for their helpful comments on earlier versions of the paper.
Notes
1 For our purposes here, family ownership dispersion is referred to as the number of controlling family members that hold equity in the firm. Low dispersion reflects that family ownership is concentrated in one or few family members, whereas high family ownership dispersion indicates that multiple family members hold ownership in the firm. It is important to note that this measure is similar to that used by Eddleston, Otondo, and Kellermanns (Citation2008) and Le Breton‐Miller, Miller, and Lester (Citation2011); however, contrary to Schulze, Lubatkin, and Dino (Citation2003a), we do not focus here on how the voting power is balanced among majority and minority family owners.
Additional information
Notes on contributors
Alfredo De massis
Alfredo De Massis is director of the Centre for Family Business and reader in Family Business and Innovation at IEED, Lancaster University Management School, and professor of Family Entrepreneurship at the University of Bergamo.
Josip Kotlar
Josip Kotlar is senior research associate at IEED, Lancaster University Management School.
Giovanna Campopiano
Giovanna Campopiano is research fellow at the University of Bergamo.
Lucio Cassia
Lucio Cassia is professor of Strategic Management at the University of Bergamo and director of CYFE.