The substitution of governance mechanisms in the evolution of family firms. Issue 6 (December 2017)

• Record Type: Journal Article
• Authors: van Aaken, Dominik; Rost, Katja; Seidl, David
• Is Part Of: Long range planning. Volume 50:Issue 6(2017)
• Page Start: 826
• Page End: 839
• Publication Date: 2017-12
• Subjects: Agency theory -- Altruism -- Corporate governance -- Family business -- Family governance -- Parental altruism -- Self-governance -- Substitution; Management -- Periodicals; Business planning -- Periodicals; Gestion -- Périodiques; Management; Periodicals; 658.4012
• DOI: 10.1016/j.lrp.2017.01.002
• Languages: English
• ISSNs: 0024-6301

Abstract

Abstract: This paper examines how family firms substitute corporate governance with family governance and self-governance at different stages of their development. We argue that the types of agency problems that family firms face as they pass from one generation to the next determine the extent to which these mechanisms can be used as substitutes for one another. Our empirical investigation provides evidence that in the early stages of a family firm's life cycle, instruments of self-governance lessen the need for mechanisms of corporate governance, whereas in the later stages, instruments of family governance can substitute for mechanisms of corporate governance.