Effects of Family Ownership and Professionalization on Firms’ Financial Performance and Sustainability Reputation
Issued Date
2023-01-01
Resource Type
ISSN
10422587
eISSN
15406520
Scopus ID
2-s2.0-85176013704
Journal Title
Entrepreneurship: Theory and Practice
Rights Holder(s)
SCOPUS
Bibliographic Citation
Entrepreneurship: Theory and Practice (2023)
Suggested Citation
Piyasinchai N., Thananusak T., Hughes M. Effects of Family Ownership and Professionalization on Firms’ Financial Performance and Sustainability Reputation. Entrepreneurship: Theory and Practice (2023). doi:10.1177/10422587231206573 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/91046
Title
Effects of Family Ownership and Professionalization on Firms’ Financial Performance and Sustainability Reputation
Author(s)
Author's Affiliation
Other Contributor(s)
Abstract
Family firms face significant challenges in professionalizing their management, while the professionalization effects on the firms’ performance are unclear. Drawing on stewardship and agency theories, we theorize and test the effects of family ownership and professionalization on firms’ financial performance and sustainability (environmental, social and governance) reputation. Using a large-scale management practices dataset of both public and private companies in the US, UK, Germany, and France, we find that family firms outperform nonfamily ones in terms of both financial performance and sustainability reputation, and professionalization helps strengthen such positive effects. We theorize that this is because professionalization can address agent opportunistic behaviors, while enhancing steward behaviors unique to family firms. The findings contribute to the literature on family business governance and professionalization.