To read this content please select one of the options below:

Principal-principal conflicts and family firm growth: The moderating role of business family identity

Andrea Calabrò (Witten Institute for Family Business, Witten/Herdecke University, Witten, Germany)
Giovanna Campopiano (Witten Institute for Family Business, Witten/Herdecke University, Witten, Germany)
Rodrigo Basco (Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in Family Business, American University of Sharjah, Sharjah, United Arab Emirates)

Journal of Family Business Management

ISSN: 2043-6238

Article publication date: 6 September 2017

Issue publication date: 19 September 2017

3260

Abstract

Purpose

Drawing on the principal-principal conflict and identity literatures, the purpose of this paper is to investigate the Agency Problem Type II-bis in the context of family business. Specifically, the authors hypothesize that the size of the family owner group is related to firm growth and that this relationship is moderated by the extent to which the family identifies with the firm.

Design/methodology/approach

The hypotheses are tested on a sample of 265 medium and large German family firms (FFs) via moderated hierarchical regression analysis.

Findings

The main findings suggest that business family identity moderates the inverted U-shaped relationship between the size of the family owner group and firm growth in such a way that FFs with medium-sized family owner groups and high levels of business family identity reach higher firm growth.

Practical implications

In the context of FFs fully owned by one family, family owners might have different strategic preferences, goals, and identities, thus potentially making them subject to the conflict that could arise among the different family owners in relation to growth expectations. Recognizing this problem could help family owners find potential solutions to ensure the well-being of both the family and the business.

Originality/value

The combination of family ownership structure and family ownership dynamics affects firm growth. Challenging the homogeneity of the family owner group, the authors highlight the role of Agency Problem Type II-bis in hindering growth of FFs. A finer-grained view of principal-principal conflicts in FFs is thus discussed.

Keywords

Citation

Calabrò, A., Campopiano, G. and Basco, R. (2017), "Principal-principal conflicts and family firm growth: The moderating role of business family identity", Journal of Family Business Management, Vol. 7 No. 3, pp. 291-308. https://doi.org/10.1108/JFBM-02-2017-0005

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

Related articles