We use transaction cost economics to explain the individual-level entrepreneurial behavior of family and non-family managers in family firms. We argue that non-family managers exhibit lower entrepreneurial behavior than family managers, particularly after the founder’s departure from the business. Moreover, we identify an expanded set of factors through which family firms can facilitate non-family managers’ entrepreneurial behavior, including monitoring, incentives, distributive justice, access to the top management, and job control perceptions. We test these hypotheses in a sample of 296 family firm managers, contributing new insights on non-family managers and corporate entrepreneurship in family firms.