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Beyond agency and stewardship theory : shareholder–manager relationships and governance structures in family firms. / Löhde, Ann Sophie K.; Campopiano, Giovanna; Calabrò, Andrea.
In: Management Decision, Vol. 59, No. 2, 01.02.2021, p. 390-405.Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Beyond agency and stewardship theory
T2 - shareholder–manager relationships and governance structures in family firms
AU - Löhde, Ann Sophie K.
AU - Campopiano, Giovanna
AU - Calabrò, Andrea
N1 - This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.
PY - 2021/2/1
Y1 - 2021/2/1
N2 - Purpose: Challenging the static view of family business governance, we propose a model of owner–manager relationships derived from the configurational analysis of managerial behavior and change in governance structure. Design/methodology/approach: Stemming from social exchange theory and building on the 4C model proposed by Miller and Le Breton-Miller (2005), we consider the evolving owner–manager relationship in four main configurations. On the one hand, we account for family businesses shifting from a generalized to a restricted exchange system, and vice versa, according to whether a family manager misbehaves in a stewardship-oriented governance structure or a nonfamily manager succeeds in building a trusting relationship in an agency-oriented governance structure. On the other hand, we consider that family firms will strengthen a generalized exchange system, rather than a restricted one, according to whether a family manager contributes to the stewardship-oriented culture in the business or a nonfamily manager proves to be driven by extrinsic rewards. Four scenarios are analyzed in terms of the managerial behavior and governance structure that characterize the phases of the relationship between owners and managers. Findings: Various factors trigger managerial behavior, making the firm deviate from or further build on what is assumed by stewardship and agency theories (i.e. proorganizational versus opportunistic behavior, respectively), which determine the governance structure over time. Workplace deviance, asymmetric altruism and patriarchy on the one hand, and proorganizational behavior, relationship building and long-term commitment on the other, are found to determine how the manager behaves and thus characterize the owner's reactions in terms of governance mechanisms. This enables us to present a dynamic view of governance structures, which adapt to the actual attitudes and behaviors of employed managers. Research limitations/implications: As time is a relevant dimension affecting individual behavior and triggering change in an organization, one must consider family business governance as being dynamic in nature. Moreover, it is not family membership that determines the most appropriate governance structure but the owner–manager relationship that evolves over time, thus contributing to the 4C model. Originality/value: The proposed model integrates social exchange theory and the 4C model to predict changes in governance structure, as summarized in the final framework we propose.
AB - Purpose: Challenging the static view of family business governance, we propose a model of owner–manager relationships derived from the configurational analysis of managerial behavior and change in governance structure. Design/methodology/approach: Stemming from social exchange theory and building on the 4C model proposed by Miller and Le Breton-Miller (2005), we consider the evolving owner–manager relationship in four main configurations. On the one hand, we account for family businesses shifting from a generalized to a restricted exchange system, and vice versa, according to whether a family manager misbehaves in a stewardship-oriented governance structure or a nonfamily manager succeeds in building a trusting relationship in an agency-oriented governance structure. On the other hand, we consider that family firms will strengthen a generalized exchange system, rather than a restricted one, according to whether a family manager contributes to the stewardship-oriented culture in the business or a nonfamily manager proves to be driven by extrinsic rewards. Four scenarios are analyzed in terms of the managerial behavior and governance structure that characterize the phases of the relationship between owners and managers. Findings: Various factors trigger managerial behavior, making the firm deviate from or further build on what is assumed by stewardship and agency theories (i.e. proorganizational versus opportunistic behavior, respectively), which determine the governance structure over time. Workplace deviance, asymmetric altruism and patriarchy on the one hand, and proorganizational behavior, relationship building and long-term commitment on the other, are found to determine how the manager behaves and thus characterize the owner's reactions in terms of governance mechanisms. This enables us to present a dynamic view of governance structures, which adapt to the actual attitudes and behaviors of employed managers. Research limitations/implications: As time is a relevant dimension affecting individual behavior and triggering change in an organization, one must consider family business governance as being dynamic in nature. Moreover, it is not family membership that determines the most appropriate governance structure but the owner–manager relationship that evolves over time, thus contributing to the 4C model. Originality/value: The proposed model integrates social exchange theory and the 4C model to predict changes in governance structure, as summarized in the final framework we propose.
KW - 4C model
KW - Agency theory
KW - Governance mechanisms
KW - Governance structure
KW - Social exchange theory (SET)
KW - Stewardship theory
KW - Time orientation
U2 - 10.1108/MD-03-2018-0316
DO - 10.1108/MD-03-2018-0316
M3 - Journal article
AN - SCOPUS:85087090251
VL - 59
SP - 390
EP - 405
JO - Management Decision
JF - Management Decision
SN - 0025-1747
IS - 2
ER -