Lone founders, types of private family firms and firm performance

Abstract

The purpose of this article is to provide an explanation for the contradictory findings about the links between private family businesses (FBs) and organisational performance. The paper suggests that lone founder firms determine the results by explaining the comparative performance of different private FBs and NFBs. In addition, we develop a parsimonious typology of private FBs that exploits the interactions of the components of family involvement to show that firms that achieve to avoid or minimize traditional agency conflicts tend to outperform the firms that do not. It appears that the use of ownership dispersion as a governance mechanism shepherds and monitors performance progress, and the conflict between large and minority shareholders seems to be more costly than the conflict between owners and managers.