Goal tolerance, outside investors, and family firm governance

TY - JOUR

T1 - Goal tolerance, outside investors, and family firm governance

AU - Villanueva, Jaume

AU - Sapienza, Harry J.

PY - 2009/11

Y1 - 2009/11

N2 - Le Breton-Miller and Miller argue that as the family becomes more embedded in the firm, the firm's decision makers become more susceptible to influence by the family, and agency problems rise for outside investors. We contend that the family's embeddedness in the business does not, in itself, explain whether the assumptions of agency theory are warranted. Our commentary offers an alternative way in which outside investors might look at family firms' goals. Outsiders should assess the complementarity of the family firm's objectives with their own if they are to make rewarding investments in family firms.

AB - Le Breton-Miller and Miller argue that as the family becomes more embedded in the firm, the firm's decision makers become more susceptible to influence by the family, and agency problems rise for outside investors. We contend that the family's embeddedness in the business does not, in itself, explain whether the assumptions of agency theory are warranted. Our commentary offers an alternative way in which outside investors might look at family firms' goals. Outsiders should assess the complementarity of the family firm's objectives with their own if they are to make rewarding investments in family firms.

UR - http://www.scopus.com/inward/record.url?scp=70649101505&partnerID=8YFLogxK

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U2 - https://doi.org/10.1111/j.1540-6520.2009.00340.x

DO - https://doi.org/10.1111/j.1540-6520.2009.00340.x

M3 - Article

SN - 1042-2587

VL - 33

SP - 1193

EP - 1199

JO - Entrepreneurship: Theory and Practice

JF - Entrepreneurship: Theory and Practice

IS - 6

ER -