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| Author: | Schulze, W.S. (et al.) |
| Title: | Agency relationships in family firms: theory and evidence |
| Journal: | Organization Science
2001 : MAR-APR, VOL. 12:2, p. 99-116 |
| Index terms: | AGENCY THEORY ALTRUISM FAMILY FIRMS |
| Language: | eng |
| Abstract: | Does owner management necessarily eliminate the agency costs of ownership? Drawing on agency literature and on the economic theory of the household, the authors argue that private ownership and owner management expose privately held, owner-managed firms to agency costs threats ignored by Jensen's and Meckling's (1976) agency models. Private ownership and owner management not only reduce the effectiveness of external control mechanisms, they also expose firms to a "self-control" problem created by incentives that cause owners to take actions which "harm themselves as well as those around them" (Jensen, 1994, p. 43). The thesis is extended to the domain of the family firm. |
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