Ties that Bind? A Mediation Analysis Exploring Contract Use in Family versus Nonfamily Firms

Whitney O. Peake and Warren Watson

Journal of Small Business Management, 2015, vol. 53, issue 4, 1185-1202

Abstract: Based on the assumptions of agency theory, family business researchers have often argued that family firms are less likely to use formal methods of monitoring and control than nonfamily firms. We explore the relationship between family firm status and presence of a written agreement among the owners, a formal measure of control. We hypothesize economic goals and perceived level of risk taking and management efficacy will mediate the relationship between family firm status and presence of a written agreement. Results indicate that the primary goal of the firm serves as a partial mediator of this relationship.

Date: 2015
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DOI: 10.1111/jsbm.12105

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