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Home-based family firms, spousal ownership and business exit: a transaction cost perspective

  • Melih Madanoglu
  • Esra Memili
  • Alfredo De Massis
Article

Abstract

In this study, we compare family and non-family firms with respect to their exit due to financial reasons. We suggest that the principal dimensions of Transaction Cost Theory (TCT) (i.e., asset specificity, risk aversion, opportunism, and trust) may underlie governance decisions such as family vs. non-family firm and home-based spousal ownership in family firms which can consequently impact firm success/failure. Given the wide variations in the goals and internal structures of family firms, we specifically suggest that home-based family firms with spousal ownership will be less prone to exit than other firms. Indeed, the findings show that family firms are less likely to exit than non-family firms, and the interaction effects of spousal ownership and home-based business further reduce the exit probability of family firms. We conclude by discussing future research implications.

Keywords

Family business Family firms Transaction cost theory Trust Governance Business exit 

JEL classifications

M10 L20 L26 

Notes

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Authors and Affiliations

  1. 1.College of BusinessFlorida Atlantic UniversityBoca RatonUSA
  2. 2.Bryan School of Business and EconomicsUniversity of North Carolina-GreensboroGreensboroUSA
  3. 3.Faculty of Economics & Management, Centre for Family Business ManagementFree University of Bozen-BolzanoBolzanoItaly
  4. 4.Lancaster University Management SchoolLancasterUK

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