Recent studies have established that non-family CEOs invariably outperform family CEOs. In this paper, we argue that the case against family CEOs could be overstated. Applying a contingency theory, we propose that the growth stage of the firm and management practice domains moderate the influence of CEO type on firm performance. Using the dataset of 1288 family firms collected as part of the World Management Survey, we find support for most of the hypotheses. Finally, we draw attention to the conceptual and practical implications of our findings.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
Tax calculation will be finalised during checkout.
Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. The Journal of Finance, 58(3), 1301–1328.
Arzubiaga, U., Iturralde, T., Maseda, A., & Kotlar, J. (2018). Entrepreneurial orientation and firm performance in family SMEs: The moderating effects of family, women, and strategic involvement in the board of directors. International Entrepreneurship and Management Journal, 14(1), 217–244.
Astrachan, J. H., & Kolenko, T. A. (1994). A neglected factor explaining family business success: Human resource practices. Family Business Review, 7(3), 251–262.
Bennedsen, M., & Foss, N. (2015). Family assets and liabilities in the innovation process. California Management Review, 58(1), 65–81.
Bennedsen, M., Nielsen, K., Perez-Gonzalez, F., & Wolfenzon, D. (2007). Inside the family firm. Quarterly Journal of Economics, 122, 647–691.
Berrone, P., Cruz, C., Gómez-Mejía, L., & Larraza-Kintana, M. (2010). Socioemotional wealth and corporate responses to institutional pressures. Administrative Science Quarterly, 55, 82–113.
Bertrand, M., & Schoar, A. (2006). The role of family in family firms. Journal of Economic Perspectives, 20, 73–96.
Bloom, N., & Van Reenen, J. (2006). Measuring and explaining management practices across firms and nations. Center for Economic Performance Discussion Paper no. 716.
Bloom, N., & Van Reenen, J. (2007). Measuring and explaining management practices across firms and countries. Quarterly Journal of Economics, 122, 1351–1408.
Bloom, N., Genakos, C., Sadun, R., & Van Reenen, J. (2012). Management practices across firms and countries. Academy of Management Perspectives, 26, 12–33.
Burt, R. S. (1997). The contingent value of social capital. Administrative Science Quarterly, 42(2), 339–365.
Carnabuci, G., & Diószegi, B. (2015). Social networks, cognitive style, and innovative performance: A contingency perspective. Academy of Management Journal, 58(3), 881–905.
Casson, M. (1999). The economics of the family firm. Scandinavian Economic History Review, 47(1), 10–23.
Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneurship Theory & Practice, 23(4), 19–39.
Chrisman, J. J., & Patel, P. J. (2012). Variations in R&D investments of family and non-family firms: Behavioral agency and myopic loss aversion perspectives. Academy of Management Journal, 55(4), 976–997.
Chrisman, J. J., Memili, E., & Misra, K. (2014). Nonfamily managers, family firms, and the winner’s curse: The influence of noneconomic goals and bounded rationality. Entrepreneurship Theory and Practice, 38(5), 1103–1127.
Daily, C. M., & Dollinger, M. J. (1992). An empirical examination of ownership structure in family and professionally managed firms. Family Business Review, 5(2), 117–136.
Dalton, D. R., & Kesner, I. F. (1985). Organizational performance as an antecedent of inside/outside chief executive succession: An empirical assessment. Academy of Management Journal, 28(4), 749–762.
Daspit, J. J., Chrisman, J. J., Sharma, P., Pearson, A. W., & Mahto, R. V. (2018). Governance as a source of family firm heterogeneity. Journal of Business Research, 84, 293–300.
Davis, J., Batchelor, J. H., & Kreiser, P. (2019). Journal of Small Business and Entrepreneurship, 31(1), 21–42.
De Massis, A., Frattini, F., Pizzurno, E., & Cassia, L. (2015). Product innovation in family versus nonfamily firms: An exploratory analysis. Journal of Small Business Management, 53(1), 1–36.
De Massis, A., Frattini, F., Kotlar, J., Petruzzelli, A. M., & Wright, M. (2016). Innovation through tradition: Lessons from innovative family businesses and directions for future research. The Academy of Management Perspectives, 30(1), 93–116.
Dekker, J., Lybaert, N., Steijvers, T., & Depaire, B. (2015). The effect of family business professionalization as a multidimensional construct on firm performance. Journal of Small Business Management, 53(2), 516–538.
Donaldson, L. (1987). Strategy and structural adjustment to regain fit and performance: In defence of contingency theory. Journal of Management Studies, 24(1), 1–24.
Eddleston, K. A., Otondo, R. F., & Kellermanns, F. W. (2008). Conflict, participative decision-making, and generational ownership dispersion: A multilevel analysis. Journal of Small Business Management, 46, 456–484.
Ellington, E. P., Jones, R. T., & Deane, R. (1996). TQM adoption practices in the family-owned business. Family Business Review, 9(1), 5–14.
Filatotchev, I., Lien, Y., & Piesse, J. (2005). Corporate governance and performance in publicly listed, family-controlled firms: Evidence from Taiwan. Asia Pacific Journal of Management, 22(3), 257–283.
Flamholtz, E. G., & Randle, Y. (2007). Successful organizational development and growing pains. In Management Online Review available at: www.anderson.ucla.edu/Documents/areas/fac/hrob/org_dev_growing_pains.pdf.
Gomez-Mejia, L. R., Campbell, J. T., Martin, G., Hoskisson, R. E., Makri, M., & Sirmon, D. G. (2014). Socioemotional wealth as a mixed gamble: Revisiting family firm R & D investments with the behavioral agency model. Entrepreneurship Theory and Practice, 38(6), 1351–1374.
Gomez-Mejia, L. R., Larraza-Kintana, M., & Makri, M. (2003). The determinants of executive compensation in family-controlled public corporations. Academy of management journal, 46(2), 226-237.
Gomez-Mejia, L. R., Nunez-Nickel, M., & Gutierrez, I. (2001). The role of family ties in agency contracts. Academy of Management Journal, 44(1), 81–95.
Gómez-Mejía, L. R., Makri, M., & Larraza-Kintana, M. (2010). Diversification decisions in family-controlled firms. Journal of Management Studies, 47, 223–252.
Hall, A., & Nordqvist, M. (2008). Professional management in family businesses: Toward an extended understanding. Family Business Review, 21(1), 51–69.
Hofer, C. W., & Charan, R. (1984). The transition to professional management: Mission impossible. American Journal of Small Business, 9(1), 1–11.
Hughes, M., Filser, M., Harms, R., Kraus, S., Chang, M. L., & Cheng, C. F. (2018). Family firm configurations for high performance: The role of entrepreneurship and ambidexterity. British Journal of Management, 29(4), 595–612.
Jaskiewicz, P., Uhlenbruck, K., Balkin, D. B., & Reay, T. (2013). Is nepotism good or bad? Types of nepotism and implications for knowledge management. Family Business Review, 26(2), 121–139.
Jaskiewicz, P., Block, J. H., Combs, J. G., & Miller, D. (2017). The effects of founder and family ownership on hired CEOs’ incentives and firm performance. Entrepreneurship: Theory & Practice, 41(1), 73–103.
Klein, S. B., & Bell, F. A. (2007). Non-family executives in family businesses: A literature review. Electronic Journal of Family Business Studies, 1, 19–37.
Kotlar, J., & De Massis, A. (2013). Goal setting in family firms: Goal diversity, social interactions, and collective commitment to family-centered goals. Entrepreneurship Theory and Practice, 37(6), 1263–1288.
Kraus, S., Harms, R., & Fink, M. (2011). Family firm research: Sketching a research field. International Journal of Entrepreneurship and Innovation Management, 13(1), 32–47.
Kudlats, J., McDowell, W. C., & Mahto, R. V. (2019). Unrelated but together: Trust and intergroup relations in multi-family businesses. Journal of Business Research, 101, 750–756.
Lansberg, I. (1983). Managing human resources in family firms: The problem of institutional overlap (pp. 39–46). Summer: Organizational Dynamics.
Lansberg, I. (1999). Succeeding generations: Realizing the dream of families in business. Boston, MA: Harvard Business School Press.
Lawrence, P. R., & Lorsch, J. W. (1967). Differentiation and integration in complex organizations. Administrative Science Quarterly, 12, 1–47.
Lin, S., & Hu, S. (2007). A family member or professional management. Corporate Governance: An International Review, 15, 1348–1362.
Mahto, R. V., Davis, P. S., Pearce, J. A., & Robinson, R. B. (2010). Satisfaction with firm performance in family businesses. Entrepreneurship, Theory & Practice, 34(5), 985–1001.
Mahto, R. V., Chen, J. S., McDowell, W. C., & Ahluwalia, S. (2019). Shared identity, family influence, and the Transgenerational intentions in family firms. Sustainability, 11(4), 1130–1134.
Mazzola, P., Sciascia, S., & Kellermanns, F. W. (2013). Non-linear effects of family sources of power on performance. Journal of Business Research, 66(4), 568–574.
McDowell, W. C., Matthews, L. M., Matthews, R. L., Aaron, J. R., Edmondson, D. R., & Ward, C. B. (2019). The price of success: Balancing the effects of entrepreneurial commitment, work-family conflict and emotional exhaustion on job satisfaction. International Entrepreneurship and Management Journal, 1-14.
McDowell, W. C., Peake, W. O., Coder, L., & Harris, M. L. (2018). Building small firm performance through intellectual capital development: Exploring innovation as the “black box”. Journal of Business Research, 88, 321–327.
Mehrotra, V., Morck, R., Jungwook, S., & Wiwattanakantang, Y. (2013). Adoptive expectations: Rising sons in Japanese family firms. Journal of Financial Economics, 108, 840–854.
Meilich, O. (2006). Bivariate models of fit in contingency theory: Critique and a polynomial regression alternative. Organizational Research Methods, 9(2), 161–193.
Miller, D., Le Breton-Miller, I., Minichilli, A., Corbetta, G., & Pittino, D. (2014). When do non-family CEOs outperform in family firms? Agency and behavioural agency perspectives. Journal of Management Studies, 51(4), 547–572.
Miller, D., Le Breton-Miller, I., & Scholnick, B. (2008). Stewardship vs. stagnation: An empirical comparison of small family and non-family businesses. Journal of Management Studies, 45(1), 51–78.
Patel, P. C., & Cooper, D. (2014). Structural power equality between family and non-family TMT members and the performance of family firms. Academy of Management Journal, 57(6), 1624–1649.
Patel, P. C., & Chrisman, J. J. (2014). Risk abatement as a strategy for R&D investments in family firms. Strategic Management Journal, 35(4), 617–627.
Royer, S., Simons, R., Boyd, B., & Rafferty, A. (2008). Promoting family: A contingency model of family business succession. Family Business Review, 21(1), 15–30.
Rubenson, G. C., & Gupta, A. K. (1997). The initial succession: A contingency model of founder tenure. Entrepreneurship: Theory & Practice, 21(2), 21–35.
Schulze, W. S., Lubatkin, M. H., Dino, R. N., & Buchholtz, A. K. (2001). Agency relationship in family firms: Theory and evidence. Organization Science, 12, 99–116.
Schulze, W. S., Lubatkin, M. H., & Dino, R. N. (2003). Exploring the agency consequences of ownership dispersion among the directors of private family firms. Academy of Management Journal, 46, 179–194.
Sciascia, S., & Mazzola, P. (2008). Family involvement in ownership and management: Exploring nonlinear effects on performance. Family Business Review, 21(4), 331–345.
Sharma, P., Chrisman, J. J., & Chua, J. H. (2003). Predictors of satisfaction with the succession process in family firms. Journal of Business Venturing, 18(5), 667–687.
Sirmon, D. G., Arregle, J. L., Hitt, M. A., & Webb, J. W. (2008). The role of family influence in firms’ strategic responses to threat of imitation. Entrepreneurship Theory and Practice, 32, 979–998.
Sitkin, S. B., Sutcliffe, K. M., & Schroeder, R. G. (1994). Distinguishing control from learning in total quality management: A contingency perspective. Academy of Management Review, 19(3), 537–564.
Sraer, D., & Thesmar, D. (2007). Performance and behavior of family firms: Evidence from the French stock market. Journal of the European Economic Association, 5(4), 709–751.
Tagiuri, R., & Davis, J. A. (1992). On the goals of successful family companies. Family Business Review, 5(1), 43–62.
Wasserman, N. (2013). The Founder’s dilemmas: Anticipating and avoiding the pitfalls that can sink a Startup. Princeton University Press.
Xi, J. M., Kraus, S., Filser, M., & Kellermanns, F. W. (2015). Mapping the field of family business research: Past trends and future directions. International Entrepreneurship and Management Journal, 11(1), 113–132.
Xiao, Z., & Tsui, A. S. (2007). When brokers may not work: The cultural contingency of social capital in Chinese high-tech firms. Administrative Science Quarterly, 52(1), 1–32.
Zellweger, T. (2007). Time horizon, costs of equity capital, and generic investment strategies of firms. Family Business Review, 20(1), 1–15.
Zellweger, T. M., Kellermanns, F. W., Chrisman, J. J., & Chua, J. H. (2012). Family control and family firm valuation by family CEOs: The importance of intentions for transgenerational control. Organization Science, 23, 851–868.
Zhang, Y., & Rajagopalan, N. (2010). Once an outsider, always an outsider? CEO origin, strategic change, and firm performance. Strategic Management Journal, 31(3), 334–346.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
About this article
Cite this article
Khanin, D., Rakshit, A., Mahto, R.V. et al. An Ongoing race: family CEOs vs. non-family CEOs. Int Entrep Manag J 16, 1043–1063 (2020). https://doi.org/10.1007/s11365-019-00602-8
- Family business
- Management practice
- Family firm performance