The Transaction Cost Economics Theory of the Family Firm: Family-Based Human Asset Specificity and the Bifurcation Bias

Entrepreneurship: Theory and Practice

Volumn 36, Issue 6, 2012, Pages 1183-1205

  Verbeke, Alain ^a   Kano, Liena ^a  

^a UNIVERSITY OF CALGARY   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84876171789     PISSN: 10422587     EISSN: 15406520     Source Type: Journal    
DOI: 10.1111/j.1540-6520.2012.00545.x     Document Type: Article

References (98)

1. Anad, B., Carpenter, E., & Jayati, S. (2004). Oscar de la Renta. Boston, MA: Harvard Business School Publishing.
2. Arregle, J.L., Hitt, M.S., Sirmon, D.G., & Very, P. (2007). The development of organizational social capital: Attributes of family firms. Journal of Management Studies, 44, 73-95.
3. Arthurs, J. & Busenitz, L. (2003). The boundaries and limitations of agency theory and stewardship theory in the venture capitalist/entrepreneur relationship. Entrepreneurship Theory and Practice, 28, 339-358.
4. Banalieva, E. & Eddleston, K. (2011). Home-region focus and performance of family firms: The role of family vs. non-family leaders. Journal of International Business Studies, 42(8), 1060-1072.
5. Banfield, E.C. (1958). The moral basis of a backward society. Glencoe, IL: Free Press.
6. Beckhard, R. & Dyer, W.G., Jr. (1983). Managing continuity in the family-owned business. Organizational Dynamics, 12, 5-12.
7. Bennedsen, M., Van der Heyden, L., & MBA Students of Family Business Management (2010). When MBAs meet Henokiens: What can we learn from long-lived family firms? Fontainebleau, France: INSEAD workshop.
8. Bertrand, M., Mehta, P., & Mullainathan, S. (2002). Ferreting out tunnelling: An application to Indian business groups. The Quarterly Journal of Economics, 117, 121-148.
9. Bertrand, M. & Schoar, A. (2006). The role of family in family firms. The Journal of Economic Perspectives, 20, 73-96.
10. Burkart, M., Panunzi, F., & Shleifer, A. (2003). Family firms. Journal of Finance, 58, 2167-2201.
11. Cadbury, A. (2000). Family firms and their governance: Creating tomorrow's company from today's. London: Egon Zender International.
12. Carney, M. (2005). Corporate governance and competitive advantage in family-controlled firms. Entrepreneurship Theory and Practice, 29, 249-265.
13. Chandler, A.D. & Salsbury, S. (1971). Pierre S. Du Pont and the making of the modern corporation. New York: Harper & Row.
14. Chrisman, J.J., Chua, J.H., & Bergiel, E.B. (2009). An agency theoretic analysis of the professionalized family firm. Entrepreneurship Theory and Practice, 33, 355-372.
15. Chrisman, J.J., Chua, J.H., Kellermanns, F.W., & Chang, E.P. (2007). Are family managers agents or stewards? An exploratory study in privately-held family firms. Journal of Business Research, 60, 1030-1038.
16. Chrisman, J.J., Chua, J.H., & Litz, R. (2004). Comparing the agency costs of family and nonfamily firms: Conceptual issues and exploratory evidence. Entrepreneurship Theory and Practice, 28, 335-354.
17. Chua, J.H., Chrisman, J.J., & Bergiel, E.B. (2009). An agency theoretic analysis of the professionalized family firm. Entrepreneurship Theory and Practice, 33, 355-372.
18. Chua, J.H., Chrisman, J.J., & Sharma, P. (2003). Succession and nonsuccession concerns of family firms and agency relationship with nonfamily managers. Entrepreneurship Theory and Practice, 23, 19-39.
19. Connor, K. & Prahalad, C. (1991). A resource-based theory of the firm: Knowledge versus opportunism. Organization Science, 7, 477-501.
20. Corbetta, G. & Salvato, C. (2004). Self-serving or self-actualizing? Models of man and agency costs in different types of family firms: A commentary on "Comparing the agency costs of family and non-family firms: Conceptual issues and exploratory evidence." Entrepreneurship Theory and Practice, 28, 355-362.
21. Cruz, C.C., Gomez-Mejia, L.R., & Becerra, M. (2010). Perceptions of benevolence and the design of agency contracts: CEO-TMT relationships in family firms. Academy of Management Journal, 53, 69-89.
22. David, R.J. & Han, S.K. (2004). A systematic assessment of the empirical support for transaction cost economics. Strategic Management Journal, 25, 39-58.
23. Davis, J., Allen, M., & Hayes, H. (2010). Is blood thicker than water? A study of stewardship perceptions in family business. Entrepreneurship Theory and Practice, 34, 339-358.
24. Davis, J., Schoorman, D.L., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22, 339-358.
25. Day, A.M. (2008). Family business daughters: The ties that bind and divide. Theses and Dissertations. Paper 203. Scholar Commons@USF.
26. Dyer, W.G., Jr. (2006). Examining the "family effect" of firm performance. Family Business Review, XIX, 253-273.
27. Eddleston, K. & Kellermanns, F. (2007). Destructive and productive family relationships: A stewardship theory perspective. Journal of Business Venturing, 22, 545-565.
28. Eddleston, K., Kellermanns, F., & Sarathy, R. (2008). Resource configuration in family firms: Linking resources, strategic planning and technological opportunities to performance. Journal of Management Studies, 45, 26-50.
29. Ehrhardt, O., Nowak, E., & Weber, F.M. (2006). Running in the family: The evolution of ownership, control and performance in German family-owned firms 1903-2003. National central of competence in research financial valuation and risk management. Swiss Finance Institute Research Paper No. 06-13. Available at: http://ssrn.com/abstract=891255 or http://dx.doi.org/10.2139/ssrn.891255
30. Fama, E. & Jensen, M. (1983). Separation of ownership and control. The Journal of Law & Economics, 26, 327-349.
31. Francesco, A.M. (2004). Ireka Construction Berhad: A Chinese family business goes public. London, ON: Ivey Publishing.
32. Gedajlovic, E. & Carney, M. (2010). Markets, hierarchies, and families: Toward a transaction cost theory of the family firm. Entrepreneurship Theory and Practice, 34, 1145-1171.
33. Gedajlovic, E., Carney, M., Chrisman, J., & Kellermanns, F.W. (2012). The adolescence of family firm research: Taking stock and planning for the future. Journal of Management, 38(4), 1010-1037.
34. Gedajlovic, E., Lubatkin, M.H., & Schulze, W.S. (2004). Crossing the threshold from founder management to professional management: A governance perspective. Journal of Management Studies, 41, 899-912.
35. Ghoshal, S. (2005). Bad management theories are destroying good management practices. Academy of Management Learning and Education, 4, 75-91.
36. Ghoshal, S. & Moran, P. (1996). Bad for practice: A critique of the transaction cost theory. Academy of Management Review, 21, 13-47.
37. Gilovich, T., Griffin, D.W., & Kahneman, D. (2002). Heuristics and biases: The psychology of intuitive judgment. Cambridge: Cambridge University Press.
38. Gomez-Mejia, L.R., Haynes, K.T., Nunez-Nickel, M., Jacobson, K.J.L., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52, 106-137.
39. Hess, E.D. (2009). LG Investments, LLC: A family business in generational transition. Charlottesville, VA: Darden School Foundation.
40. Hill, C.W.L. (1990). Cooperation, opportunism, and invisible hand: Implications for transaction cost theory. Academy of Management Review, 15, 500-513.
41. Hodgson, G.M. (2004). Opportunism is not the only reason why firms exist: Why an explanatory emphasis on opportunism may mislead management strategy. Industrial and Corporate Change, 13, 401-418.
42. International Financial Corporation. (2007). IFC family business governance handbook. Washington, DC: IFC.
43. Jensen, M. & Meckling, W. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. The Journal of Law & Economics, 3, 305-360.
44. Jivraj, J.S. & Woods, A. (2002). Successional issues within Asian family firms: Learning from the Kenyan experience. International Small Business Journal, 20, 77-94.
45. Klein, S.B. (2000). Family businesses in Germany: Significance and structure. Family Business Review, 13, 157-181.
46. Le Breton-Miller, I. & Miller, D. (2009). Agency vs. stewardship in public family firms: A social embeddedness reconciliation. Entrepreneurship Theory and Practice, 33, 1169-1191.
47. Le Breton-Miller, I., Miller, D., & Steier, L. (2004). Toward an integrative model of effective FOB succession. Entrepreneurship Theory and Practice, 28, 305-328.
48. Lee, K.S., Lim, G.H., & Lim, W.S. (2003). Family business succession: Appropriation risk and choice of successor. Academy of Management Review, 29, 657-666.
49. Lubatkin, M.H., Schulze, W.S., Ling, Y., & Dino, R.N. (2005). The effects of parental altruism on the governance of family-managed firms. Journal of Organizational Behaviour, 26, 313-330.
50. Magretta, J. (1998). Governing the family-owned enterprise: An interview with Finland's Krister Ahlstrom. Harvard Business Review, 76, 112-123.
51. Mahto, R., Davis, P., Pearce, J.A. II, & Robinson, R., Jr. (2010). Satisfaction with firm performance in family business. Entrepreneurship Theory and Practice, 34, 985-1001.
52. Memili, E., Chrisman, J.J., & Chua, J.H. (2011). Transaction costs and outsourcing decisions in small- and medium-sized family firms. Family Business Review, 24, 47-61.
53. Memili, E., Chrisman, J.J., Chua, J.H., Chang, E.P.C., & Kellermanns, F.W. (2011). The determinants of family firms' subcontracting: A transaction cost perspective. Journal of Family Business Strategy, 2, 26-33.
54. 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, 51-78.
55. Miller, G.S. & Doyle, T. (2004). Mondavi winery. Boston, MA: Harvard Business School Publishing.
56. Neumann, F.A. & Tapies, J. (2006a). Succession at Merck KGaA. Barcelona, Spain: IESE Publishing.
57. Neumann, F.A. & Tapies, J. (2006b). Balancing family and business needs at Merck KGaA. Barcelona, Spain: IESE Publishing.
58. Neumann, F.A. & Tapies, J. (2006c). Bertelsmann: The ownership question. Barcelona, Spain: IESE Publishing.
59. Papyrina, V. & Hardy, G. (2007). Loblaw Companies Limited: Preparing for Wal-Mart supercenters. London, ON: Ivey Publishing.
60. Park, Y. (2002). Executive pay practices in family controlled firms in Canada: A preliminary study. In J.J. Chrisman, J.A. Holbrook, & J.H. Chua (Eds.), Innovation and entrepreneurship in Western Canada: From family business to multinationals (pp. 321-332). Calgary, AB: University of Calgary Press.
61. Pearson, A. & Marler, L. (2010). A leadership perspective of reciprocal stewardship in family firms. Entrepreneurship Theory and Practice, 34, 1117-1123.
62. Perman, S. (2006). Taking the pulse of family businesses. Business Week, February 13.
63. Peter Leach & Partners, LLP. (2008). Pay, benefits and incentives in family companies. London: Peter Leach LLP.
64. Pollak, R. (1985). A transaction cost approach to families and households. Journal of Economic Literature, 23, 581-608.
65. Poza, E.F., Alfred, T., & Maheshawi, A. (1997). Stakeholder perceptions of culture and management practices in family and family firms-A preliminary report. Family Business Review, 10, 135-155.
66. Riordan, M. & Williamson, O. (1985). Asset specificity and economic organization. International Journal of Industrial Organisation, 3, 365-378.
67. Schein, E.H. (1999). The corporate culture survival guide. San Francisco, CA: Jossey-Bass.
68. 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.
69. 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.
70. Sharma, P. & Manikutty, S. (2005). Strategic divestments in family firms: Role of family structure and community culture. Entrepreneurship Theory and Practice, 29, 293-311.
71. Shim, J. & Okamuro, H. (2011). Does ownership matter in mergers? A comparative study of the causes and consequences of mergers by family and non-family firms. Journal of Banking & Finance, 35, 193-203.
72. Simon, H. (1961). Administrative behavior (2nd ed.). New York: Macmillan.
73. Sirmon, D.G. & Hitt, M.A. (2003). Managing resources: Linking unique resources, management and wealth creation in family firms. Entrepreneurship Theory and Practice, 27, 339-358.
74. Slovic, P., Finucane, M.L., Peters, E., & MacGregor, D.G. (2002). Rational actors or rational fools: Implications of the affect heuristic for behavioural economics. The Journal of Socio-Economics, 31, 329-342.
75. Slovic, P., Finucane, M.L., Peters, E., & MacGregor, D.G. (2007). The affect heuristic. European Journal of Operational Research, 177, 1333-1352.
76. Steen, M. (2006). The decision tree of family business. Stanford Business Magazine, August.
77. Subramanian, G. & Sherman, E. (2007). Lazard LLC. Boston, MA: Harvard Business School Publishing.
78. Thompson, T. (1960). Stewardship in contemporary theology. New York: Association Press.
79. Toninato, F. & Tapies, J. (2005). The Agnellis and the Fiat Group: The story of a family empire (A). Case DG-1475-E. Barcelona, Spain: IESE Publishing.
80. Tran, E., Sambamurthy, B., & Mansinghka, S. (2006). The Harilela Enterprises: An Indian family business in Hong Kong. Boston, MA: Harvard Business School Publishing.
81. Tsang, E. (2006). Behavioral assumptions and theory development: The case of transaction cost economics. Strategic Management Journal, 27, 999-1001.
82. Vallejo, M.C. (2009). The effect of commitment of non-family employees of family firms from the perspective of stewardship theory. Journal of Business Ethics, 87, 379-390.
83. Verbeke, A. & Greidanus, N. (2009). The end of the opportunism versus trust debate: Bounded reliability as a new envelope-concept in research on MNE governance. Journal of International Business Studies, 40, 1471-1495.
84. Verbeke, A. & Kano, L. (2010). Transaction cost economics (TCE) and the family firm. Entrepreneurship Theory and Practice, 34, 1173-1182.
85. Verbeke, A. & Kenworthy, T. (2008). Multidivisional versus metanational governance of the multinational enterprise. Journal of International Business Studies, 39, 940-956.
86. Villalonga, B., Beyersdorfer, D., & Dessain, V. (2009). Spiegel-Verlag Rudolf Augstein GmbH & Co. Boston, MA: Harvard Business School Publishing.
87. Ward, J.L. (2004). Perpetuating the family business: 50 lessons learned from long-lasting success. New York: Palgrave Macmillan.
88. Ward, J.L. & Pericelli, S.G. (2005). Magid Glove and Safety Manufacturing Co. Boston, MA: Harvard Business School Publishing.
89. Ward, J.L. & Zsolnay, C.A. (2004). Succession and continuity for Johnson Family Enterprises. Boston, MA: Harvard Business School Publishing.
90. Weber, M. (1946). From Max Weber: Essays in sociology. New York: Oxford University Press.
91. Westhead, P. & Cowling, M. (1998). Family firm research: The need for a methodological rethink. Entrepreneurship Theory and Practice, 23, 301-316.
92. Westhead, P. & Howorth, C. (2006). Ownership and management issues associated with family firm performance and company objectives. Family Business Review, XIX, 301-316.
93. Wiklund, J. (2006). Commentary: "Family firms and social responsibility: Preliminary evidence from the S&P 500." Journal of Business Venturing, 30, 803-808.
94. Williamson, O.E. (1981). The modern corporation: Origins, evolution, attributes. Journal of Economic Literature, 19, 1537-1568.
95. Williamson, O.E. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. New York: Free Press.
96. Williamson, O.E. (1993). Opportunism and its critics. Managerial and Decision Economics, 14, 97-107.
97. Williamson, O.E. (1996). The mechanisms of governance. New York: Oxford University Press.
98. Zahra, S.A., Hayton, J.C., Neubaum, D.O., Dibrell, C., & Craig, J. (2008). Culture of family commitment and strategic flexibility: The moderating effect of stewardship. Entrepreneurship Theory and Practice, 32, 1035-1054.