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Keywords:

  • private firms;
  • productive efficiency;
  • agency theory;
  • data envelopment analysis (DEA)

Abstract

The principal–agent theory asserts that public firms' performance is driven by efficient capital and labor markets but is silent about non-listed private companies, which are less permeable to market forces (both capital and labor) than are public companies. We propose and test a 2 × 2 framework distinguishing owner-controlled vs. agent-led firms from firms with a flat vs. multilayer organization. Our findings provide highly contrasted results and raise important issues for further study of private firms. Copyright © 2003 John Wiley & Sons, Ltd.