Agency vs. Stewardship in Public Family Firms: A Social Embeddedness Reconciliation

Authors

  • Isabelle Le Breton-Miller,

    Corresponding author
    1. School of Business, University of Alberta; and OER, Inc. in Montreal
      Isabelle Le Breton-Miller, tel.: (514) 340-7315; e-mail: isabelle.lebreton@hec.ca, and to Danny Miller at danny.miller@hec.ca.
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  • Danny Miller

    Corresponding author
    1. University of Alberta
      Isabelle Le Breton-Miller, tel.: (514) 340-7315; e-mail: isabelle.lebreton@hec.ca, and to Danny Miller at danny.miller@hec.ca.
    Search for more papers by this author

Isabelle Le Breton-Miller, tel.: (514) 340-7315; e-mail: isabelle.lebreton@hec.ca, and to Danny Miller at danny.miller@hec.ca.

Abstract

Family businesses (FBs) play a key role in the world's economies. Unfortunately, the current literature surfaces disparate understandings and conclusions concerning their conduct and performance. Much of that literature falls under two insightful perspectives, agency theory and stewardship theory, that conflict quite directly. The agency view, based in economics, maintains that families will pursue utility for themselves to the detriment of their public shareholders. By contrast, stewardship proponents, arguing from a psychological perspective, suggest that family owners will invest deeply in their enterprise, to the benefit of all. This study synthesizes the literature on each of these perspectives to derive core motivational assumptions and expected organizational outcomes. Then, by employing a third sociological perspective, it proposes to reconcile these opposing views by considering the social embeddedness of firms and their key actors within the institution of the family for different types of public family enterprises. It will argue that there is a need for such integration in order to better understand and permit accurate, context-based predictions across various kinds of family businesses and family business situations.

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