Ties that Bind? A Mediation Analysis Exploring Contract Use in Family versus Nonfamily Firms

Authors

  • Whitney O. Peake,

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    • Address correspondence to: Whitney O. Peake, Department of Management, University of North Texas, 1155 Union Circle #305429, Denton, TX 76203-5017. E-mail: Whitney.Peake@unt.edu.

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    • Whitney O. Peake is assistant professor in the Department of Management at the University of North Texas.
  • Warren Watson

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    • Warren Watson is professor in the Department of Management at the University of North Texas.

Abstract

Based on the assumptions of agency theory, family business researchers have often argued that family firms are less likely to use formal methods of monitoring and control than nonfamily firms. We explore the relationship between family firm status and presence of a written agreement among the owners, a formal measure of control. We hypothesize economic goals and perceived level of risk taking and management efficacy will mediate the relationship between family firm status and presence of a written agreement. Results indicate that the primary goal of the firm serves as a partial mediator of this relationship.

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