Performance implications of manager entrenchment in family firmsJonathan Bauweraerts1* and Olivier Colot2
- *Corresponding Author:
- Jonathan Bauweraerts
University of Mons-Warocqué School of Economics and Management
Accounting and Management Department, Belgium
Tel: 3265 37 32 76
E-mail: [email protected]
Received date: February 10, 2014; Accepted date: May 08, 2014; Published date: May 14, 2014
Citation: Jonathan Bauweraerts and Olivier Colot (2014) Performance Implications of Manager Entrenchment in Family Firms. Bus Eco J 5:96. doi: 10.4172/2151-6219.100096
Copyright: © 2014 Bauweraerts J. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Numerous studies analyzing family firms have tried to explain their outperformance by diverse contractual and relational theories. However, the effect of entrenchment reveals ambiguous findings. Whereas several scholars underline the negative influence of entrenchment in family firms, others propose a positive approach resulting from the superiority of family firms in terms of efficiency. The purpose of this paper is thus to understand the impact of entrenchment within family firms acting in a specific institutional context. To determine whether entrenchment is significant, a 7-items scale is used. Based on data collected on the French stock market (SBF 120), we distinguish between family firms where the likelihood of entrenchment is high and those characterized by lower level of entrenchment. Our results show that family firms displaying higher level of entrenchment outperform (ROA, Gross Sales Margin and ROE), thereby confirming that managers in family firms are more likely to act as stewards of the organization.