Examining the “Family Effect” on Firm Performance

The purpose of this article is to provide an explanation for the contradictory evidence in the literature regarding the performance of family-owned firms. The article suggests that most of the research fails to clearly describe the “family effect” on organizational performance. The “family effect,” based on agency theory and the resource-based view of the firm, is described and propositions are generated that examine the relationship between families and organizational performance. Implications for theory and research are also discussed.