Agency Costs in Family Business: A Review

Shuran Li,Xiaode Zuo

doi:10.4236/jssm.2020.132025

Abstract

Family business occupies an important position in the national economy of all countries in the world. The theoretical field has always been controversial about the agency costs of family businesses. This article reviews the agency conflicts in family businesses and the resulting agency costs. Relevant literature found the particularity and complexity of agency costs for family businesses. Finally, we proposed an agenda for future research.

Highlights

Families and businesses have been writing business history together
Scholars have explored the sources of agency costs of family businesses and the relationship between altruism and agency costs, and have carried out exploratory and empirical studies, but the academic community has not reached an agreement on the relationship between the family management model and the agency cost, and the literature review research in this field is very lacking
Many other scholars believe that the impact of altruism on agency costs changes as family businesses are at different stages of development (Su Qilin, Zhang Qinglin, 2009; Karra et al, 2006)

Summary

Introduction

Families and businesses have been writing business history together. Family businesses are the oldest and universally significant corporate organization in the world. When altruism has a negative effect, the agency cost of a family firm is higher (Lubatkin et al, 2010). After this new viewpoint was published in some mainstream management journals (such as “Organization Science”), the international academic community has been increasingly controversial on this issue. Scholars have explored the sources of agency costs of family businesses and the relationship between altruism and agency costs, and have carried out exploratory and empirical studies, but the academic community has not reached an agreement on the relationship between the family management model and the agency cost, and the literature review research in this field is very lacking. In order to fill and enrich the related research fields, this article aims to review the literature on agency costs in family businesses one by one, and lay the foundation for further research

Sources of Agency Costs for Family Businesses

Altruism and Agency Costs of Family Business

Research on Agency Costs of Family Firms in the Past Decade

Conclusion