Bound by Laws, or by Values? A Multi‐Level and Cross‐National Approach to Understanding the Protection of Minority Owners in Family Firms

Abstract

AbstractManuscript TypeConceptualResearch Question/IssueHow do firm‐level attributes and country‐level institutions affect cross‐national and firm‐level differences in how minority owner rights in family firms are protected?Research InsightsWe consider differences in family dynamics, stewardship‐oriented organizational culture, and countries' legal and cultural dimensions to develop theory predicting differences in minority owner protection in family firms. We advance propositions and a model delineating the role of these key firm‐level and country‐level constructs.Theoretical/Academic ImplicationsWe contribute to the literature in three ways: (1) We illustrate the importance of family dynamics for predicting the likelihood of a stewardship‐oriented culture to emerge in a family firm; (2) our multi‐level and cross‐national approach extends earlier explanations of agency and stewardship that are centered at the firm, family, and individual levels of analysis; and (3) we consider the impact of cross‐cultural dimensions on family firms, an area that has received limited attention in the literature.Practitioner/Policy ImplicationsOur research implies that individuals considering becoming a minority owner in a family firm should take into account not only the legal institutions of that country (which might not be as strong as they first seem) but also intra‐firm family dynamics and the prevalent norms and values of the firm's national culture to get a more complete picture of the protections available to them.