Firing managers: The benefits of family ownership and costs of family management

Abstract

We investigate how family ownership versus family management moderates the relationship between involuntary managerial turnover (IMT) and organizational performance in public firms. We postulate extended socioemotional priorities for family owners versus more restricted socioemotional priorities for family managers, thus arguing that family ownership versus management have contrasting effects on the performance implications of IMT, the former more positive than the latter. By combining hand collected survey and archival data from 299 Taiwanese listed family firms, we find that IMT is associated with better subsequent financial performance, but more so under family ownership than family management.