Managerial controls in private family firms: The influence of a family’s decision premises

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Sustainability (Switzerland)
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Mucci D.M.
Jorissen A.
Frezatti F.
Bido D.S.
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© 2021 by the authors. Licensee MDPI, Basel, Switzerland.In most studies, the affiliation of the manager (family‐affiliated or non‐family affiliated) and supposedly related behavior (agent or steward) is considered the sole antecedent to explain a family business’ (non) professionalization of managerial controls. This paper, based on Luhmann’s new system theory, examines whether a family’s decision premises influence the design of managerial controls in family firms in addition to a manager’s family affiliation status. Using survey data of 135 large and medium‐sized Brazilian family firms and testing the hypotheses with SEM, this study provides evidence that a family’s decision premises significantly influence the design of managerial controls in family firms. This study provides evidence that when a family’s intention to transfer the firm to next generation (TGO) is high, more formal controls, as well as controls of a more participative nature are adopted in a family firm. Moreover, the results do not indicate that the level of family involvement in management affects the design of controls in firms with high TGO. The results only showed a significant relationship between a family’s intention to control and influence (FCI) the firm and the absence of participative controls. In addition, these findings also illustrate that each single family‐induced decision premise has the potential to explain family firm behavior, since each of the two premises considered in our study is related to a different design of the controls adopted by the family firm.
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