A FAMILY FIRM VARIANT OF THE BEHAVIORAL AGENCY THEORY

There is currently a debate in the literature regarding whether family firm ownership fosters or discourages risk-taking activities. In this article, we propose a contingency framework that shifts the focus of investigation: instead of asking whether family firms tend to be risk takers, we suggest specific ownership conditions under which privately owned family-managed firms are more likely to engage in risk taking. We do so by integrating concepts from the behavioral agency model and a resource-based concept known. as familiness to advance a base proposition that explains the effects of different ownership structures (controlling ownership, sibling partnership, and cousin consortium) on risk-taking behaviors in family firms. Then, drawing insights from the family firm and household economics literatures, we discuss the contingent effects of three distinct forms of altruism (parental, paternalistic, and psychosocial) on the base proposition. The framework advances our current understanding of risk taking in family businesses in two ways: first, by proposing how and when risk-taking behaviors differ across these firms; and second, by offering a variant of the base behavioral agency model that is better suited for explaining risk taking at family firms. Copyright 2010 Strategic Management Society.