The relationship between family orientation, organization context, organization structure and firm performance

This study focuses on the prediction of three firm performance indicators, sales growth, innovation performance and profitability, on a sample of small and medium-sized firms in the Netherlands. Predictions from agency theory and the resource based view of organizations lead to alternate hypotheses regarding the direct and indirect effects of family ownership and management on firm performance. Other variables in the analysis include various organization structure variables including standardization, self coordination, team coordination, decentralization, departmentalization and specialization, and control variables such as firm size and age. Results suggest a direct effect of family orientation on innovation performance, even when controlled for other variables. The effect of family orientation on the other two dependent variables is quite limited.