Trends and Directions in the Development of a Strategic Management Theory of the Family Firm

Trends that contribute to the development of a strategic management theory of family firms are discussed.The first of these developments is relative agreement among theorists attempting to define the family firm.The second is the empirical evidence that family involvement affects firm performance.The third development is the emergence of two strategic management-oriented perspectives that account for the distinctiveness of family firms. These perspectives, which include agency theory and the resource-based view of the firm, have led researchers to argue that both altruism and management entrenchment can have positive and negative effects on family firm performance.Whether those effects are positive or negative depends on contingencies, such as the extent of ownership control and corporate and business strategy.To develop further a strategic management theory of family firms, researchers must focus on differences in the behavior of these firms, the forces that drive the formulation of goals in family firms, and the strategic alternatives available to family firms. (SAA)