When do Non-Family CEOs Outperform in Family Firms? Agency and Behavioral Agency Perspectives

Family firms represent a globally dominant form of organization, yet they confront a steep challenge of finding and managing competent leaders. Sometimes, these leaders cannot be found within the owning family. To date we know little about the governance contexts under which non-family leaders thrive or founder. Guided by concepts from agency theory and behavioral agency theory, we examine the conditions of ownership and leadership that promote superior performance among non-family CEOs of family firms. Our analysis of 893 Italian family firms demonstrates that these leaders outperform when they are monitored by multiple major family owners as opposed to a single owner; they also outperform when they are not required to share power with co-CEOs who are family members, and who may be motivated by parochial family socioemotional priorities