A Dyadic Analysis of Governance Complexity in Family Firms
DOI:
https://doi.org/10.62794/pjer.v4i3.352Keywords:
Agency theory, Bifurcation bias, Family firms, Governance nexus, Socioemotional wealthAbstract
Family firm leadership transitions from founding owners (G1 Owners) to next-generation owners (G2 Owners) introduce severe governance friction during professionalization, particularly when integrating non-family managers (NFMs). Using a qualitative multiple-case study design, this research investigates governance complexity across 11 family firms in Indonesia, analyzing verbatim interview data from 44 informants across four distinct actor categories (G1 Owners, G2 Owners, G1 NFMs, and G2 NFMs). Data analysis reveals five main analytical themes across six dyadic relationships: Legacy Protection vs. Modernization, Centralized vs. Decentralized Authority, Trust-based vs. Meritocracy Assessment, Informal vs. Professional Management, and Experience-based vs. Data-driven Work Methods. Theoretically, this study advances family firm literature by establishing a governance nexus encompassing principal–principal (P-P), principal–agent (P-A), and agent–agent (A-A) configurations, showing that governance friction stems from relationally contingent mechanics rather than uniform owner-manager dynamics. The article highlights context-dependent organizational practices to help firms harmonize founding traditions with modern technocratic standards.
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