The determinants of family firms’ subcontracting: A transaction cost perspective.

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Esra Memili, Associate Professor of Entrepreneurship (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: In this article we compare the governance choices of family and non-family firms regarding their subcontracting tendencies. Based on transaction cost theory, we argue that family firms are less likely to engage in subcontracting than non-family firms and that kinship ties, the extent to which a family firm's production activities are important, and cost minimization concerns influence the extent to which family firms utilize subcontractors. Using a sample of small, established firms, we find support for our hypotheses as well as for the use of transaction cost theory logic to explain family firm behavior. Research highlights We compare family and non-family firms regarding their propensity to subcontract. We find that family firms are less likely to subcontract than non-family firms. Kinship ties, importance of activities, and cost concerns affect subcontracting decisions.

Additional Information

Language: English
Date: 2011
transaction cost theory, family business, subcontracting, business strategy, family businesses, family firms

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