Integrating agency theory and stewardship theory into family business research – Based on literature analysis
DOI:
https://doi.org/10.15170/MM.2022.56.04.02Keywords:
ageny theory, stewardship theory, family business, manager entrenchmentAbstract
THE AIMS OF THE PAPER
The aim of the study is to summarize the most important findings of two scientific theories, agent theory and stewardship theory based on literature review, which have had a great influence on the theoretical research on family businesses. Another goal is to provide specific family business examples of how the elements of the two theories can be realized in practice.
METHODOLOGY
The method used is a review of the international and Hungarian literature dealing with agency theory and stewardship theory, as well as the adaptation of the two theories to family businesses, supplemented by a summary of practical examples typical of the main elements of the two theories in firms that can be identified as family businesses based on the definitional criteria.
MOST IMPORTANT RESULTS
The most important result of the study is that it reviews the characteristics of the family business in an even less studied field within the Hungarian literature, the agent theory and the stewardship theory, with the help of practical examples. One of the fundamentals of agent theory is that agency costs arise due to the nature of the relationship between the principal (owner) and the agent (manager). The theoretical findings of the study can contribute to the understanding of what situations can result in agency costs and how they can be reduced. The present examination does not touch on all aspects of the two theories and does not cover the empirical justification of the theoretical conclusions.
RECOMMENDATIONS
A better understanding of the ownership and management patterns of family businesses can be facilitated by examining how the relationships between the owner and manager of the family business can typically be described, and what owner-manager relationship may be optimal for a family business. The findings can serve as a starting point in practice for family businesses in deciding the strategic question of what management structure is better suited to the business, what is preferable if the leader is an agent-manager or a steward-manager.
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