Family-Ownership, or Founder-CEO, Does it Matter, For the Firm Performance?
Abstract
The debate on whether a founder should be or should remain as a CEO is one that has attracted various authors. One stride of literature emphasise the effect of founder-CEO on the firm performance (McConaughty, et al. 1998). Such literature argue that the founder has an ‘emotional’ connection with the business they started and are keen on the future sustainability of the business. On the other hand, those who argue that the founder should relinquish some control of the firm hold that an external CEO could perform better than the founder. Other literature have concentrated on the family ownership and its effect on firm performance while other distinguish a lone founder firm and family firms with multiple relatives (Miller, et al., 2007). In this research, we investigate whether family ownership has greater influence than founder-CEO on firm performance. The questions raised in this short paper are, does it matter whether it is family-ownership or founder-CEO in relation to firm performance. Do family firms perform better than non-family firms? Does a founder-CEO bring better firm performance?
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