Determinants of professionalization of TMT in private family firms

Abstract

We examine the determinants of top management team professionalization in Belgian private family firms. Professionalization, conceptualized here as the inclusion of non-family managers, can be more challenging due to the unique composition of family firms. Therefore, predictions are based on contingency factors that are formed by three different subsystems: the ownership, business, and family system. A multi-theoretical approach is used to determine which family firms are more or less eager to hire non-family managers. Furthermore, the specific ties within a business family, translated by socio-emotional wealth, are considered to be influential. The results of the logistic regression analyses on a sample of 218 Belgian private family firms provide partial support for the effect of all three subsystems while also a significant influence of socio-emotional wealth is found. Hence, professionalization of top management teams in family firms is confirmed to be complex due to the unique interaction between the firm’s owners, management and family.