Managerial Family Ties and Employee Risk Bearing in Family Firms: Evidence from Spanish Car Dealers

Abstract

This article argues that family firms in which the top management team (TMT) is dominated by nonfamily managers are more likely to shift risk to employees through incentive pay schemes than family firms with TMTs dominated by family members. We also argue that this tendency is aggravated in firms of bigger size, as this condition makes nonfamily managers more vulnerable. We further note that differences between family- and non-family-dominated TMTs may lessen when the sales trend is negative. The analyses conducted on a sample of 219 family-controlled car dealerships in Spain confirm our expectations.