Transaction Costs and Outsourcing Decisions in Small and Medium-Sized Family Firms

An important difference between family and nonfamily firms, and among different types of family firms, is in the way they make outsourcing decisions and thereby define the boundaries of the firm. The authors propose that transaction costs arising from human asset specificity, threats of opportunism, and risk aversion will make small-and medium-sized family firms operating with technologies of low to medium complexity less likely to outsource than comparable nonfamily firms. The authors also argue that the limiting influence of transaction costs on the outsourcing decisions of family firms may be mitigated by variations in available suppliers, goals, and ownership structures

The determinants of family firms’ subcontracting: a transaction cost perspective

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

The determinants of family firms' subcontracting: A transaction cost perspective

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.Transaction cost theory Family business Subcontracting

Transaction Costs and Outsourcing Decisions in Small- and Medium-Sized Family Firms

An important difference between family and nonfamily firms, and among different types of family firms, is in the way they make outsourcing decisions and thereby define the boundaries of the firm. The authors propose that transaction costs arising from human asset specificity, threats of opportunism, and risk aversion will make small- and medium-sized family firms operating with technologies of low to medium complexity less likely to outsource than comparable nonfamily firms. The authors also argue that the limiting influence of transaction costs on the outsourcing decisions of family firms may be mitigated by variations in available suppliers, goals, and ownership structures

Family Social Capital, Venture Preparedness, and Start-Up Decisions: A Study of Hispanic Entrepreneurs in New England

Using insights from the resource-based view, social capital, and network theories, the authors develop a model of how family social capital, as well as an entrepreneur’s knowledge capital and external social capital, influences the venture creation process. The model is tested on a sample of 85 nascent Hispanic entrepreneurs. Results indicate that family social capital, measured as family support, contributes to venture preparedness and the start-up decision, suggesting that it has both a direct and an indirect influence on venture creation