International Journal of Management, Accounting and Economics
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Volume 4, No. 10, October 2017 Pages: 1020 - 1039
Governance of Family Owned Businesses and Firm Performance: Evidence from Sri Lanka
Athula Ekanayake , Ravindra Hewa Kuruppuge
Corresponding author:
athulae[at]gmail[dot]com
Abstract:
Following the notions of agency and stewardship theories, this study examined the empirical validity of the relationship between governance of family owned businesses and firm performance, employing a sample of 82 family businesses in 5 main commercial districts in Sri Lanka. Governance variables related to family ownership, involvement in management and experience were examined in order to assess their influence on firm performance, measured in both financial and non-financial terms. Whilst sales growth was used to measure financial performance, 5-point Likert scale, ranging from much lower to much higher, has been used to assess respondents’ views on non-financial performance of their firms, controlling the cultural factors. The results were in favour of family ownership and family involvement in management both of which influence significantly on financial and non-financial performance of the family owned businesses. But, the study did not support to prove the relationship between experience of owner managers and firm performance.
Keywords:
Governance, Family Involvement, Family owned businesses, Firm performance, Sri Lanka.
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