You reap what you SEW: Rethinking how kinship shapes managerial alignment in family firms

Socioemotional wealth (SEW) theory has advanced our understanding of family-firm behavior by highlighting the importance of noneconomic goals such as legacy preservation and family control. However, this literature often assumes that family managers are aligned with these goals and thatnonfamily managers are not. This binary overlooks cases wherein nonfamily managers support SEW objectives and wherein family managers act in self-interest. The few works that acknowledge exceptions to this binary begin to address this complexity, though a more developed theoretical framework remains needed. In this paper, we integrate agency theory and SEW to offer a contingent framework for governance in family firms. We propose that effective governance depends not on family status but on a manager’s alignment with the family’s dominant coalition and on the choice between formal and informal governance, which together allow firms to balance risk and control while preserving socioemotional value.