Slack and performance in family owned SMEs: an agency-theory perspective

Building on the notion that unabsorbed, absorbed, and potential slack resources positively affect financial performance in small and medium enterprises (SMEs), we take a family firm angle and theorize from an agency theory perspective that these relationships are weaker when SMEs are family-owned. Delving deeper into family firm heterogeneity, we then investigate how founding-generation board control and the presence of a family CEO moderate the slack performance relationships in family-owned SMEs. A longitudinal analysis of a panel dataset of Italian SMEs largely confirms our expectations while also revealing counterintuitive findings that offer important contributions to existing literature.