The impact of asymmetry on the management of family firms

This master thesis deals with the issue of family firms, which form a significant part of the private sector in business. The business and the family are closely intertwined, which emphasizes the successful succession and sustainability of the firm. However, many family businesses face internal conflicts and inadequate succession planning, which can jeopardize their future, and therefore choose an external non-family director to lead their firm. The aim of this thesis is to examine the effect of information asymmetry on the management of family firms through the lens of information processing theory. The research questions focus on the factors of information asymmetry affecting the management of family firms and how information asymmetry affects the ma-nagement of these firms. The research was conducted using a qualitative research method focusing on semi-structured interviews with owners and non-family directors of selected family firms. Based on the data analysis, three factor-dimensions affecting corporate governance were identified: the Transparency and Reflection Dimension, the Role Anchoring and Understanding Values Dimension, and the Stability and Environment Dimension. Furthermore, a typology of family firm owners was developed with respect to their approach to information transfer and organizational structure formation, namely, competent, neutral and non-competent owner types. The practical contribution of this paper is the findings and recommendations for family business owners that can contribute to more effective management of their businesses, especially due to the lack of exploitation of the potential of non-family directors by family business owners.