Relation between Governance Structures, Agency Issues, and Justice Principles in Family Firms

If the family business shall remain in the family incumbents must choose according to which justice principle they transfer the family business - ownership and management - to the next generation. The most prevalent justice principles in our culture in this context are equity and equality. Each choice leads to different governance structures that entail particular consequences, such as agency issues. In the following I will analyze three different succession options - succession according to equity, succession according to equality as well as a succession form that encompasses both principles - and carve out in a dynamic approach the particular challenges that arise in the family business under an agency perspective. This paper is a conceptual one that combines justice and agency considerations in the family business succession.