Non-family CEOs in family firms: Spotting gaps and challenging assumptions for a future research agenda

Journal of Family Business Strategy xxx (xxxx) xxxx

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Journal of Family Business Strategy journal homepage: www.elsevier.com/locate/jfbs

Non-family CEOs in family firms: Spotting gaps and challenging assumptions for a future research agenda Matthias Waldkirch EBS Business School, EBS Universität für Wirtschaft und Recht, Rheingaustrasse 1, 65375 Oestrich-Winkel, Germany

ARTICLE INFO

ABSTRACT

Keywords: Non-family chief executive officer (CEO) Family firms Literature review Professionalization Gap-spotting Challenging assumptions

As the field of family business matures, research increasingly focuses on actors outside the owner family. The most important non-family member a family firm can hire is arguably a non-family CEO. Given the limited pool of family members, family firms regularly hire such actors, yet, our knowledge of them is fragmented. Using a multidisciplinary systematic literature review, this article collects, organizes and structures current knowledge on non-family CEOs in family firms. The article proposes a research agenda by engaging in ‘gap-spotting’ and ‘assumption-challenging’, first outlining gaps in the existing literatures and proposing research questions to fill them, then identifying and problematizing three underlying assumptions in the literature. Finally, the article develops alternative assumptions to stimulate new research about non-family CEOs.

1. Introduction The field of family business research hinges on the involvement of the family in matters of the business and ownership of the firm (Sharma, 2004; Tagiuri & Davis, 1992). Accordingly, family firms are associated not only with family ownership but also with family management (Stewart & Hitt, 2012). Thus, it is not surprising that among all actor groups in family firms, family members have received by far the most attention. However, in recent years, the development of the family business field has inspired researchers to broaden their focus beyond family members and to study other actor groups working in family firms (for a recent review on non-family employees see: Tabor, Chrisman, Madison, & Vardaman, 2018). Arguably the most important non-family member that family firms hire is the non-family chief executive officer (CEO). CEOs are commonly depicted as “the most powerful individual in the organization” (Busenbark, Krause, Boivie, & Graffin, 2016: 258) and they have an important impact on the growth, survival, strategy, and overall fate of their firms (Finkelstein, Hambrick, & Cannella, 2009; Quigley & Graffin, 2017). From an organizational perspective, non-family CEOs have been associated with a multitude of issues, such as business performance (Miller, Le Breton-Miller, Minichilli, Corbetta, & Pittino, 2014; Naldi, Cennamo, Corbetta, & Gómez-Mejía, 2013) or internationalization of family firms (Banalieva & Eddleston, 2011; Kraus et al., 2016). However, in addition to their impact on the business, CEOs in family firms can have an influence on processes within the family and ownership areas, and affect for instance the ownership succession process (Daspit, Holt, Chrisman, & Long,

2016; Wiklund, Nordqvist, Hellerstedt, & Bird, 2013) and the integration of the next generation (De Massis, Chua, & Chrisman, 2008; Waldkirch, Nordqvist, & Melin, 2018). Thus, understanding the impact of choosing a non-family member as CEO is not just important from a business perspective, but has clear implications for family and ownership processes and outcomes. In the last decade, it has become increasingly common for family firms to hire non-family CEOs (PwC, 2016). Just recently, Ferrero announced that for the first time in the company’s history of more than 70 years, a non-family CEO will take over the reins (Financial Times, 2017). As the previous family CEO Giovanni Ferrero argues, the new CEO is expected to combine the “best of our worlds”, bringing together family history, entrepreneurship, and managerial excellence (ChiefExecutive, 2017). Despite the growing amount of research on this topic, the body of literature is fragmented. Existing knowledge of nonfamily CEOs and their impact on family firm outcomes and processes is spread across different fields, such as strategic management, finance, economics, and accounting, with little integration among the different streams. Furthermore, while several articles explicitly focus on nonfamily CEOs (e.g. Blumentritt, Keyt, & Astrachan, 2007; Miller et al., 2014), it is common that insights on non-family CEOs are part of broader research questions and might thus be easy overlooked (e.g. Gómez-Mejía, Larraza-Kintana, & Makri, 2003; Naldi et al., 2013). Therefore, an integration of the current insights seems warranted. Moreover, CEOs as individual actors take an outstanding role due to their overall responsibility for the management of the firm, as the extant research on strategic leadership shows (Finkelstein et al., 2009;

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Please cite this article as: Matthias Waldkirch, Journal of Family Business Strategy, https://doi.org/10.1016/j.jfbs.2019.100305

Journal of Family Business Strategy xxx (xxxx) xxxx

M. Waldkirch

Quigley & Graffin, 2017). Thus, despite recent reviews on non-family employees (Tabor et al., 2018), the explicit focus on non-family CEOs is fitting. Moreover, as several calls for more research on this important actor further underline (Blumentritt et al., 2007; Daspit et al., 2016; DeTienne & Chirico, 2013; Eklund, Palmberg, & Wiberg, 2013), creating an agenda to move this body of research forward seems timely. Therefore, the aim of this article is to collect, organize and structure the knowledge on non-family CEOs and to create a future research agenda that both builds upon and challenges current knowledge. The article relies on a multidisciplinary systematic literature review approach (Calabrò, Vecchiarini, Gast, Campopiano, & De Massis, 2018; Denyer & Tranfield, 2009), which is based on the analysis of 91 ABSranked articles (CABS, 2018). The review follows a three-step approach: in the first step, a systematic and multi-disciplinary literature review analyzes the current stream of research on non-family CEOs to identify their impact on family firm processes and outcomes and how non-family CEOs are framed in the literature. Following the approach by Alvesson and Sandberg (2011, 2013), in the second step, the review engages in ‘gap-spotting’ based on the previous analysis to outline under-researched areas around non-family CEOs and propose ways of extending the current knowledge. In the final step, the review problematizes the depiction of non-family CEOs and challenges three commonly-held assumptions in the literature (Alvesson & Sandberg, 2011, 2013). Following both approaches enables the review to offer both incremental and innovative ways forward. Thus, the review contributes to the family business literature and especially the understanding of non-family CEOs in family firms.

capabilities, such as ‘cultural competence’ (Hall & Nordqvist, 2008), are important for non-family CEOs in the context of family firms. Thus, to better understand family firms, it is vital to focus on the actors steering them. While there is a lack of official statistics on the prevalence of nonfamily CEOs, the samples of the articles in the review clearly indicate that non-family CEOs represent an important stakeholder group across listed and private family firms. In listed family firms, the presence of non-family CEOs seems to be more common. This can be explained with the increased shareholder pressure to achieve financial performance and the increasingly strong ‘shareholder logic’ that affects family firms in the stock market (Xu, Chen, & Wu, 2018). Anderson and Reeb (2003) show that 55% of the family firms listed in the S&P 500 are managed by non-family CEOs, while the Swedish sample of Eklund et al. (2013) indicates that 37% of the listed family firms are non-family CEO-led. In their sample from Thailand, Sitthipongpanich and Polsiri (2015) indicate that more than 35% of the firms have a non-family CEO. Regarding private family firms, Steijvers and Niskanen (2014) indicate that in their Finnish sample, 17% of the firms are led by non-family CEOs, Arteaga and Menéndez-Requejo (2017) indicate that around 28% of the family firms in their Spanish sample are led by non-family CEOs, and Michiels (2017) indicates that around 15% of the family firms in her Belgian sample have a non-family CEO. Combining both private and listed firms, Bandiera, Lemos, Prat, and Sadun (2018) find 16% nonfamily CEOs across six countries. While these numbers are not representative, they give an insight into how common non-family CEOs are across the world.

2. Non-family CEOs in family firms

3. Methodology

Non-family CEOs were originally framed as part of what is understood as the ‘professionalization’ of the family business (Levinson, 1971; Schein, 1983), and an ever-increasing amount of research has become interested in the role and impact of these individuals (Miller et al., 2014). Despite the ongoing discussion about the extent to which CEOs matter (Fitza, 2017; Quigley & Graffin, 2017), the majority of research agrees that CEOs are an important factor in explaining why and how things happen in and to organizations (Finkelstein et al., 2009). While the general importance of CEOs is mostly uncontested, one might ask whether the attention given to non-family CEOs is warranted; why is it that we should care about this specific group of actors? The first answer to this question is surprisingly simple: we should care because family firm owners care. As Chua et al. (2003) have already shown, contact with non-family managers and CEOs is an important concern for family owners, as reflected in the plethora of practitioner articles on the topic of non-family CEOs (for instance: Aronoff & Ward, 2010; Mooney, 2012). Second, non-family CEOs matter because they have become increasingly common in family firms all over the world. While the largest concern of family firms used to be which of the children to choose as managerial successor (Calabrò, Minichilli, Amore, & Brogi, 2018; Calabrò, Vecchiarini et al., 2018), recent reports indicate that an increasing share of family firms are willing to hire non-family CEOs and retain ownership of the firm (PwC, 2014, 2016). Moreover, while most CEO literature pertains to publicly listed firms with dispersed ownership (Berns & Klarner, 2017; Busenbark et al., 2016; Giambatista, Rowe, & Riaz, 2005), the situation of non-family CEOs in family firms may differ quite drastically, which warrants the focus on this sub-group of executives. Non-family CEOs face a complex work context, having to handle both business and family concerns at the same time (Edwards & Meliou, 2015; Mitchell, Morse, & Sharma, 2003). Contrary to non-family firms, ownership in family firms is oftentimes concentrated and follows different logics than in non-family firms (Brundin, Florin Samuelsson, & Melin, 2014). Accordingly, non-family CEOs work extensively with the business’ owners outside of regular ownership arenas (Blumentritt et al., 2007). Therefore, in addition to more ‘rational’ competences, soft factors and interpersonal

3.1. Approach of the review To identify articles published on non-family CEOs, this paper relies on a multidisciplinary systematic literature review (Allan & Oswald, 2010; Calabrò, Minichilli et al., 2018; Denyer & Tranfield, 2009). As Webster and Watson (2002): xiii) outline, such review effectively “facilitates theory development, closes areas where a plethora of research exists, and uncovers areas where research is needed”. However, the article goes a step beyond a regular systematic literature review, which tends to lack a critical dimension (Huff, 2008). The literature review outlines a new approach to further engage with the literature by drawing from the idea of ‘gap-spotting’ and ‘assumption-challenging’ (Alvesson & Sandberg, 2011, 2013). Following both approaches allows to outline a future research agenda that both strengthens this body of literature while simultaneously providing new ways forward. 3.2. Scope of the review 3.2.1. Objective and boundaries of the review The process of this literature review began by defining the research objective (Denyer & Tranfield, 2009), which is to collect, organize and structure the current knowledge on non-family CEOs in the context of family-owned firms. The review focuses particularly on the role of nonfamily CEOs for family firm processes and outcomes. Moreover, the review aims to extend current status quo and to problematize the conceptualization of non-family CEOs, providing new ways forward. Thus, the review focuses on firms owned by a family but managed by a non-family actor. Given the presence of non-family CEOs in both publicly listed (Villalonga & Amit, 2006) and private family firms (Hall & Nordqvist, 2008), this review encompasses both types of family firms. Fig. 1 provides a summary of the literature review process (Nolan & Garavan, 2016). 3.2.2. Inclusion criteria Following best practices from recent literature reviews (Calabrò, Minichilli et al., 2018; Pukall & Calabrò, 2014; Tabor et al., 2018), the 2

Journal of Family Business Strategy xxx (xxxx) xxxx

M. Waldkirch

Fig. 1. Systematic literature review approach.

3

Quantitative; 1114 CEOs of listed & private family & non-family firms; panel Quantitative; 986 firm-year observations of listed family firms from continental Europe; panel

Journal of Management & Governance (ABS 1); 21

Family Business Review (ABS 3); 15

Journal of International Business Studies (ABS 4*); 107

Review of Financial Studies (ABS 4*); 47

Journal of Economics and Business (ABS 1); 0

Quarterly Journal of Economics (ABS 4*); 1137

Administrative Science Quarterly (ABS 4*); 856

Academy of Management Perspectives (ABS 3); 492

Family Business Review (ABS 3); 144

European Journal of Finance (ABS 3); 44

Strategic Management Journal (ABS 4*); 76

Contemporary Accounting Research (ABS 4); 31

André et al. (2014)

Arteaga and MenéndezRequejo (2017)

Banalieva and Eddleston (2011)

Bandiera et al. (2018)

Barontini and Bozzi (2018)

Bennedsen et al. (2007)

Berrone et al. (2010)

Bloom et al. (2012)

4

Blumentritt et al. (2007)

Caselli and Giuli (2010)

Chang and Shim (2015)

Chen et al. (2013)

Quantitative; 1856 listed family & non-family firms from the USA; panel

Quantitative; 2109 listed family firms from Japan; panel

Quantitative; 708 private family firms from Italy; panel

Quantitative; > 10,000 organizations across 20 countries; cross-sectional Qualitative; 5 group interviews with 27 family firm actors from the USA

Quantitative; 5334 successions in Danish private and listed family & non-family firms; panel Quantitative; 194 listed family & non-family firms from the USA; panel

Quantitative; 202 listed family firms from Western Europe; panel

Quantitative; 215 mergers of listed family & non-family firms from Canada; panel Quantitative; 530 private family firms from Spain; panel

Quantitative; 2484 listed & unlisted family firms from Italy; panel

Journal of Corporate Finance (ABS 4); 65

Amore et al. (2011)

Method and sample

Journal, ABS list ranking & citationsa

Author; date

Table 1 Research on non-family CEOs.

Family firms managed by non-family CEOs tend to be better-managed than those run by family CEOs, looking similar to firms owned by dispersed shareholders. The owner family needs to foster good interactions with the non-family CEO, since relationships between both parties make for successful appointments. The board may function as a form of support group for the non-family CEO for making difficult decisions. Both under family and non-family CEO leadership, nonfamily CFOs have a positive impact on small family firm performance; best performance is reached on average by having a family CEO and a non-family CFO. Non-family CEOs outperform when 1) families maintain high ownership control, yet leave no family legacy behind, 2) when the non-family manager follows a non-founder family manager, and 3) when the non-family CEO graduated from an elite university. CEO turnover–performance sensitivity is lower for both family CEO firms and non-family firms than for professional CEO family firms, but markets react less positively to the dismissal of non-family CEOs.

/

Agency theory

Behavioral agency theory

Agency theory

Agency & stewardship theory

To gain a socioemotional reward, family firms show a higher environmental performance, notwithstanding the family membership of the CEO.

Non-family CEOs outperform their family counterparts.

In opposite to family CEOs, the number of family representatives has no significant effect on non-family CEO compensation.

Family CEOs work 9% fewer hours than professional CEOs, who work as much in family firms than as their counterparts in nonfamily firms.

Non-family CEOs are beneficial for the internationalization of family firms with a low home region focus.

The appointment of non-family professional CEOs leads to a significant increase in the use of debt, which especially applies for young firms, those with financial flexibility, and firms where the owner family is dominant in the board of directors. Non-family CEO-led firms undertake less-profitable high-tech M&As than founder CEO-led firms and show less abnormal returns. Non-family CEO-led family firms have a stronger positive relationship between the implementation of a family constitution and future firm performance.

Impact of non-family CEO

Socioemotional wealth

Not applicable (n.a.)

Agency & Stewardship Theory

n.a.

Agency & stewardship theory

Agency theory

Agency theory

Agency theory

Theoretical perspective

(continued on next page)

Non-family CEOs inherently differ from family CEOs Due to entrenchment, family CEOs are less likely to be dismissed than non-family CEOs.

Non-family CEOs inherently differ from family CEOs Both family and non-family CEOs perform better when working with a non-family CFO who brings increased skills. Non-family CEOs counteract socioemotional wealth Non-family CEOs perform better in firms with less socioemotional endowment and when they have better education.

Non-family CEOs inherently differ from family CEOs Non-family CEOs lead to increased agency issues that lower abnormal returns after M&As. Formal mechanisms govern the family-CEO relationship The presence of a family constitution leads to better performance as it increases formal control and monitoring of the non-family CEO. Non-family CEOs inherently differ from family CEOs Non-family CEOs outperform in low homeregion focus context due to their experience and the more realistic experience toward them. Non-family CEOs inherently differ from family CEOs Non-family CEOs follow a different set of goals in opposite to family CEOs, which leads to different working hours. Formal mechanisms govern the family-CEO relationship The presence of family members in the board and the increasing formal monitoring do not influence the non-family CEO compensation. Non-family CEOs inherently differ from family CEOs In comparison to family CEOs, non-family CEOs outperform due to higher qualifications. Non-family CEOs counteract socioemotional wealth Despite their lower socioemotional wealth, non-family CEOs behave similar to family CEOs regarding environmental performance. Non-family CEOs inherently differ from family CEOs Non-family CEOs bring higher capabilities and managerial expertise to the business. / Successful non-family CEOs are a match with the firm’s culture, since they must build a relationship with the family in order to have a healthy and productive tenure as firm leader.

Non-family CEOs inherently differ from family CEOs Non-family CEOs change the firm's investment opportunity set, which family firms fund through debt to mitigate the increased risk.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

Journal of Business Research (ABS 3); 11

Journal of Risk and Insurance (ABS 3); 5

Journal of Multinational Financial Management (ABS 2); 58 Entrepreneurship Theory and Practice (ABS 4); 86

Finance Research Letters (ABS 2); 11

Journal of Business Ethics (ABS 3); 8

Chen et al. (2016)

Cheng et al. (2017)

Cohen and Lauterbach (2008)

Cucculelli and Peruzzi (2017)

Cui et al. (2016)

5

Strategic Management Journal (ABS 4*); 1

Journal of Corporate Finance (ABS 4); 12

Journal of Organizational Change Management (ABS 2); 6

Human Relations (ABS 4); 15

Small Business Economics (ABS 3); 18

Strategic Management Journal (ABS 4*); 75

Journal of Comparative Economics (ABS 3); 32

Damaraju and Makhija (2018)

De Cesari et al. (2016)

Del Giudice et al. (2013)

Edwards and Meliou (2015)

Eklund et al. (2013)

Feldman et al. (2016)

Gallego and Larrain (2012)

Combs et al. (2010)

Journal, ABS list ranking & citationsa

Author; date

Table 1 (continued)

Quantitative; 1700 executives from family & non-family firms in Argentina, Brazil, and Chile; cross-sectional

Quantitative; 234 listed family & non-family firms from Sweden; panel Quantitative; 2110 listed family & non-family firms from the USA; panel,

Mixed method; 30 interviews & factor analysis based upon 232 private Italian family firms Conceptual

Quantitative; 760 listed family & non-family firms from 15 European countries; panel

Quantitative; 1000 largest listed family and non-family firms from India; panel

Quantitative; 177 listed family firms from the USA; panel

Quantitative; 1437 family businesses from seven EU countries; cross-sectional

Quantitative; 381 listed family & non-family firms from the USA; panel

Quantitative; 124 listed family firms from Israel; panel

Quantitative; 976 listed family & non-family firms from the USA; panel

Experimental; 173 founder CEOs from Taiwan

Method and sample

n.a.

Agency theory

Agency theory

Institutional logics & reflexivity

Psychoanalysis

n.a.

Social proximity & homophily

Behavioral agency theory

n.a.

Agency theory

Agency theory

Agency theory

Agency & stewardship theory

Theoretical perspective

Controlling for firm and executive characteristics, nonfamily CEOs in family-controlled firms earn around 30% more than CEOs in other firms.

Family firms derive more value from divestitures than non-family firms, and more so if they are run by family rather than non-family CEOs.

When a founder CEO perceives professional managers as possessing higher degrees of stewardship, founders are more likely to choose a professional CEO as the successor than to sell the business. Poorly performing non-family CEOs in publicly traded family stock firms face the highest likelihood of turnover, whereas the likelihood of turnover in nontraded family firms is not significantly different from non-family firms. Owner CEOs have significantly higher pay and insignificantly lower pay performance sensitivity than non-owner CEOs. In multi-family-member firms, non-family CEOs receive a higher compensation than family CEOs due to family monitoring, which is similar to CEOs in non-family firms. Founder-led family firms are required to provide a larger set of information during the bank screening process. Non-family CEO-led firms are required to provide mostly hard information, whereas family firms’ founders are more likely to be requested for soft information. Family firms with non-family CEOs invest less in CSR. However, non-family CEOs receive a higher percentage of long-term incentives, which positively influences the firms’ CSR performance notwithstanding the CEO family membership. There is a significant ‘in-group’ preference based on caste/religion in hiring professional CEOs by firm owners/ chairpersons for the Indian firms. Findings indicate that it is based on ‘information’ reasons due to higher homophily. During the post-acquisition period there is no significant impact on CEO turnover in family firms, however, non-family CEOs in acquiring family firms receive an increase in total and cash compensation. A non-family CEO acting like a steward represents the myth of the family firm and is therefore able to transmit the entrepreneurial dream of the family. CEOs act as reflexive individuals confronted by complexity and informed by different personal preferences. Appointing a non-family manager as the successor improves a family firm’s performance significantly.

Impact of non-family CEO

(continued on next page)

/ Non-family CEOs acting like stewards are able to carry on family tradition even without being a family member. / Non-family CEOs are subject to different logics and individual preferences that influence their decisionmaking in family firms. Non-family CEOs inherently differ from family CEOs Non-family CEOs bring superior managerial capabilities. Non-family CEOs counteract socioemotional wealth Non-family CEOs have less emotional attachment to business units and thus do not price in the family-specific costs. Formal mechanisms govern the family-CEO relationship The observed salary premium stems from family firms beyond founder stage, indicating weaker governance.

Non-family CEOs inherently differ from family CEOs Non-family CEOs and family CEOs have different incentive schemes.

Non-family CEOs counteract socioemotional wealth Due to their lack of socioemotional wealth, non-family CEOs tend to view CSR as a loss and must be higher compensated to invest in CSR performance. / Social proximity and caste membership explains how family owners choose non-family CEOs for their firms.

Formal mechanisms govern the family-CEO relationship Monitoring in publicly listed family firms is most efficient, as highlighted by the performance-turnover relationship of non-family CEOs. Non-family CEOs inherently differ from family CEOs In opposite to non-family CEOs, owner CEOs extract private benefits through inflated pay. Formal mechanisms govern the family-CEO relationship Family CEOs are willing to accept lower pay than non-family CEOs when monitored by several family members. Non-family CEOs inherently differ from family CEOs In opposite to non-family CEOs, family firms’ founders are perceived as riskier borrowers.

Formal mechanisms govern the family-CEO relationship Family owners prefer CEOs who act in their interest, indicated through pay premium.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

Journal, ABS list ranking & citationsa

Small Business Economics (ABS 3); 0

Review of Managerial Science (ABS 2); 1

Academy of Management Journal (ABS 4*); 769

Academy of Management Journal (ABS 4*); 1264

Economic and Industrial Democracy (ABS 3); 4

Family Business Review (ABS 3); 304

Journal of Business Finance & Accounting (ABS 3); 84

Corporate Governance-An International Review (ABS 3); 3

Management and Organization Review (ABS 3); 1

Family Business Review (ABS 3); 93

Entrepreneurship Theory and Practice (ABS 4); 19

Author; date

Garcés-Galdeano et al. (2017)

García-Sánchez et al. (2018)

Gómez-Mejía et al. (2003)

Gómez-Mejía et al. (2001)

Gulbrandsen (2009)

Hall and Nordqvist (2008)

Hillier and McColgan (2009)

Hsu et al. (2018)

Hu et al. (2018)

Huybrechts et al. (2013)

Jaskiewicz, Block, Combs et al. (2017)

Table 1 (continued)

6 Quantitative; 335 listed family and non-family firms from the USA; panel

Quantitative; 740 privately held family firms from Belgium; crosssectional

Quantitative; 16,225 firm-year observations of listed family & non-family firms from Taiwan; panel Quantitative; 1284 private family firms from China; cross-sectional

Quantitative; 545 listed family & non-family firms from the UK; panel

Agency & signaling theory

Agency theory, psychological ownership & socioemotional wealth

Agency Theory & Organizational Justice

Agency Theory

n.a.

Symbolic interactionism

/

Quantitative; 2358 private family & non-family firms from Norway; cross-sectional Qualitative; 5 case studies (95 interviews) in private family firms from Sweden

Agency theory

Agency theory

Socioemotional Wealth

Socioemotional wealth

Theoretical perspective

Quantitative; 276 private family & non-family firms from Spain; panel

Quantitative; 253 listed family firms from the USA; panel

Quantitative; 103 listed family firms from 13 countries; panel

Quantitative; 823 small family and non-family firms from Spain; cross-sectional

Method and sample

Firms with family owners offer greater CEO incentive compensation than founder-owned firms, both to entice high-quality CEOs and to signal to shareholders that the family shares their concerns about financial performance.

During the initial years of the tenure, a non-family CEO has a positive influence on a family firm's risk-taking, which is reduced over time.

Non-family CEOs reduce the negative impact of familial middle-managers on labor productivity.

Non-family firms and family firms with a non-family CEO have higher percentage of union members, whereas owner-manager-led family firms show lower percentages. In order to be successful as a non-family CEO, constant interaction and the ability to understand and be sensitive to the family-influenced cultural and social processes are core. In opposite to non-family CEOs, CEO turnover is insensitive to firm performance for family CEOs. However, stock prices respond favorably to the departure of a family CEO. Non-family CEO-led firms are, similar to founder-led firms, less inclined to appoint higher-quality auditors due to family alignment.

In general, non-family CEOs will be held more accountable for business risks. However, this effect is lower for non-family CEOs operating under strongly relational contracts.

Economic performance has a stronger impact on the satisfaction of CEOs in non-family firms than in family ones, and there is no difference for family and nonfamily CEOs. Non-family CEOs have a negative impact on family investment levels, especially when they have a longer tenure. This relationship is moderated by family involvement. Family CEOs receive lower total income than nonfamily CEOs. The difference increases with the concentration of family ownership.

Impact of non-family CEO

(continued on next page)

Non-family CEOs inherently differ from family CEOs The exit of family CEOs is positively received by shareholders because family CEOs are perceived as more powerful. Non-family CEOs inherently differ from family CEOs Family and non-family CEOs follow different goals, which partly can lead to similar outcomes, such as not appointing the best auditors. Non-family CEOs inherently differ from family CEOs Non-family CEOs lack the emotional connection to family members and thus can better manage them. Non-family CEOs inherently differ from family CEOs Over time, non-family CEOs develop psychological ownership towards the firm which makes them act like family CEOs and decreases their positive impact on risk-taking. Formal mechanisms govern the family-CEO relationship Founders are better equipped to monitor opportunistic non-family CEOs. However, family ownership leads to increased salary as a signal for good governance measures.

Formal mechanisms govern the family-CEO relationship The compensation of non-family CEOs is less insulated from risk than that of family CEOs. Non-family CEOs are also paid more in long-term pay than family CEOs as R&D expenditures rise. Formal mechanisms govern the family-CEO relationship Contracting with family ties oftentimes introduces a relational and affective factor to contracts that is absent in contracts with non-family CEOs. However, relational contracting may span towards non-family members that work closer with principals. Non-family CEOs counteract socioemotional wealth Owner CEOs pay higher wages to employees than non-family CEOs, partly explaining the lower rate of union membership. / Non-family CEOs are more successful when they have an in-depth understanding of the family’s dominant goals and meanings of being in business.

Non-family CEOs counteract socioemotional wealth Non-family CEOs do not have a strong socioemotional bond to the firm, so they will prioritize financial performance. Formal mechanisms govern the family-CEO relationship Family involvement in the board moderates the risk-taking of the non-family CEO

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

7

Pacific-Basin Finance Journal (ABS 2); 0

Family Business Review (ABS 3); 200

Journal of Business Research (ABS 3); 48

International Review of Economics & Finance (ABS 2); 46

Kowalewski et al. (2010)

Kraus et al. (2016)

Kuan et al. (2012)

Review of Accounting and Finance (ABS 2); 3

Kang and Kim (2016)

Kim and Han (2018)

Journal of Corporate Finance (ABS 4); 6

Kang et al. (2017)

International Journal of Accounting and Information Management (ABS 2); 7

International Journal of Auditing (ABS 2); 0

Kang (2017)

Khosa (2017)

Cogent Economics & Finance (ABS 1); 1

Jong and Ho (2018)

Accounting Horizons (ABS 3); 26

Entrepreneurship Theory and Practice (ABS 4); 25

Jaskiewicz and Luchak (2013)

Khalil et al. (2011)

Journal, ABS list ranking & citationsa

Author; date

Table 1 (continued)

Quantitative; 1216 listed family & non-family firms from Taiwan; panel

Fuzzy-set qualitative comparative analysis; 426 family firms from Germany; cross-sectional

Quantitative; 906 CEO observations of listed family and non-family business groups from Korea; panel Quantitative; 217 public family firms from Poland; panel

Quantitative; 317 listed family firms from India; panel

Quantitative; 171 auditor resignations in listed family & non-family firms from the USA; panel

Quantitative; 426 group-years and 7362 firm-years from listed family business groups from Korea; panel

Quantitative; Korean familyowned Chaebols and affiliated firms; panel

Quantitative; all S&P 1500 firms from 2002-2010; panel

Quantitative; 279 listed family firms from Malaysia; panel

Conceptual

Method and sample

Agency theory

Socioemotional wealth

Agency theory

Agency Theory

Agency theory

Entrenchment vs. alignment (agency)

Agency theory

Agency theory

Agency theory

Agency Theory

Regulatory focus theory

Theoretical perspective

Non-family CEOs are a factor for successful internationalization in low SEW firms when combined with a non-family advisory board and international networks, and in high SEW firms when combined with external ownership and international networks. Cash-holdings under a non-family CEO are lower than under family CEOs in low-cash holding firms.

For affiliates with non-family CEOs, controlling shareholders’ value and its increase in attention has a positive effect on Tobin's Q and a negative effect on EBITDA, indicating a weak agency type 1 problem. Family firms switching from a family CEO towards a non-family CEO experience an improvement in firm performance, while there is no improvement when doing the opposite. Family CEOs tend to replace nonfamily CEOs in firms more 'central' to the family business group. Auditor resignations in family firms managed by a founder and non-family CEO are less frequent compared to non-family firms, and abnormal returns after auditor resignations are higher in non-family CEO-led family firms. There is an inverse relationship between board independence and firm value of group-affiliated firms in India, but no difference between family & non-family CEO led firms. Korean family business groups provide excessive compensation to CEOs who are family members than to professional CEOs in family and non-family firm groups. Family CEOs are positively and significantly related to better financial performance.

The different nature of the tie between a firmcontrolling family and a family and non-family CEO will lead to the adoption of predictably different goal orientations by the CEO, leading to different organizational strategies that fit some business contexts better than others. Institutional investors have a stronger negative impact on executive compensation when the CEO is not a family member and better protect minority shareholders. Family firms tend to purchase more non-audit services than their non-family counterparts, which further increases with the presence of a non-family CEOs.

Impact of non-family CEO

(continued on next page)

Non-family CEOs inherently differ from family CEOs Family CEOs have a higher incentive to reserve larger cash holdings to invest in family objectives.

Non-family CEOs counteract socioemotional wealth Family CEOs extract private benefits directed toward the family through excessive compensation. Non-family CEOs inherently differ from family CEOs Family CEOs possess higher social capital, which can make up for the weak institutional framework. Non-family CEOs inherently differ from family CEOs Non-family CEOs have higher formal competences and thus lead to more successful internationalization efforts in family firms.

Formal mechanisms govern the family-CEO relationship Non-family CEOs may be entrenched in family firms as well.

Non-family CEOs inherently differ from family CEOs Investors' reactions to auditor resignations are less negative when non-family CEOs are present.

Non-family CEOs counteract socioemotional wealth Because non-family CEOs are less entrenched, they have less litigation and reputation concerns. Formal mechanisms govern the family-CEO relationship Non-family CEOs in firms that the family cares more about are more closely monitored and perform better. Non-family CEOs counteract socioemotional wealth Non-family CEOs reduce family entrenchment and the extraction of private benefits at the expense of minority shareholders.

Formal mechanisms govern the family-CEO relationship The presence of non-family directors provides superior monitoring of non-family CEOs.

Non-family CEOs inherently differ from family CEOs There are differences in self-regulatory mindsets of family and non-family CEOs due to the tie with the owning family, leading to different goal orientations.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

8

Journal of Small Business Management (ABS 3); 7

Family Business Review (ABS 3); 343

Mazur and Wu (2016)

McConaughy (2000)

Journal of Family Business Strategy (ABS 2); 4

Journal of Management Studies (ABS 4); 91

Strategic Management Journal (ABS 4*); 227

Miller et al. (2018)

Miller et al. (2014)

Miller et al. (2013)

Michiels et al. (2013)

Journal of Small Business and Enterprise Development (ABS 2); 8 Family Business Review (ABS 3); 73

International Business Review (ABS 3); 47

Liu et al. (2006)

Michiels (2017)

Corporate Governance-An International Review (ABS 3); 125

Lin and Hu (2007)

European Journal of International Management (ABS 1); 13

Journal of Family Business Strategy (ABS 2); 7

Lardon et al. (2017)

Mensching et al. (2016)

Journal, ABS list ranking & citationsa

Author; date

Table 1 (continued)

Quantitative; 2522 private and listed family firms from Italy; panel

Quantitative; 893 private family firms from Italy; panel

Quantitative, 2786 listed and private family firms from Italy; panel

Quantitative; 124 private family firms from Belgium; crosssectional Quantitative; 529 private family firms from the USA; crosssectional

Experimental; 126 CEOs from family firms in Germany, Switzerland, Austria; crosssectional

Quantitative; 82 listed family firms from the USA; crosssectional

Quantitative; 362 listed family & non-family firms from the USA; panel

Quantitative; 159 listed family & non-family firms from Taiwan; panel

Quantitative; 375 listed family firms from Taiwan; panel

Quantitative; 367 small private family firms from Belgium; crosssectional

Method and sample

Agency & stewardship theory

Agency theory & behavioral agency theory

Strategic distinctiveness

Agency theory

Agency theory

Socioemotional wealth

Agency theory

Agency theory

Agency theory

Agency theory

Agency theory

Theoretical perspective

Non-family CEOs outperform when monitored by multiple family owners as opposed to a single family owner. Moreover, family co-CEOs have a negative impact on a non-family CEO's performance. Non-family CEOs outperform in large family firms with diffused ownership.

The CEO’s compensation is more responsive to firm performance in firms with low ownership dispersion and in the controlling-owner stage. The positive payfor-performance relation is slightly stronger for nonfamily CEOs. Non-family CEOs outperform under extreme levels of distinctiveness, indicating that they are better able to handle extreme conditions.

The perception of risk and success of internationalization differs among CEOs. Non-family CEOs are more risk-averse regarding distance in communication but perceived to be more successful when executing internationalization to distant countries. Family firms led by a non-family CEO are more likely to adopt formal compensation practices.

The compensation of non-family CEOs is higher than that of family CEOs, but more sensitive to performance.

Family firms have lower CEO incentive pay than nonfamily firms, which holds true for both family and nonfamily CEOs.

Firms going through an IPO are more likely to transition to Anglo-American standards and hire nonfamily CEOs. This effect becomes stronger the longer firms are public.

Family firms with a non-family CEO take more entrepreneurial risk but have lower leverage; the negative relation with leverage is reduced when board control is stronger, yet stronger for long-term debt. Family firms are more likely to choose non-family CEOs when they are in need of high managerial skills.

Impact of non-family CEO

(continued on next page)

Non-family CEOs inherently differ from family CEOs Non-family CEOs exhibit higher competence, are more rational & objective and not hampered by family conflicts.

Non-family CEOs inherently differ from family CEOs Non-family CEOs have superior managerial skills, which allows the to perform better under extreme conditions. Formal mechanisms govern the family-CEO relationship Multiple owners provide better monitoring and service to a non-family CEO.

Non-family CEOs inherently differ from family CEOs Non-family CEOs are more educated and experienced in formal management practices. Non-family CEOs inherently differ from family CEOs Non-family CEOs focus more on short-term performance for their career outside the family firm.

Formal mechanisms govern the family-CEO relationship Non-family CEOs have divergent objectives from family owners, which are curbed by increased board control by the family. Formal mechanisms govern the family-CEO relationship Non-family CEOs outperform when they are hired by 'suitable' firms, i.e. those in need for managerial skills and with appropriate governance mechanisms in place. Formal mechanisms govern the family-CEO relationship Bringing in non-family CEOs may depend on the company status of being private or public, with the latter putting more pressure on family firms. Non-family CEOs inherently differ from family CEOs Family firms with family and non-family CEOs have comparable agency costs and similar levels of incentive pay. Non-family CEOs inherently differ from family CEOs Family CEOs possess superior incentives than non-family CEOs, who need to receive more additional incentives through monetary compensation. Non-family CEOs counteract socioemotional wealth Family and non-family CEOs differ regarding their perspectives towards financial and nonfinancial aspects, which affects their risk perception.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

9

Corporate Governance-an International Review (ABS 3); 57

Journal of Management Studies (ABS 4); 355

Journal of Management Studies (ABS 4); 62

Journal of Financial Economics (ABS 4*); 56

Entrepreneurship Theory and Practice (ABS 4); 130

Research in International Business and Finance (ABS 2); 12 Family Business Review (ABS 3); 57

Minichilli et al. (2016)

Minichilli et al. (2010)

Minichilli et al. (2014)

Mullins and Schoar (2016)

Naldi et al. (2013)

Pandey et al. (2015)

American Economic Review (ABS 4*); 1085

Journal of Management & Governance (ABS 1); 1

Family Business Review (ABS 3); 60

Pérez-González (2006)

Rizzotti et al. (2017)

Salvato et al. (2012)

Pazzaglia et al. (2013)

Journal, ABS list ranking & citationsa

Author; date

Table 1 (continued)

Quantitative; 100 CEO careers in family and non-family firms from Italy; panel

Quantitative; 129 Italian & 392 French listed family & non-family firms; panel

Quantitative; 335 listed firms from the USA; panel

Quantitative; listed family firms from Italy; panel

Quantitative; 269 listed family firms from India; cross-sectional

Quantitative; 1008 private and listed family firms from Italy; panel

Quantitative; 823 CEOs from 22 emerging countries; crosssectional

Quantitative; 161 private & listed family firms from Italy; panel

Quantitative; 113 private & listed family firms from Italy; crosssectional

Quantitative; 219 family & nonfamily firms from Italy; panel

Method and sample

Human capital

Agency theory

n.a.

Socioemotional wealth

/

Socioemotional wealth

n.a.

Socioemotional wealth

Familiness

Prospect theory & socioemotional wealth

Theoretical perspective

Non-family CEOs are similar to CEOs in non-family firms regarding business philosophies, management strategies, and accountability towards shareholders. However, they have fewer control rights than other CEO types and less scope to replace top managers. In environments dominated by informal norms and tacit rules, such as industrial districts, having a family CEO is an asset for family firms. However, in environments dominated by formal regulations and higher transparency, such as stock exchanges, nonfamily CEOs outperform. The effect of CEO/chairman busyness on firm performance is negative but does not differ significantly between family and non-family CEOs. Firms acquired by a family show lower earnings quality than firms created by families due to the lower SEW investment in acquired firms. Moreover, the earnings quality of acquired family firms benefits from having a non-family CEO, while non-acquired family firms benefit from a family CEO. Family firms that appoint family CEOs significantly underperform relative to firms that promote non-family CEOs, who are in overall better educated. Family owners ensure a prompt replacement of an underperforming CEO only for non-family CEOs. The family’s ability to monitor a non-family CEO is weaker in low-trust environments. Both family and non-family CEOs show boundaryless careers and neither show a faster career progression, highlighting the importance of human capital over family membership.

Family firms can balance financial and non-financial concerns in CEO succession by choosing one of three distinct succession modes. This is notwithstanding of the candidates' family ties.

Non-family CEOs underperform in both listed and private family firms, and the negative effect is stronger for TMTs with a higher family ratio.

During steady-state times, non-family CEOs under low family ownership concentration outperform, while during times of economic crisis family CEOs perform better.

Impact of non-family CEO

(continued on next page)

/ Human capital is similarly important for family and non-family CEOs.

Formal mechanisms govern the family-CEO relationship Family membership is argued to affect the board attendance-performance relationship. Non-family CEOs counteract socioemotional wealth While family owners may extract earnings from firms they are less emotionally invested in, non-family CEOs will increase earnings quality in such firms due to the absence of socioemotional considerations. Non-family CEOs inherently differ from family CEOs Non-family CEOs bring higher managerial qualifications and education. Formal mechanisms govern the family-CEO relationship The family tie and the context for trust towards strangers affect CEO replacement.

Non-family CEOs inherently differ from family CEOs Family CEOs outperform due to their higher social capital in business contexts with tacit rules, while non-family CEOs outperform in formalized contexts due to their higher managerial capabilities.

Non-family CEOs counteract socioemotional wealth Family In opposite to non-family CEOs, family CEOs have greater incentive to work for longterm survival of the firm, have higher tacit knowledge, and stronger social capital. Formal mechanisms govern the family-CEO relationship Conflicts in the top-management created through the presence of both family and non-family actors negatively influence the impact of non-family CEOs. Formal mechanisms govern the family-CEO relationship The impact on socioemotional wealth depends on the tie of the candidate to the business, yet, the benefits are set off by family presence in the board of directors. Non-family CEOs inherently differ from family CEOs Management philosophies among family and non-family CEOs differ.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

Journal, ABS list ranking & citationsa

Journal of Family Business Strategy (ABS 2); 26

Journal of The European Economic Association (ABS 4); 654

Accounting and Finance (ABS 2); 31

Journal of Family Business Strategy (ABS 2); 24

Journal of Management Studies (ABS 4); 50

Small Business Economics (ABS 3); 46

Journal of Business Research (ABS 3); 21

Journal of Financial Economics (ABS 4*); 3485

Corporate Governance - An International Review (ABS 3); 3

Human Resource Management Review (ABS 3); 4

Entrepreneurship Theory and Practice (ABS 4); 67

Canadian Journal of Administrative Sciences (ABS 2); 2

Author; date

Sitthipongpanich and Polsiri (2015)

Sraer and Thesmar (2007)

Steijvers and Niskanen (2013)

Steijvers and Niskanen (2014)

Strike et al. (2015)

Tsai et al. (2009)

Tsao et al. (2015)

Villalonga and Amit (2006)

Visintin et al. (2017)

Waldkirch et al. (2018)

Wiklund et al. (2013)

Wong and Chen (2018)

Table 1 (continued)

10 Quantitative; 130 listed family firms from Taiwan; panel

Quantitative; 3829 private family firms from Sweden; panel

Conceptual

Quantitative; 508 listed family & non-family firms from the USA; panel Quantitative; 917 private family firms from Italy; panel

Quantitative; 375 listed family & non-family firms from Taiwan; panel

Quantitative; 424 listed family & non-family firms from Taiwan; panel

Quantitative; 264 listed family & non-family firms; panel

Quantitative; 600 private family & non-family firms from Finland; cross-sectional

Quantitative; 2591 private family firms from the USA; crosssectional

Quantitative; listed family firms from Thailand; panel & crosssectional Quantitative; listed family & nonfamily firms from France; panel

Method and sample

Upper Echelon Theory

Embeddedness

Social exchange

Behavioral agency theory

n.a.

Agency theory

Agency theory

Socioemotional wealth

Agency theory

Agency theory

n.a.

Agency theory

Theoretical perspective

Firms that promote an internal non-family CEO receive higher stock market reactions than in comparison to an internal family CEO, but lower reactions than from hiring an external CEO.

Non-family CEOs and those with a lower ownership share are more eager to engage in tax aggressive behavior; the presence of outsider directors reduces rent extraction. Family CEOs are more likely than non-family CEOs to engage in risky acquisitions at the end of their career. However, this effect is weaker when the family CEO is succeeded by a non-family CEO, as the family CEO is less certain about the protection of SEW in the future. Non-family CEOs are less likely to engage in corporate diversification than family CEOs. Moreover, non-family CEO turnover is more likely under diversification strategies. The association between R&D investment and CEO compensation is higher in family firms than in nonfamily firms; and families tend to place more weight on R&D investment than on explicit performance measures for CEO compensation. Family ownership creates value only when the founder serves as CEO of the family firm or as Chairman with a non-family CEO. When control is concentrated in the hands of few family shareholders or there is a low number of family members involved in the board of directors, nonfamily CEOs are less likely to be dismissed after poor performance. Affective attachment and detachment, created through different exchanges in the triad between non-family CEO, the current and next generation, are an important factor in explaining why non-family CEOs stay or leave. Firms with a non-family CEO are less likely to be passed on to a family member.

Non-family CEOs maintain higher cash holdings than family CEOs if the family firm is owned by a single owner.

Family firms with a non-family CEO outperform nonfamily firms, and family firms managed by non-family CEOs make a more parsimonious use of capital.

Family firms that are led by non-family CEOs have a higher value.

Impact of non-family CEO

(continued on next page)

Non-family CEOs counteract socioemotional wealth The presence of non-family members indicates less family commitment. Non-family CEOs inherently differ from family CEOs Non-family CEO hiring indicates that the family firm prioritizes financial goals.

/ Emotional attachment created through exchanges influences the turnover of non-family CEOs.

Non-family CEOs counteract socioemotional wealth Family CEO firms have greater incentive to reduce firm-specific risk than non-family CEO firms in order to maintain family prestige. Non-family CEOs inherently differ from family CEOs Family owners have better information on R& D projects and a longer-term perspective and thus incentivize non-family CEOs toward R&D investment. Formal mechanisms govern the family-CEO relationship Non-family CEOs profit from family founders being Chairmen of the board of directors. Formal mechanisms govern the family-CEO relationship Increased control through the board is good for monitoring, while increase ownership concentration leads to worse monitoring.

Non-family CEOs inherently differ from family CEOs Non-family CEOs have a more advanced education than their family counterparts. Non-family CEOs inherently differ from family CEOs While non-family CEOs lack credibility towards their workers, they manage capital more efficiently. Formal mechanisms govern the family-CEO relationship Non-family CEOs may maintain higher cash holdings to allow them to invest in prestige projects, which may be curbed through dividends when ownership dispersion is high. Formal mechanisms govern the family-CEO relationship Non-family CEOs shift family firms towards short-term financial goals, which can be curbed by outsider director involvement. Non-family CEOs counteract socioemotional wealth Family CEOs have a longer career horizon than non-family CEOs due to transgenerational socioemotional wealth considerations.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

11

Journal of Small Business Management (ABS 3); 0

Asia Pacific Journal of Management (ABS 3); 0

Finance Research Letters (ABS 2); 0

Family Business Review (ABS 3); 100

Thunderbird International Business Review (ABS 2); 39

Journal of Business Research (ABS 3); 49

Asia Pacific Business Review (ABS 2); 7

Asian Business & Management (ABS 2); 20

Small Business Economics (ABS 3); 18

Wu and Mazur (2018)

Xu et al. (2018)

Xu and Zhang (2018)

Yang (2010)

Yeoh (2013)

Young and Tsai (2008)

Zheng and Ho (2012)

Zhou et al. (2013)

Zona (2016)

Quantitative; 104 private and listed family firms from Italy; cross-sectional

Quantitative; 1624 listed family & non-family firms from China; panel

Conceptual; 2 'strategic' cases of Hong Kong banks

Quantitative; 110 listed family firms from Malaysia; crosssectional Quantitative; listed family firms from Taiwan; panel

Quantitative; listed family & nonfamily firms from Taiwan; panel

Quantitative; 472 pairs of familyCEO and non-family CEO from listed firms from China; panel

Quantitative; 635 listed family firms from China; panel

Quantitative; 362 listed family and non-family firms from the USA; panel

Quantitative; listed family firms from Taiwan; panel

Method and sample

Citations taken from Google Scholar, updated March 5th, 2019.

Journal of Multinational Financial Management (ABS 2)

Wu (2013)

a

Journal, ABS list ranking & citationsa

Author; date

Table 1 (continued)

Agency theory

Agency theory

Social capital

Resource dependence

Agency theory

n.a.

Institutional Logics

Agency Theory

Agency Theory

Theoretical perspective

The effects of board decision processes are influenced by CEO identity, so that the use of knowledge and skills is especially beneficial under a non-family CEO, while cognitive conflict is particularly beneficial when a family CEO manages the business.

The difference in business culture and ideology led banks to follow different paths trajectories regarding the separation or unity of ownership and management. Family firms with a family CEO in which the founder remains as chairman outperform, and there is no difference between family and non-family CEOs when a family member takes the chairman position.

Higher ownership held by the largest family owner increases the use of non-family CEOs, while higher ownership held by the family at the firm level decreases it. The amount of firm-specific information incorporated into stock prices is about 25% lower for family CEO-led firms, implying that more information is disclosed in these firms. The larger the insider ownership, the greater the extent of earning management. Moreover, non-family CEOs exhibit a greater tendency to manage earnings than do family CEOs. Family firms that hire a non-family CEO with international experience profit more strongly from internationalization. Social capital is an important determinant for the compensation of non-family CEO.

Family firms led by non-family CEOs show higher spending in both R&D and M&A activity, indicating a different investment horizon and risk perception.

Excess board compensation in non-family CEO-led firms is positively related to board members with family ties, yet, has no positive effect on performance.

Impact of non-family CEO

Non-family CEOs inherently differ from family CEOs The incentives of family CEOs to arrive at a short-term performance target by the use of opportunistic behaviors are weaker. Non-family CEOs inherently differ from family CEOs Non-family CEOs bring superior capabilities and experience in internationalization. Non-family CEOs inherently differ from family CEOs In a market where informal ties are important, social capital held by non-family CEOs is especially valuable to firms. Non-family CEOs inherently differ from family CEOs Non-family CEOs are a sign of Western governance norms. Formal mechanisms govern the family-CEO relationship The conflict between owners and nonfamily CEOs is more costly than between family owners, leading to non-family CEOs performing worse. Non-family CEOs inherently differ from family CEOs Given their difference in capability and entrenchment, non-family CEOs who focus on using knowledge and skills toward the board increase its performance whereas family CEOs increase it through cognitive conflict.

Formal mechanisms govern the family-CEO relationship Family firms with a non-family CEO may show a negative entrenchment, as the CEO cannot curb the compensation. Non-family CEOs inherently differ from family CEOs Family and non-family CEOs show an inherently different risk orientation and investment horizon. Non-family CEOs counteract socioemotional wealth Hiring a non-family CEO is a sign of a weakened family logic in favor of a shareholder logic. Non-family CEOs counteract socioemotional wealth Family firms that hire non-family CEOs signal that they do not follow a clear family logic.

Underlying assumption and the framing of nonfamily CEOs

M. Waldkirch

Journal of Family Business Strategy xxx (xxxx) xxxx

Journal of Family Business Strategy xxx (xxxx) xxxx

M. Waldkirch

Fig. 2. Analysis of the non-family CEO literature.

literature review follows several steps to assure that the mainstream research on non-family CEOs is covered. Specific inclusion criteria were used to ensure that a rigorous body of literature was reviewed. To ensure the quality of the included articles, only peer-reviewed articles from academic journals listed in the ABS Academic Journal Quality Guide (CABS, 2018) were included, which is a commonly used criterion in literature reviews (Nolan & Garavan, 2016; Rawhouser, Villanueva, & Newbert, 2017). When seeking a balance between including rigorous research and being too narrow in the search criteria, the ABS list offers an excellent compromise. Journals ranked in the ABS list encompass both well-established and new journals from various disciplines that fully adhere to accepted standards and conventions (CABS, 2018). Thus, the research published in these journals is of acceptable quality, yet, niche journals are included as well. Moreover, the ABS list includes the most common journals in family business and entrepreneurship, such as the Journal of Family Business Strategy, the Family Business Review, the Journal of Small Business Management, and Entrepreneurship: Theory and Practice, as well as more mainstream journals, such as the Academy of Management Journal and

Organization Science. Although rankings are criticized in general, and the ABS list in particular (Willmott, 2011), using this list allows to find a good compromise between rigor and inclusiveness. 3.2.3. Article selection First, I conducted a series of keyword search in Web of Science, Business Source Premier and ABI-INFORM, encompassing at least title, abstract, and keywords, which represents a regularly used approach (Daspit et al., 2016; Giménez & Calabrò, 2018; Nolan & Garavan, 2016; Tabor et al., 2018). To identify the most common phrases about nonfamily CEOs, I first read well-cited articles about the topic and the previous review by Klein and Bell (2007), Blumentritt et al. (2007), Hall & Nordqvist (2008), Miller et al. (2014). Based on these readings, the keywords encompass ‘non-family’ (Blumentritt et al., 2007), ‘nonfamily’ (Huybrechts, Voordeckers, & Lybaert, 2013), ‘external’ (Eklund et al., 2013), ‘outsider’ (Sraer & Thesmar, 2007), ‘professional’ (Amore, Minichilli, & Corbetta, 2011) and ‘hired’ (Jaskiewicz, Block, Combs, & Miller, 2017; Jaskiewicz, Block, Miller, & Combs, 2017). I combine these phrases with variations of CEO, such as ‘chief executive officer’ 12

Journal of Family Business Strategy xxx (xxxx) xxxx

M. Waldkirch

(Mullins & Schoar, 2016) and ‘leader’ (Banalieva & Eddleston, 2011), as well as the phrase ‘family firm’ or ‘family business’. Fig. 1 gives an overview of the approach and outlines the specific search queries for each database in line with best practice (Calabrò, Minichilli et al., 2018). The initial search resulted in 283 articles published in ABSranked journals, which was reduced to 148 articles after merging the databases and deleting duplicates. Second, I read the abstracts and titles of all papers to identify those in line with the research objective of the review, which further reduced the number to 109 articles. Third, because not all abstracts were clear regarding the articles’ purpose and the inclusion of non-family CEOs, I carefully read all articles to determine whether they were indeed interested in the role of non-family CEOs. At this point in the review, articles were excluded for several reasons. Several articles conflated non-family CEOs with CEOs from non-family firms (Bach & SerranoVelarde, 2015) or with non-founder CEOs (Patel & Cooper, 2014). This exclusionary step reduced the list of articles to 86. As a final step, I engaged in a ‘residual search’ (Pukall & Calabrò, 2014) to avoid omitting important contributions. In line with best practice (Tabor et al., 2018), I contacted two leading family business scholars who have published research on non-family CEOs and who pointed me toward another five relevant articles that were initially not captured due to specific formulations in their abstracts (Gómez-Mejía, Núñez-Nickel, & Gutierrez, 2001; Hall & Nordqvist, 2008; Miller, Minichilli, & Corbetta, 2013; Naldi et al., 2013; Pérez-González, 2006). Ultimately, 91 articles are included in the review.

The resulting findings provide the basis for ‘gap-spotting’ and ‘assumption-challenging’ (Alvesson & Sandberg, 2011, 2013). As Alvesson and Sandberg argue, the focus of gap-spotting is to reinforce influential theories and approaches in the current literature without, however, challenging its underlying assumptions. Researchers can spot gaps in the literature by 1) identifying competing explanations (confusion spotting), 2) outlining overlooked areas (neglect spotting), and 3) pointing out shortages of a particular theory or perspective (application spotting) (Alvesson & Sandberg, 2013: 29ff.). For each aggregate dimension, I propose research questions that are based explicitly on these three approaches (Table 2). This approach allows to better understand how authors arrive at research questions and thus explicates the implicit way how researchers usually create research questions in literature reviews (Daspit et al., 2016; Giménez & Calabrò, 2018; Nordqvist, Wennberg, Baù, & Hellerstedt, 2012). While gap-spotting strengthens the current research direction and is thus vital for research, it tends to “reproduce rather than challenge the assumptions that underlie existing theories and studies” (Alvesson & Sandberg, 2013: 45). Therefore, in a second step, I engage in what Alvesson and Sandberg call ‘challenging assumptions’ of an existing body of literature (in this case the literature on non-family CEOs). First, researchers should identify and articulate assumption within a defined body of literature. Often, assumptions are commonly seen as ‘facts’ or ‘truth’, such as the depiction that family and non-family CEOs are inherently different. Second, researchers should evaluate the articulated assumption, considering whether it is true, adds intellectual value, and provides practical impact. Third, the researcher should develop an alternative assumption ground, for instance by reversing the shared assumption or by building an analogy. Last, the researcher should evaluate the alternative assumption ground and consider how the new assumption relates to the research audience. Following this approach, I outline three underlying assumptions that are widely shared within the literature. These assumptions are based upon the framing of non-family CEOs in the literature. The analysis (see Table 1) shows that the assumption that non-family CEOs inherently differ is prevalent in 40 articles, the assumption that the relationship between family and CEO is governed through formal mechanisms is prevalent in 27 articles, and the assumption that non-family CEOs counteract socioemotional wealth is prevalent in 17 articles. Seven articles do not follow any of these three assumptions. While many articles share several of the assumptions that this article challenges, I highlight only the most prevalent assumption for each article to keep the analysis concise. As I argue below, challenging these assumptions provides new opportunities for research on non-family CEOs

3.2.4. Article analysis All articles were carefully read and classified by author, journal, title, ABS ranking, research question, theoretical approach, methodology, sample size, country of analysis, summary of the general findings, the specific impact of non-family CEOs, the way they are framed by the article, and assumptions that they are based on. I further engaged in an open coding process (Corbin & Strauss, 1990) regarding the focus of the papers, using categories such as ‘performance difference’, ‘CEO turnover’, or ‘internationalization’. Table 1 gives an overview of all articles and their findings regarding non-family CEOs. These open codes were then compared and contrasted as the review advanced and were ultimately combined through axial coding into broader categories, such as ‘contractual design’ (Miles, Huberman, & Saldaña, 2014). The coding process resembles the so-called Gioia method (Langley & Abdallah, 2011), which has been used in recent literature reviews (Tabor et al., 2018). The findings of the coding process result in four overall aggregate dimensions (Fig. 2). Table 2 Spotting gaps about non-family CEOs. Topics The impact on financial performance

Organizational structures and strategies

Contracting

CEO life-cycle

Gap-spotting based on:

Potential research questions/Gap-spotting

do family governance practices, such as family councils, affect the performance impact of non-family CEOs? (NS) • How which conditions do family firms profit from previous experience and competences of non-family CEOs? (CS) • Under the positive impact on performance by founder-chairmanship stem from higher control (monitoring) or closer collaboration • Does (support)? (AS) does the presence of family members in operational positions below the management affect the performance of non-family • How CEOs? (NS) which conditions do differ non-family CEO led family firms differ from family-led family firms and non-family firms? (CS) • Under do non-family CEOs change structures and strategies of the family firm over time? (AS) • How does the work of family owners change when family firms hire a non-family CEO? (NS) • How do non-family CEOs affect intra-family dynamics? (CS) • How do family owners incorporate non-financial goals into the contract, and how do they incentivize non-family CEOs to pursue • How such goals? (NS) type of pay premiums do non-family CEOs receive compared to their previous positions? (NS) • Which type of capitals and experience affect non-family CEOs’ pay? (AS) • Which which conditions does the compensation for family and non-family CEOs differ? (CS) • Under contexts do family firms choose non-family CEOs? (NS) • InHowwhich the recruitment process of non-family CEOs unfold, and how do family firms find fitting candidates? (AS) • How does CEOs navigate the socioemotional endowment of family firms? (NS) • Whatdoarenon-family the determinants of non-family CEO tenure and turnover in private and listed family firms? (CS) • Confusion spotting (CS), neglect spotting (NS) & application spotting (AS)

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Fig. 3. Publications on non-family CEOs over time.

non-family CEOs affect the financial performance of family firms. However, with great interest comes great disagreement about the impact of non-family CEOs. The two sub-clusters thus highlight the direct and conditional impact of non-family CEOs on financial performance.

3.3. The status quo of the non-family CEO literature Overall, the systematic literature review highlights the increasing interest in non-family CEOs over the last decade (Fig. 3). There has been a clear upward trend in scholarly engagement with the topic of nonfamily CEOs since the first articles on this topic were published in the early 2000s; 67% of the articles included in this review have been published since 2013. It is important to note that the articles included are based on various country contexts, such as the USA (17), Italy (15), or Taiwan (11). It is also worth noting the quality of publications in relation to their ranking on the ABS list. One might expect a relatively low level of quality given that research has only recently become interested in non-family CEOs. However, the findings from the 91 articles paint a different picture: approximately 14.29% of the articles are published in ABS 4* journals, 16.48% in ABS 4 journals, 39.56% in ABS 3 journals, 24.18% in ABS 2 journals, and only 5.49% in the lowestranked ABS 1 journals. Especially in comparison with the findings of similar reviews (Nolan & Garavan, 2016), this points to the high quality of the contributions. The results may partly be explained by the strong interest in CEOs as actors in fields such as finance and strategic management (Finkelstein et al., 2009; Quigley & Graffin, 2017), as well as by the mature theories in the field, which allow for high-level publications. Regarding the methods used, 81 of the articles utilize various quantitative methods, while the rest of the articles utilize conceptual (4), qualitative (2), experimental (2), mixed methods (1) or fuzzy-set qualitative comparative analysis (1). Accordingly, there is exciting potential for more methodological variety, especially regarding qualitative approaches. Last, the articles in the review utilize a narrow range of theories, with more than half relying on agency theory and roughly one fifth relying on socioemotional wealth and the underlying behavioral agency theory. Thus, there is also potential for variety with regard to theoretical approaches.

4.1.1. Direct effect on financial performance Several articles highlight the direct positive performance impact of non-family CEOs on family firms. These articles mostly base their arguments on the higher capabilities of non-family CEOs. In choosing a non-family CEO, family firms have access to a broader pool of resources; in contrast, family CEOs come from a limited pool of candidates (Miller et al., 2013), which can be problematic because “the family candidate is rarely the best man or woman for the job” (Eklund et al., 2013: 429). Thus, family firms can avoid nepotism by hiring nonfamily CEOs who outperform their family counterparts (PérezGonzález, 2006). Another common argument is that non-family CEOs bring higher qualifications and managerial capabilities to family firms (Bennedsen, Nielsen, Perez-Gonzalez, & Wolfenzon, 2007). While most articles to do not explicitly measure experience, two articles show that non-family CEOs indeed have better education and more outside experience than their family counterparts (Chang & Shim, 2015; Sitthipongpanich & Polsiri, 2015). The potentially higher capabilities may explain the better-informed investment decisions of non-family CEOs (Eklund et al., 2013). Moreover, family firms profit more from internationalization when hiring a non-family CEO with international experience (Kraus, Mensching, Calabrò, Cheng, & Filser, 2016; Yeoh, 2013). Non-family CEOs are also a positive signal to the market that family firms aim to professionalize (Stewart & Hitt, 2012). Thus, family firms experience improved firm performance when switching from a family to a non-family CEO, while the opposite switch shows no change in performance (Hillier & McColgan, 2009; Kang & Kim, 2016). In contrast to the articles mentioned above, several studies outline that non-family CEOs have a negative impact on the financial performance of family firms. Combining a sample of both private and listed family firms, Minichilli, Corbetta, and MacMillan (2010) show that family CEOs outperform their non-family counterparts in all contexts. The authors link this effect to the altruism of family CEOs and their long-term orientation. Social capital in family firms can also explain the findings that family CEOs outperform their non-family counterparts, especially in contexts with weak institutions (Kowalewski, Talavera, & Stetsyuk, 2010).

4. Understanding non-family CEOs in family firms Regarding the impact of non-family CEOs, the analysis of the literature reveals two broad areas of research. The first area investigates organizational outcomes and changes, especially regarding the impact on financial performance and organizational structures and strategies. The second area contains research investigating the relationship between the owner family and the non-family CEO, encompassing the CEO lifecycle and contracting between the owner family and the non-family CEO.

4.1.2. Conditional effect on financial performance Several articles have tried to overcome the divergent performance findings mentioned above by moving beyond asking whether family or non-family management is beneficial for performance and instead asking under which conditions one type of management is superior to the other (Miller et al., 2014). The findings highlight that the governance context of family firms is important for understanding the impact of non-family CEOs. Several articles base their arguments on the goal

4.1. The impact on financial performance Understanding the impact of non-family CEOs on financial performance has received much attention because it coincides with another important question: Is family involvement in the management good or bad for the performance of the business (Miller et al., 2013)? Accordingly, the largest cluster of articles in the review is interested in how 14

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difference between non-family and family CEOs, which requires family firms to incentivize and monitor non-family CEOs. Thus, CEO incentives have a stronger impact on firm performance for non-family CEOs (Jaskiewicz, Block, Combs et al., 2017). Furthermore, when the responsibility for monitoring is spread among more family members (Miller et al., 2014) or is diffused even more broadly (Miller et al., 2013), non-family CEOs perform better. Non-family CEOs especially profit from the experience of founders who serve as chairmen of the board of directors and are therefore in close contact to the CEOs (Villalonga & Amit, 2006; Zhou, Tam, & Yu, 2013). Kang et al. also show that family firms in which owners spend more time controlling and collaborating with the non-family CEO outperform firms where owners do not play this role (Kang, Anderson, Eom, & Kang, 2017). On the other hand, excessive board compensation due to high family board participation is not related to firm performance, indicating that non-family CEOs do not always mitigate entrenchment (Wu, 2013). It is interesting to note that even though nonfinancial goals have been prominently highlighted in the family business literature (Gómez-Mejía, Cruz, Berrone, & De Castro, 2011), only one article considers the impact of non-family CEO succession on the socioemotional wealth ‘performance’ of family firms, highlighting that family firms can balance financial and non-financial goals through three types of succession mechanisms (Minichilli, Nordqvist, Corbetta, & Amore, 2014). The close collaborators in the firm’s management, especially the composition of the top management team, have implications for the work of non-family CEOs. The presence of a non-family CFO has a positive impact on performance for the work of both non-family and family CEOs because non-family CFOs bring new capabilities to the family firm (Caselli & Giuli, 2010). On the other hand, shared leadership with a family co-CEO seems to hamper the impact of non-family CEOs on firm performance (Miller et al., 2014). The presence of both family and non-family members in the top management can lead to faultlines that create conflict. Non-family CEOs in listed firms thus work best with non-family teams, while non-family CEOs in private family firms work best with pure family teams (Minichilli et al., 2010). Research also shows that CEO busyness has a similarly negative effect on both family and non-family CEOs (Pandey, Vithessonthi, & Mansi, 2015). The industrial setting and its rules are another crucial factor that affects how non-family CEOs impact family firms. Non-family CEOs work especially effectively in industries in which formal regulations and transparency are important, as opposed to informal norms and tacit rules (Naldi et al., 2013). Jaskiewicz and Luchak (2013) extend those findings by arguing that non-family CEOs adopt different goal orientations, which lead to divergent strategies that work better in formalized contexts. Miller, Amore, Le Breton-Miller, Minichilli, and Quarato (2018)) highlight that non-family CEOs outperform under extreme levels of strategic distinctiveness. In times of economic crisis, however, Minichilli, Brogi, and Calabrò (2016)) show that non-family CEOs underperform. Several articles contrast the impact of institutions in emerging vs. mature economies and investigate how macro-factors may influence family business processes. Especially in weak institutional settings, hiring non-family may create multiple agency issues (Lin & Hu, 2007) because it is more difficult to punish ‘shirking’ non-family managers (Sitthipongpanich & Polsiri, 2015). For instance, Lien and Li (2014) show that in Taiwan, adopting non-family management in postIPO family firms harms firm performance due to weak governance institutions. Chang and Shim (2015) make use of their Japanese sample by incorporating the specificities of the country’s culture into their hypotheses. They show that stronger cultural values make it more difficult for non-family CEOs to change the business.

CEOs, there is still much to be understood. First, recent evidence indicates that non-family CEOs profit from a family constitution (Arteaga & Menéndez-Requejo, 2017); however, we know little about how the performance of non-family CEOs is impacted by other family governance advancements, such as family councils or ownership education. Second, there is dissent regarding the degree to which non-family CEOs can utilize their previous experience. While their international experience is positively linked to performance (Yeoh, 2013), externally-hired non-family CEOs may find it difficult to apply their formal knowledge when entering a family firm (Hall & Nordqvist, 2008). Thus, it is important to understand under which conditions family firms profit from the experience of non-family CEOs. Third, while the literature has outlined the controlling function of the family and its impact on nonfamily CEO performance (Miller et al., 2014), there has been less focus on the collaborative aspect of boards and their chairmen (Krause, 2017). Thus, we know little about whether the positive performance impact of founder-chairmanship stems from an increase in control over or support for the non-family CEO. Lastly, while the presence of family members on the board and in top-management has received attention (Kang et al., 2017), we know less about how the work of non-family CEOs is affected by family members working in operational positions such as in the middle management (Hu, Zhang, & Yao, 2018). 4.2. Organizational structures and strategies The second cluster of articles derived from the analysis is concerned with how the involvement of non-family CEOs changes organizational structures and strategies in family firms. As the analysis shows, the literature has investigated changing strategy and management practices, differences in financial structures and behaviors, ownership implications, and how the presence of a non-family CEO affects the relationships between the family firm and organizational stakeholders. 4.2.1. Strategy and management practices Firms led by non-family CEOs show different strategies and managerial practices because non-family CEOs are similar to CEOs from non-family firms with regard to their business philosophies, management strategies, and accountability towards shareholders (Bandiera et al., 2018; Mullins & Schoar, 2016). Bandiera et al. (2018) further show that family CEOs work 9% fewer hours than non-family CEOs, who in turn work as much as CEOs in non-family firms. In contrast to family CEOs, non-family CEOs show a shorter career horizon and are less likely to engage in risky acquisitions at the end of their careers (Strike, Berrone, Sapp, & Congiu, 2015). However, both family and non-family CEOs share certain traits, such as the satisfaction they derive from economic performance (GarcésGaldeano, Larraza-Kintana, Cruz, & Contín-Pilart, 2017). Huybrechts et al. (2013) is one of the only articles that investigates how nonfamily CEOs change family firm strategies over time. The authors show that while non-family CEOs initially increase a family firm’s risk-taking, over time the difference between non-family and familyled firms evens out because non-family CEOs develop psychological ownership toward the family firm. The changes are also reflected in the CEO’s interactions with the board. Zona (2016) highlights that the CEO’s identity affects board decision processes in that knowledge and skills are especially beneficial under a non-family CEO, while cognitive conflict is particularly beneficial under a family CEO. Given that non-family CEOs are often part of the formalization of the family firm (Stewart & Hitt, 2012), family firms managed by non-family CEOs adopt more formalized management practices than do family-managed firms; this formalization may be observed in firms’ compensation practices (Bloom, Genakos, Sadun, & Van Reenen, 2012; Michiels, 2017). Fittingly, Hu et al. (2018) find that non-family CEOs reduce the negative effect of family middle managers on labor productivity. Regarding internationalization strategies, firms led by non-family CEOs seem to perform better in far-away contexts, in

4.1.3. Gap-spotting: the impact on financial performance The analysis shows that while considerable attention has been directed toward understanding the performance impact of non-family 15

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which reputation, social capital, and socioemotional considerations play a smaller role (Banalieva & Eddleston, 2011). Generally, non-family CEOs seem to be beneficial for internationalization due to their differences in perception, formal competences and international experience (Kraus et al., 2016; Mensching, Calabrò, Eggers, & Kraus, 2016; Yeoh, 2013).

ownership, the perceptions of successors are also important. Thus, when founder CEOs perceive that potential non-family CEOs can act as stewards, they are more likely to hire them and retain ownership of the firm (Chen, Liu, Yang, & Chen, 2016). Family firms with non-family CEOs are also less likely to diversify the firm’s portfolio. While family CEOs tend to diversify to reduce firm-specific risk, non-family CEOs perceive such diversifications as risky (Tsai, Kuo, & Hung, 2009). When divesting, family firms derive less value when they are run by nonfamily CEOs. Because family owners not only consider the monetary value of their firms but also price their own socioemotional endowment, divestitures must offset these family-specific costs that do not occur for non-family CEOs (Feldman, Amit, & Villalonga, 2016). Furthermore, when acquiring high-tech firms, founder-led firms outperform non-family CEO-led firms due to lower agency costs (André, BenAmar, & Saadi, 2014). While these studies highlight the divergent impact of non-family CEOs, Khosa (2017) finds no difference between family and non-family CEOs with regard to the firm value of groupaffiliated firms in India.

4.2.2. Financial structures and behavior The findings of the analysis show that the involvement of non-family CEOs not only shapes financial outcomes but also the financial structure and behavior of family firms. Research highlights that family firms with a non-family CEO change their debt structure in different ways. Amore et al. (2011) note that family firms take on a significant increase in their use of debt, which is especially pronounced in young firms with high growth opportunities and in family firms with previous underinvestment. The use of debt provides non-family CEOs with the ability to invest but does not dilute the control of the family. However, owner families in later stages of the lifecycle may show lower levels of socioemotional wealth and need for control. They may therefore decide to issue more equity and reduce financial risk through debt in order to offset the increased entrepreneurial risk-taking of non-family CEOs (Lardon, Deloof, & Jorissen, 2017). The question of the investment horizon of non-family CEOs is further debated, with some articles showing lower investment levels under non-family CEOs (García-Sánchez, Martínez-Ferrero, & García-Meca, 2018), while others find higher R&D and M&A spending (Wu & Mazur, 2018). Furthermore, family firms with non-family CEOs are found to maintain higher cash holdings compared to firms with family CEOs, especially in the case of concentrated ownership that leads to weaker monitoring (Steijvers & Niskanen, 2013). These internal cash reserves allow non-family CEOs to finance ‘pet projects’ without increased scrutiny of banks and lenders. While these findings hold in high cash holding firms, in low cash holding situations family CEO-led firms hold more cash, which allows the family CEO to invest in family objectives (Kuan, Li, & Liu, 2012). The presence of non-family CEOs further affects whether and how family firms engage in (borderline) illegal financial behavior. Research highlights that family firms with a non-family CEO tend to downward manage their taxable income to extract further rent (Steijvers & Niskanen, 2014). While tax-aggressive behavior may harm the socioemotional wealth of family firms due to the potential harm to a firm’s reputation, non-family CEOs introduce a shift towards short-term financial goals that makes tax aggressive behavior more attractive. However, outside board members curb such behavior through increased monitoring. Similar to founder-family firms, Hsu, Lin, and Tsao (2018) find that non-family CEO-led firms are less inclined to appoint higherquality auditors. Building on traditional agency arguments regarding information asymmetry, Yang (2010) finds that non-family CEOs exhibit a greater tendency to manage a firm’s earnings. On the other hand, Pazzaglia, Mengoli, and Sapienza (2013) show that in firms acquired by families, the earnings quality is lower due to the lower identification of the family with the business. In such companies, the earnings quality benefits from the presence of a non-family CEO. Also the context matters: in weak institutional contexts, family CEO-led firms disclose more information in their stock prices to increase trust in the owning family (Xu & Zhang, 2018).

4.2.4. Behavior toward stakeholders Analysis of the articles further highlights that the presence of nonfamily CEOs changes the way in which family firms interact with external stakeholders and vice versa. Family firms tend to purchase more non-audit services than do their non-family counterparts in order to limit the number of external parties that can access potentially sensitive information; this tendency further increases under non-family CEO leadership (Kang, 2017). Moreover, family firms managed by either a founder or non-family CEO experience fewer auditor resignations than do non-family firms and family firms led by a later-generation family CEO (Khalil, Cohen, & Trompeter, 2011). Moreover, investors’ reactions to the resignation of auditors are less negative when family firms are run by non-family CEOs. The positive perception of non-family CEOs is also visible when family firms work with banks. Cucculelli and Peruzzi (2017) show that non-family CEOs are required to provide mostly ‘hard’ information, such as balance-sheets, whereas family CEOs need to provide more ‘soft’ information, such as qualitative information obtained through personal contact. Furthermore, non-family CEOs have an impact on how sustainably family firms act. A study from Norway shows that employees in family firms under the leadership of non-family CEOs are more likely to be members of unions. The findings indicate that employees under founder-leadership earn more than those under non-family CEO leadership, thus indicating that they may see less reason to join a union (Gulbrandsen, 2009). Because sustainability has a positive impact on the firm’s reputation, and thus on socioemotional wealth, family CEOled firms invest more in CSR initiatives. However, family firms may counter this effect by instating long-term incentives for non-family CEOs (Cui, Ding, Liu, & Wu, 2016). Lastly, the environmental performance of family firms is shown to be higher than in non-family firms, notwithstanding the family membership of the CEO (Berrone, Cruz, Gómez-Mejía, & Larraza-Kintana, 2010). 4.2.5. Gap-spotting: organizational structures and strategies This analysis highlights several interesting research avenues. First, research highlights conflicting findings regarding how non-family CEOled family firms differ from non-family firms. While several articles show that non-family CEO-led family firms are alike to non-family firms (Bandiera et al., 2018; Mullins & Schoar, 2016), others show that they are more alike to family-led family firms (Khalil et al., 2011; Mazur & Wu, 2016). Thus, it is important to understand under which conditions non-family CEO-led firms differ from family and non-family firms. Second, most articles depict the impact of non-family CEOs on structures and strategies as constant (for an exception, see: Huybrechts et al., 2013). Thus, future research should take into consideration how nonfamily CEOs change the family firm during their tenure. Third, family members that hire a non-family CEO are likely to have more time for

4.2.3. Ownership behavior Although the family business literature has long been characterized by the three overlapping circles of family, ownership and business (Tagiuri & Davis, 1992), there are surprisingly few articles dealing with the implications of non-family CEOs for ownership and family outcomes. The presence of a non-family CEO may imply “less intensive family commitment to firm operations” (Wiklund et al., 2013: 1335), which indicates that family firms with a non-family CEO are less likely to be transferred to family members. When pondering the transfer of 16

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their work as owners (Kang & Kim, 2016; Miller et al., 2014). Further research is needed to understand how ownership activities change with the presence of a non-family CEO. Last, despite their prominent position in the family business, it is striking that we know little about how nonfamily CEOs affect intra-family dynamics (Daspit et al., 2016).

often receive contracts that are less relational and trust-based than those of their family counterparts due to the lack of family ties (GómezMejía et al., 2001). Similarly, non-family CEOs receive higher long-term incentives in order to incentivize an increased investment in corporate social responsibility (Cui et al., 2016). While some authors highlight that the pay of non-family CEOs is comparable to the compensation of CEOs in non-family firms (Combs et al., 2010), other studies show that compensation differs between non-family CEOs and CEOs in non-family firms. Mazur and Wu (2016), comparing family and non-family firms, find that family and non-family CEOs receive similar levels of incentive pay. In comparison to CEOs from non-family firms, non-family CEOs have contracts that are more strongly tied to R&D investments than to explicit performance, highlighting the long-term perspective that owners incentivize (Tsao, Lin, & Chen, 2015).

4.3. Contracting between non-family CEOs and family owners The third cluster of articles derived from the analysis is concerned with the contracting between non-family CEOs and their employers, the owning family. The analysis shows that this field is especially interested in differences in CEO compensation and in the overall contractual design. 4.3.1. Level of CEO Compensation Several studies have investigated the difference in compensation, highlighting that non-family CEOs often receive a higher overall income than do family CEOs. Given the strong ties of family CEOs to the business and the rewards they receive from their ownership stake, family-controlled firms “have to pay nonfamily CEOs more to get what a family CEO would do” (McConaughy, 2000: 130). Controlling for firm and executive characteristics, Gallego and Larrain (2012) find that nonfamily CEOs in family-controlled firms earn approximately 30% more than CEOs in other firms. Although family CEOs receive less compensation, they are better protected from business risk (Gómez-Mejía et al., 2003). However, there is evidence that owner CEOs may use their powerful position in the organization to extract excessive private benefits, resulting in significantly higher pay than for non-family CEOs (Cohen & Lauterbach, 2008). Further, higher pay is also used to expropriate minority shareholders in family business groups (Kim & Han, 2018). Such differences seem to be explainable through the governance context. Especially when monitored by multiple family members, nonfamily CEOs receive higher overall compensation than their family counterparts because family members monitor each other and thus curb the ability of family CEOs to extract extra pay (Barontini & Bozzi, 2018; Combs, Penney, Crook, & Short, 2010). After acquisitions, non-family CEOs receive both higher total and cash compensation than do family CEOs, highlighting that controlling family shareholders may not provide sufficient monitoring for non-family CEOs who engage in acquisitions to expand their compensation (De Cesari, Gonenc, & Ozkan, 2016). The presence of for instance institutional investors can help better monitor the non-family CEO and curb excessive compensation (Jong & Ho, 2018).

4.3.3. Gap-spotting: contracting The research on contracting offers several opportunities for further research regarding the contextualization of contracts and the incorporation of non-financial aspects. First, given the mixed motives that family firms follow (Gedajlovic, Carney, Chrisman, & Kellermanns, 2012), it is surprising that we do not know “how family owners monitor and reward managers’ pursuit of socioemotional goals in addition to financial goals” (Jaskiewicz, Block, Combs et al., 2017: 1529). Future research should focus on the design of non-performance-related incentives to better understand how family firms incentivize, control, and measure the adherence to non-economic goals. Second, research has focused exclusively on the current position of the CEO. However, it would be interesting to investigate the premiums that non-family CEOs receive compared to their previous positions. For instance, do non-family CEOs coming from publicly listed non-family firms receive a higher increase in payment compared with non-family CEOs joining from private non-family firms? Third, research highlights that non-family CEOs are compensated for certain capitals they possess (Young & Tsai, 2008). However, we do not know which capitals family owners value when compensating non-family CEOs. Last, the above research highlights inconclusive findings regarding the overall level of CEO remuneration between family and non-family CEOs (for instance: Gallego & Larrain, 2012; Kim & Han, 2018). Further research is thus needed to understand the contextual factors that lead to these compensation differences. 4.4. The non-family CEO life-cycle The fourth cluster of articles derived from the analysis is concerned with the different stages or ‘seasons’ (Hambrick & Fukutomi, 1991) of non-family CEOs. Several articles investigate the conditions under which non-family CEOs are chosen, how their interactions and careers unfold, and how and under which conditions they leave family firms.

4.3.2. Contractual design While research has been interested in the overall compensation of non-family CEOs, the actual composition of the contract has received even more attention. Research investigates both what non-family CEOs are compensated for as well as the extent to which their compensation is tied to firm-level outcomes, such as financial performance or R&D investments. Overall, compared with founder family firms, family firms are found to remunerate non-family CEOs with more incentive pay. Family firms do so to signal good governance, achieve higher performance, and counter the socioemotional goals of the firm (Jaskiewicz, Block, Combs et al., 2017). Several articles show that non-family CEOs’ contracts are more strongly tied to performance than those of their family counterparts (Gómez-Mejía et al., 2001; Jaskiewicz, Block, Combs et al., 2017; McConaughy, 2000; Michiels, Voordeckers, Lybaert, & Steijvers, 2013). Non-family CEOs are thus held more accountable for business risks (Gómez-Mejía et al., 2001). The higher sensitivity of incentive payments may be partially due to differences in the types of contracts. Young and Tsai (2008) show that in the context of Taiwan, non-family CEOs are compensated for their social capital, which is measured through external directorship ties. While non-family CEOs are thus compensated for their ‘guanxi’, they

4.4.1. Non-family CEO hiring process While non-family CEOs might be chosen when no other option is available (Le Breton-Miller, Miller, & Steier, 2004), they are often selected through the conscious decisions of family firms and their owners. Lin and Hu (2007) argue that larger family firms may opt for a nonfamily CEO in order to address the increased complexity the firm may be facing, as non-family CEOs often bring superior managerial skills. Especially ownership held by the largest family owner increases the use of non-family CEOs, while higher ownership held by the family at the firm level decreases it (Xu et al., 2018). Furthermore, hiring a nonfamily CEO is often seen as a tradeoff between socioemotional and financial considerations. Family owners thus incorporate that trade-off as part of the CEO succession decision through different types of succession mechanisms (Minichilli et al., 2014). Regarding family business groups, non-family CEOs are more common in firms that are less ‘central’ to the overall group, i.e., firms in which owner families have 17

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less socioemotional endowment (Kang & Kim, 2016). Also the origin of the new CEO is important, as stock markets react more positively to both internal non-family CEOs as well as outside CEOs in comparison to family CEOs (Wong & Chen, 2018). Looking at society more broadly, Zheng and Ho (2012) argue that differences in business culture and ideology in Hong Kong caused different trajectories regarding the separation or unity of ownership and management. Therefore, the overall institutional setting may influence the presence of non-family CEOs. Similarly, another study shows that family firms going through an initial public offering are more likely to transition to Anglo-American standards, including the employment of non-family CEOs (Liu, Ahlstrom, & Yeh, 2006). Focusing on the tie between owner and potential CEO candidates, Damaraju and Makhija (2018) show that family owners in India have a preference to hire ‘ingroup’ candidates based on caste and religion, which provides owners with better information about the candidates.

Cummins, & Lin, 2017). It is interesting to note, however, that the turnover for non-family CEOs in private family firms is similar to the turnover of CEOs in non-family firms. Ownership concentration is also linked to the turnover of non-family CEOs (Visintin, Pittino, & Minichilli, 2017). Findings show that when control lies in the hands of a few family shareholders and when there are few family members on the board of directors, poorly performing non-family CEOs are less likely to be dismissed. Last, also the relationship to both current and next generational members is an important aspect to understand why non-family CEOs stay in or leave family firms (Waldkirch et al., 2018). Building on social exchange, the authors show how affective attachment and detachment built through exchanges explain both short and long CEO tenures. 4.4.4. Gap-spotting: non-family CEO life-cycle There are several promising areas for further research regarding how non-family CEOs enter, work in, and leave family firms. First, while non-family CEOs are often chosen for their superior managerial skills (Miller et al., 2013; Pérez-González, 2006), we know little about the contexts, such as financial crises, in which non-family CEOs are chosen over family CEOs. Second, while research has outlined several reasons why family firms hire non-family CEOs (Miller et al., 2014), we know little about how the recruitment process of non-family CEOs unfolds and how family firms find appropriate candidates. Recent research shows the potential of further investigating this question (Damaraju & Makhija, 2018; Wong & Chen, 2018). Third, the work of non-family CEOs can often be hampered by a strong family legacy (Chang & Shim, 2015), which raises the question how non-family CEOs navigate such a socioemotional endowment. Lastly, the tenure and turnover of non-family CEOs has received increased attention, yet, the findings regarding the determinants of tenure and turnover remain inconsistent (Gómez-Mejía et al., 2001; Salvato et al., 2012; Visintin et al., 2017; Waldkirch et al., 2018) and thus require further research.

4.4.2. Non-family CEO careers in family firms How non-family CEOs work in family firms throughout their careers has received limited attention. During their tenure in the family firm, non-family CEOs are in constant contact with members of the owner family. Blumentritt et al. (2007) outline the importance of the family in designing an environment in which a non-family CEO can succeed, for instance by hiring external board members who can support the nonfamily CEO. Working in family firms requires non-family CEOs to be aware of potentially conflicting logics and to act reflexively to address such complexity (Edwards & Meliou, 2015). However, non-family CEOs may lack the necessary ‘cultural competence’ to understand the family goals and values, leading to conflict and often the early departure of non-family CEOs (Hall & Nordqvist, 2008). Yet, non-family CEOs who understand the family may be able to act as stewards and transform the family firm in order to preserve its legacy (Del Giudice, Della Peruta, & Maggioni, 2013). Salvato, Minichilli, and Piccarreta (2012) investigate the careers of non-family CEOs compared with the careers of family CEOs and CEOs from non-family firms. Despite earlier evidence that non-family CEOs have shorter tenures than their family counterparts (Gómez-Mejía et al., 2001; McConaughy, 2000), the authors show that the tenures of both are comparable. The careers of family and non-family CEOs are both boundaryless, and career progression is based on accumulated human capital rather than family membership.

5. Challenging assumptions about non-family CEOs The analysis of the 91 articles hints at several underlying assumptions that constrain the research on non-family CEOs and limit our understanding of this important organizational actor. The findings show that three assumptions are especially common within the literature (see Table 1). In this part, I follow the approach by Alvesson and Sandberg (2011, 2013) to articulate and challenge these assumptions, and to define alternative assumptions (Table 3).

4.4.3. Non-family CEO turnover The end of the tenure of non-family CEOs has received increasing attention in the literature. Several articles highlight the conditions under which non-family CEOs are let go and how their turnover differs from that of family CEOs. As highlighted above, non-family CEOs often receive contracts with stronger sensitivity to business performance. Accordingly, in contrast to their family counterparts, non-family CEOs are more accountable for business risks and their turnover is much more sensitive to firm performance (Gómez-Mejía et al., 2001; Hillier & McColgan, 2009; Rizzotti, Frisenna, & Mazzone, 2017), even in comparison to non-family firms (Chen, Cheng, & Dai, 2013). Thus, when non-family CEOs engage in diversification strategies, they face higher turnover after acquiring new firms (Tsai et al., 2009). Furthermore, institutional trust in members outside the family firm influences turnover. In contexts in which there is less trust in outsiders, family owners may decide to hire non-family CEOs that are close to the family and who are treated similar to family CEOs (Rizzotti et al., 2017). Interestingly, another study on diversification highlights that neither family nor non-family CEOs face increased turnover in the post-acquisition phase (De Cesari et al., 2016). Whether family firms are traded or non-traded also influences CEO turnover. Poorly-performing non-family CEOs in publicly traded family firms face the highest likelihood of turnover of all CEO types, indicating that these firms have well-functioning monitoring mechanisms (Cheng,

5.1. Towards heterogeneity and similarity The first assumption derived from the analysis is the reliance on depicting family and non-family CEOs as inherently different. The difference in family membership is used to explain goals, cognition and, ultimately, the impact of non-family CEOs. The assumption that family membership is the defining criterion of non-family CEOs seems to be rooted in upper echelon theory and the cognition of executives (Finkelstein et al., 2009; Hambrick & Mason, 1984). Upper echelon theory argues that organizational outcomes are partially predicted by managerial cognition, which results in specific strategic choices. Managerial cognition is shaped by the executive’s perception and interpretation of strategic situations. According to the theory, observable managerial background characteristics, such as age, industry experience, or family membership are valid predictors of cognition. In the context of non-family CEOs, the foremost managerial characteristic that has been investigated is family membership, or lack thereof, and its impact on family business outcomes. This assumption could be problematic for several reasons. First, the notion of non-family CEOs as rational actors who “provide objectivity and rationality to an emotional milieu” (Upton & Heck, 1997: 252) may intuitively make sense when these CEOs are compared to 18

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Table 3 Challenging assumptions about non-family CEOs.

Identification of the assumption Articulation of the assumption: Theory that informs the assumption Evaluation of the articulated assumption Alternative assumption:

Evaluation of the alternative assumption:

Potential theoretical perspectives to investigate the new assumption

Toward heterogeneity and similarity

From formal mechanisms to informal interactions

Non-family CEOs as creators of socioemotional wealth

Non-family CEOs inherently differ from family CEOs Non-family CEOs are the opposite of family CEOs; their defining criterion is family membership, which influences their goals and cognition. Upper echelon theory

Formal mechanisms govern the family-CEO relationship Relationships between family & non-family members are static, driven by cognitive dispositions and ordered through formal governance mechanisms. Agency theory

Non-family CEOs counteract socioemotional wealth Hiring non-family CEOs leads to a nearautomatic loss of socioemotional wealth. Thus, the decision to hire non-family CEOs is an inherent trade-off. Socioemotional wealth

Non-family CEOs can be both similar to and different from family members and represent an inherently heterogeneous group.

Informal interactions between ownership and management are common in family firms, usually happen in informal arenas and can influence the work of non-family CEOs. Informal interactions can be equally important to formal interactions. Focusing on relationships outside of formal interactions allows to depict relationships as complex, multifaceted, and changeable over time. Informal interactions as a focus allow to draw from other fields such as sociology and psychology and can thus provide new insights into the relations between family and non-family actors. Social exchange theory Ambivalence

Non-family CEOs might care strongly for the firm, family and legacy. Thus, they may increase SEW by, e.g., helping curb conflict within the family. Non-family CEOs may contribute to a family’s socioemotional wealth. Conceptualizing nonfamily CEOs in such a way may provide new insights and allow to understand the conditions under which non-family CEOs do this.

Non-family CEOs are heterogeneous beyond their family membership. Research can incorporate this heterogeneity into theorizing, taking into consideration experience, values, goals, and the actual behavior of non-family CEOs. Focusing on heterogeneity allows to create a more nuanced understanding of different types of non-family CEOs as well as how their work practices differ in family firms. Socioemotional wealth & non-financial goals Strategy-as-practice

Seeing non-family CEOs as potential contributors extends the SEW discussion and can provide new insights into what fosters SEW outside of the family boundary. Psychological ownership Socialization

responsibility of companies (Chin, Hambrick, & Treviño, 2013). Thus, what happens when the non-economic goals of family and non-family members, such as an interest in sustainability (Berrone et al., 2010), overlap or contradict? Do the non-financial goals of non-family CEOs change during their tenure in family firms? And how does a potential overlap in goals influence non-family CEOs’ impact on performance? Furthermore, while current research has investigated non-family CEOs in regard to who they are, future research could profit from investigating what they actually do. A theoretical perspective that lends itself well to such a focus is strategy-as-practice. In the context of family firms, strategyas-practice is well-used and has allowed researchers to gain an in-depth understanding of how strategies are enacted (Fletcher, De Massis, & Nordqvist, 2016; Nordqvist & Melin, 2010). Taking an activity-based view (Whittington, 2003), strategy-as-practice focuses on the micro activities inside organizations, turning strategy from something that organizations have into something that individuals do. Strategy-as-practice investigates the practitioners of strategizing, such as CEOs, their practices and routines, and the actual activities through which such practices are enacted (Whittington, 2006). By studying the activities of non-family CEOs – as opposed to their characteristics – researchers may gain a better understanding of their differences and similarities.

family members: Yet, when viewed outside the family business context, this assumption becomes highly debatable. Given that we know that CEOs often act in ways driven by their emotions or personal beliefs (DelgadoGarcía & De La Fuente-Sabaté, 2010), suddenly depicting them as rational actors as soon as they enter a family business is questionable. Second, the strong focus on family membership as an explanatory variable suggests a misleading homogeneity of non-family CEOs that obscures other, potentially more important, factors. Non-family CEOs differ with regard to their education (Chang & Shim, 2015), their origin as an insider or outsider (Minichilli et al., 2014), their working hours (Bandiera et al., 2018), their tenure (Binacci, Peruffo, Oriani, & Minichilli, 2016), their religious affiliation (Damaraju & Makhija, 2018), and their ties to the owner family (Pérez-González, 2006). Thus, they represent a highly heterogeneous group beyond their family membership, and it is likely that such heterogeneity will influence their impact on family firms. Third, while several articles note differences between family and non-family CEOs (Bandiera et al., 2018; Bloom et al., 2012; Mullins & Schoar, 2016), there are other articles that highlight the similarities between family and nonfamily CEOs. For instance, research shows that these two actors are similar regarding their attachment to the business (Huybrechts et al., 2013), overall agency costs (Mazur & Wu, 2016), satisfaction with financial performance (Garcés-Galdeano et al., 2017), and commitment to norms of reciprocity (Visintin et al., 2017). Yet, the insistence on framing non-family CEOs as different leaves little room to theoretically interpret such findings. To overcome the above depiction, researchers should incorporate the heterogeneity of non-family CEOs into their theorizing to enable a better understanding of the non-family CEO’s impact and the conditions under which they are different from or similar to family members. Furthermore, such approach may allow to better connect family business and strategic management research. A promising way forward is to investigate the non-financial goals of non-family CEOs. Although family firms have been a prime context in which to study non-financial goals as part of a family’s socioemotional wealth (Gómez-Mejía et al., 2011), so far only the non-financial goals of family members have been in focus. Extant research on CEOs shows that the personal ideologies and values of CEOs have a strong impact on the corporate social

5.2. From formal mechanisms to informal interactions The second assumption arising from the analysis is that only formal mechanisms govern the relationship between family owners and the non-family CEO. While governance conditions are indeed an important aspect (Miller et al., 2014), solely focusing on formal mechanisms turns interactions inherently static, and displays them as driven by cognitive predispositions. Such approach leaves little space to understand how relationships come into being or change over time. Iinstead, they become fixed through individual goals and the pursuit of self-interest. A large part of this assumption derives from theorizing non-family CEOs through the lens of agency theory (Eisenhardt, 1989). Originally based upon large companies in which control and management were separated, agency theory has been increasingly used in the context of family business research to depict intra-family conflict and agency costs 19

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between owners and managers (Madison, Holt, Kellermanns, & Ranft, 2016). While agency theory has provided many new insights, it limits the focus to the self-serving behavior of actors, which is curbed through formal monitoring and incentives. However, especially in the context of family firms, informal interactions and relationships play a central role. This assumption could be therefore be problematic for several reasons. First, family firms are inherently relational organizations and have been depicted as “one of the most vital and fertile grounds for the development of strong relationships” (Sanchez-Famoso, Akhter, Iturralde, Chirico, & Maseda, 2015: 1714Sanchez-Famoso et al., 2015SanchezFamoso, Akhter, Iturralde, Chirico, & Maseda, 2015: 1714). Therefore, non-family CEOs deal extensively with the owners of the business outside of the board context and interact with them in formal and informal arenas (Blumentritt et al., 2007; Nordqvist, 2012). Thus, interpersonal relationships between family and non-family CEOs that go beyond formal interactions matter and have been shown to be an important concern of family owners (Chua, Chrisman, & Sharma, 2003; Hall & Nordqvist, 2008). Second, interactions between family members and the non-family CEO not only encompass business transactions but also spread towards issues of the family or to questions that are intertwined with both business and family (Gedajlovic et al., 2012; Waldkirch et al., 2018). It is, for instance, not uncommon for non-family managers to act as mentors for next-generation members (Le Breton-Miller et al., 2004). Therefore, drawing from theories that only encompass economic interactions may limit our understanding of the multitude of interactions happening inside family firms. Last, several articles in the review utilize informal interactions and relationships as a way to interpret and explain findings that cannot be explained through formal mechanisms. For instance, Visintin et al. (2017) argue that the lower non-family CEO turnover under concentrated ownership may be related to socialization processes, and Garcés-Galdeano et al. (2017): 836) argue that “non-family CEOs in family firms learn the company’s culture over time, internalizing its values and goals as if they were her own”. However, despite their importance, there is little research on such socialization processes (Waldkirch et al., 2018). Thus, informal interactions and relationships may play a key role in understanding non-family CEOs and their ties to the owner family. The call to change our assumptions in depicting relations in family firms coincides with a broader movement to create a deeper understanding of relationships in organizations. While the importance of relationships and interactions has been acknowledged for decades (Weber, 1968), the focus on individuals, groups, or organizations themselves long led to research “effectively marginalizing interpersonal relationships” (Ashforth & Sluss, 2006: 8). Recent articles argue, therefore, that the study of relationships at work should become “a cornerstone of management research” (Methot, Melwani, & Rothman, 2017: 2). For instance, Dutton and Ragins (2007) have started a research group around positive relationships at work, arguing that such relationships “represent not only the essence of meaning in people’s lives, but they also reside deep in the core of organizational life; they are the means by which work is done and meaning is found in organizations”. Focusing on informal interactions may thus provide a way to position family business research within this growing research stream. To build richer conceptualizations of informal interactions and relationships, researchers could draw from the rich insights in psychology and sociology. First, social exchange is a theory that is well-suited to studying the multiplicity of interactions that happen in family firms. The objects of exchange may be services, goods, or money but could also include love, status, and information (Foa & Foa, 1980), thus encompassing “either economic or socioemotional value” (Daspit et al., 2016: 46). Recent examples show that social exchange is a suitable theory to investigate the interactions between family and non-family members. For instance, Barnett, Long, and Marler (2012) utilize social exchange to study procedural justice among non-family managers, Daspit et al. (2016) review the literature on succession and the involvement of non-family members from a social exchange perspective,

and Waldkirch et al. (2018) utilize social exchange to investigate nonfamily CEO turnover. Second, the concept of ambivalence has recently gained traction in organizational behavior (Ashforth, Rogers, Pratt, & Pradies, 2014; Methot et al., 2017). Ambivalence allows us to understand relationships not as purely positive or negative but rather encompasses the “simultaneously positive and negative orientations toward an object” (Ashforth et al., 2014: 1454). Highlighting both cognitive as well as emotional aspects, ambivalence focuses on the causes of such tensions, how individuals experience them, and what they mean for the organization. While ambivalence was originally depicted as negative for individuals and collectives, current research shows that it can lead to positive functional and beneficial outcomes on an individual, relational, and organizational level (Rothman, Pratt, Rees, & Vogus, 2017). Ambivalence may thus allow us to better understand how non-family CEOs build relationships with members of the owning families, other executives, stakeholders and regular employees and how such relationships develop over time and impact the family firm. 5.3. Non-family CEOs as creators of socioemotional wealth The third assumption derived from the analysis argues that hiring a non-family CEO is assumed to lead to a loss of non-economic utility. This line of argumentation relies on socioemotional wealth, which is “central, enduring, and unique to the dominant family owner, influencing everything the firm does” (Gómez-Mejía et al., 2011: 692). According to this theory, family firms have multiple goals that go beyond pure financial considerations. Socioemotional wealth, the “non-financial aspects of the firm that meet the family’s affective needs” (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007: 106), derives from the emotional ties of the family to the business and to other family members. Therefore, family members receive nonfinancial utility from controlling the family firm, which is argued to be reduced when a non-family member takes over the helm of the business (Gómez-Mejía et al., 2011). Indeed, Chrisman et al. explicitly argue that “hiring a nonfamily manager usually means giving up noneconomic goals to achieve economic goals” (Chrisman, Memili, & Misra, 2014: 1103), and Vandekerkhof et al. claim that non-family managers “threaten[…] the noneconomic goals of the family system” (2015: 108). Yet, the depiction of non-family CEOs as detrimental to socioemotional wealth could be problematic for several reasons. First, research indicates that non-family CEOs may have a positive effect on socioemotional wealth. Non-family CEOs often develop a “heartfelt affinity for the family for which they work” (Blumentritt et al., 2007: 330) and will act in the interest of the owning family. Especially when non-family CEOs become socialized into the family firm (Miller et al., 2014), their impact on socioemotional wealth cannot be outright assumed to be negative. Second, non-family CEOs may mitigate conflicts that would be detrimental to the socioemotional wealth of the owning family (Gómez-Mejía et al., 2011). Choosing a non-family CEO may therefore “mediate family conflict” (Vandekerkhof, Steijvers, Hendriks, & Voordeckers, 2015: 106) and increase socioemotional wealth. Furthermore, non-family CEOs may act as mentors for the next generation and introduce them to the business (Le Breton-Miller et al., 2004; Waldkirch et al., 2018), which should also increase socioemotional wealth. Last the impact of non-family CEOs on a family’s socioemotional wealth is likely to change over time. While the relationship of non-family CEOs toward the firm initially may be “transitory, individualistic, and utilitarian” (Gómez-Mejía et al., 2011: 692), research indicates that non-family CEOs may develop a strong bond with the family firm over time (Huybrechts et al., 2013; Minichilli et al., 2014; Waldkirch et al., 2018). Depicting non-family CEOs as potential contributors to socioemotional wealth has the potential to inform our understanding of what contributes to it outside the family boundary. Furthermore, investigating socioemotional wealth outside the family could help 20

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translate this theory into other research contexts. In order to do so, two theoretical perspectives could be well suited to understanding how nonfamily CEOs may strengthen the socioemotional wealth of the family business. First, psychological ownership (Pierce, Kostova, & Dirks, 2001) allows us to explain how and why non-family CEOs develop a feeling of responsibility and ownership towards the family business and even the owner family and its legacy (Blumentritt et al., 2007). Over time, individuals feel that the material or immaterial target of such psychological ownership becomes ‘theirs’ (Pierce et al., 2001). Existing research highlights the potential of utilizing psychological ownership to investigate the attachment of non-family CEOs to the business (Huybrechts et al., 2013). Psychological ownership allows researchers to investigate how and why non-family CEOs may further the non-financial goals of family members. When the psychological ownership of the non-family CEO and the socioemotional wealth of the family overlap, it is likely that non-family CEOs will contribute to both financial and non-financial goals. However, such overlap may also create conflict around the topic of who ‘owns’ the family firm and has its best interest at heart. On the other hand, it allows us to contrast the nature of socioemotional wealth in opposition to other forms of attachment. An investigation of how the psychological ownership of a non-family CEO differs from a family’s socioemotional wealth may give us new insights into both concepts. Second, even though several articles have made passing nods to the concept (Garcés-Galdeano et al., 2017; Visintin et al., 2017), there is little research on how non-family CEOs become socialized into the family firm. Extant research on socialization (Ashford & Black, 1996; Fang, Duffy, & Shaw, 2011) highlights how newcomers transition from being outsiders to being accepted parts of an organization and group. Thus, understanding the socialization process may allow researchers to understand how the new CEO’s identity forms in relation to the organization and family (Ashforth & Mael, 1989). Research has outlined that non-family members may, over time, become ‘quasi-family’ members (Karra, Tracey, & Phillips, 2006), yet we know little about how such an identity shift may occur. This shift is especially interesting given that non-family actors have to gain the trust of family members in order to bring change to the business (Nordqvist & Melin, 2008). Furthermore, we know little about the recruitment process and how new non-family CEOs are introduced to the organization, its values, and the interactions with the owner family. Ashford and Black (1996) outline that relationship building, sense making and positive framing are forms of newcomer proactivity. Such approaches may therefore provide novel ways to analyze how non-family CEOs become socialized their new position and what they do at the start of their tenure.

current body of literature that offer opportunities for future research. Second, this article combines a systematic literature review with a more critical approach that aims not only to add to existing literature but also to challenge it (Huff, 2008). Building upon the analysis, the literature review outlines three underlying assumptions in the literature and the theories underlying those assumptions. The review then challenges those assumptions and provides an alternative for how to frame non-family CEOs (Alvesson & Sandberg, 2011, 2013). First, the review questions the view of non-family CEOs as opposites of family CEOs, instead proposing to conceptualize them as a heterogeneous group that may, in several aspects, be similar to family CEOs. Second, the review questions the depiction of relationships between family and non-family members as occurring only through formal mechanisms, instead proposing to investigate informal interactions and relationships and their impact on individuals and the organizations. Third, the review questions the assumption that non-family CEOs are inherently detrimental to socioemotional wealth, instead proposing to investigate under which conditions non-family CEOs may help accomplish socioemotional goals. Thus, the review goes beyond current research and outlines a way to advance the study of non-family CEOs. Furthermore, by building upon the framework on ‘gap-spotting’ and ‘assumption-challenging’ (Alvesson & Sandberg, 2011, 2013), the review provides a novel method to combine a highly systematic literature review with both an incremental and more radical way to create a future research agenda. By outlining a clear approach for both gapspotting and challenging assumptions, this approach allows researchers to better outline and justify how they arrive at their future research agenda. While gap-spotting builds upon the assumptions of the current literature, assumption-challenging questions them and thus engages in problematization. In a sense, ‘gap-spotting’ and ‘assumption-challenging’ are similar to the entrepreneurial processes of exploration and exploitation. While exploitation “hones and extends current knowledge”, exploration “entails the development of new knowledge” (Andriopoulos & Lewis, 2009: 696), allowing to extend and challenge the research on non-family CEOs. Both approaches thus outline a clear way for building both an incremental and more radical future research agenda. While the article thus makes several contributions, it is not without its limitations. First, in opposite to other current reviews (Daspit et al., 2016; Feranita, Kotlar, & De Massis, 2017), the review does not utilize one theoretical perspective to analyze the literature. While such approach might strengthen the depth of analysis, it would hamper the breadth of findings, as shown for instance by Tabor et al. (2018). Second, the review incorporates both private and publicly-held family firms (see Table 1), yet, does not systematically differentiate between the impact of non-family CEOs in both types of settings. Future research should further delve into how the impact of non-family CEOs may differ between both contexts. Last, while the review provides new potential theoretical angles, future research should outline new methodological approaches to study non-family CEOs. Last, the review provides several interesting insights for family business owners as well as (prospective) non-family CEOs. First, the article highlights that non-family CEOs indeed tend to change the family firms they work for. It is therefore important for family owners to consider the reasons for hiring a non-family CEO. Second, the relationship between the non-family CEO and family seems to be important both through formal and informal interactions. Non-family CEOs with a close connection to the family seem to perform better and last longer in family firms. Thus, investing in this relationship early on seems advisable. Last, both family owners and non-family CEO should consider the extent to which they fit to each other. As the articles highlight, non-family CEOs thrive in certain contexts, while struggling in others. Not every family firm is the right fit for a non-family CEO, and not every executive is the right fit for a family firm.

6. Contributions and conclusion 6.1. Contributions, limitations, and implications Non-family CEOs are an important group of actors in family firms and have received increasing attention over the last decade. While their importance to family firm practice is uncontested, knowledge of nonfamily CEOs is scattered. This review thus makes two important contributions to the literature on family firms and non-family CEOs. First, this article utilizes a systematic and multi-disciplinary literature review approach to collect, organize and structure the current knowledge on non-family CEOs. Building on the analysis of 91 ABS-ranked articles, the review outlines how non-family CEOs impact family firm processes and outcomes in several different ways and thus constructs an overview of this previously scattered field. Going beyond the contribution about non-family employees by Tabor et al. (2018), the review casts light on the special position of non-family CEOs, who are the most prominent operational non-family member in family firms. Based upon three distinct approaches of gap-spotting, the review outlines several gaps in the

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7. Conclusion

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Understanding non-family CEOs and their impact on family firms is vital from both a practical and theoretical perspective. This review collects, organizes and structures current research on non-family CEOs in order to provide an overview of a previously scattered field. Furthermore, by engaging in ‘gap-spotting’ and ‘assumption-challenging’ (Alvesson & Sandberg, 2011, 2013), this review provides several novel ways forward in the study of non-family CEOs and thus contributes to the field of family business. Acknowledgements I would like to express my gratitude to the two anonymous reviewers and especially to the editor Andrea Calabrò for the excellent feedback and guidance in the review process. I gratefully acknowledge helpful comments from Denise Fletcher, Karin Hellerstedt, Andreas König, Mattias Nordqvist and Daniel Pittino, as well as comments from participants at the 1st International Family Business Research Forum and the 11th EIASM Workshop on Family Firm Management Research. I would also like to thank the Centre for Family Enterprise and Ownership at Jönköping International Business School and the CarlOlof and Jenz Hamrin Foundation for their support. References1 Allan, M., & Oswald, J. (2010). Editorial: Strategies for the development of international journal of management reviews. International Journal of Management Reviews, 12(2), 107–113. Alvesson, M., & Sandberg, J. (2011). Generating research questions through problematization. The Academy of Management Review, 36(2), 247–271. Alvesson, M., & Sandberg, J. (2013). Constructing research questions: Doing interesting research. London: SAGE Publications Ltd. *Amore, M. D., Minichilli, A., & Corbetta, G. (2011). How do managerial successions shape corporate financial policies in family firms? Journal of Corporate Finance, 17(4), 1016–1027. Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. The Journal of Finance, 58(3), 1301–1328. *André, P., Ben-Amar, W., & Saadi, S. (2014). Family firms and high technology Mergers & Acquisitions. Journal of Management and Governance, 18(1), 129–158. Andriopoulos, C., & Lewis, M. W. (2009). Exploitation-exploration tensions and organizational ambidexterity: Managing paradoxes of innovation. Organization Science, 20(4), 696–717. Aronoff, C. E., & Ward, J. L. (2010). More than family: Non-family executives in the family business. New York: Palgrave Macmillan. *Arteaga, R., & Menéndez-Requejo, S. (2017). Family constitution and business performance: Moderating factors. Family Business Review, 30(4), 320–338. Ashford, S. J., & Black, J. S. (1996). Proactivity during organizational entry: The role of desire for control. The Journal of Applied Psychology, 81(2), 199–214. Ashforth, B. E., & Mael, F. (1989). Social identity theory and the organization. The Academy of Management Review, 14(1), 20–39. Ashforth, B. E., Rogers, K. M., Pratt, M. G., & Pradies, C. (2014). Ambivalence in organizations: A multilevel approach. Organization Science, 25(5), 1453–1478. Ashforth, B. E., & Sluss, D. M. (2006). Relational identities in organizations: Healthy versus unhealthy. Relational perspectives in organizational studies. Edward Elgar Publishing8–27. Bach, L., & Serrano-Velarde, N. (2015). CEO identity and labor contracts: Evidence from CEO transitions. Journal of Corporate Finance, 33, 227–242. *Banalieva, E. R., & Eddleston, K. A. (2011). Home-region focus and performance of family firms: The role of family vs non-family leaders. Journal of International Business Studies, 42(8), 1060–1072. *Bandiera, O., Lemos, R., Prat, A., & Sadun, R. (2018). Managing the family firm: Evidence from CEOs at work. The Review of Financial Studies, 31(5), 1605–1653. *Barnett, T., Long, R. G., & Marler, L. E. (2012). Vision and exchange in intra-family succession: Effects on procedural justice climate among nonfamily managers. Entrepreneurship Theory and Practice, 36(6), 1207–1225. *Barontini, R., & Bozzi, S. (2018). Family firm heterogeneity and CEO compensation in Continental Europe. Journal of Economics and Business, 97, 1–18. *Bennedsen, M., Nielsen, K. M., Perez-Gonzalez, F., & Wolfenzon, D. (2007). Inside the family firm: The role of families in succession decisions and performance. The Quarterly Journal of Economics, 122(2), 647–691. Berns, K. V. D., & Klarner, P. (2017). A review of the CEO succession literature and a future research program. The Academy of Management Perspectives, 31(2), 83–108.

1 Articles that are part of the literature review sample are marked with an asterisk.

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