Question

The stewardship perspective on family businesses argues that

a. second- and later-generation family members cannot be effective managers of the company and must that the company is primarily run by independent managers.
b. the natural alignment of owners and managers (agents) in a family business decreases the need for formal supervision of agents and for elaborate governance mechanisms, thus reducing agency costs of ownership in family firms.
c. family companies are most successful when family members use their wealth primarily for philanthropy.
d. responsible family ownership is characterized by a generation's commitment to the larger family goals and the desire to pass a healthy company to the next generation.

Answer 1

The stewardship perspective on family businesses argues that responsible family ownership is characterized by a generation's commitment to the larger family goals and the desire to pass a healthy company to the next generation. This perspective emphasizes the importance of family members managing the company and maintaining control over its operations.

The correct option is d. responsible family ownership is characterized by a generation's commitment to the larger family goals and the desire to pass on a healthy company to the next generation.

Step-by-step explanation:

The stewardship perspective on family businesses argues that responsible family ownership is characterized by a generation's commitment to the larger family goals and the desire to pass a healthy company to the next generation. This perspective emphasizes the importance of family members managing the company and maintaining control over its operations.

Unlike the view that independent managers should primarily run the company or that wealth should be used primarily for philanthropy, the stewardship perspective highlights the alignment of owners and managers in family businesses. It suggests that this alignment reduces the need for formal supervision and elaborate governance mechanisms, thus lowering agency costs of ownership.

The correct option is d. responsible family ownership is characterized by a generation's commitment to the larger family goals and the desire to pass on a healthy company to the next generation.