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Family ties, firm performance and managerial compensations in African SMEs

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  • Eugene Bempong Nyantakyi

    (Immeuble du Centre de Commerce International d’Abidjan)

Abstract

This paper uses data from the World Banks Enterprise Surveys to assess the impact of family ties on managerial compensations in selected African SMEs. The results suggest that while managers who are related to the owners of an enterprise receive higher performance-based compensations than professional managers, their compensations are less sensitive to firm performance than that of professional managers. These findings parallel those of Chinese enterprise managers identified by Cai et al. (Rev Econ Stat 95(3), 850–867, 2013). This suggests that family relations play a significant role in compensation schemes for enterprises in developing and emerging markets and that differential treatment exists between family and non-family managers.

Suggested Citation

  • Eugene Bempong Nyantakyi, 2016. "Family ties, firm performance and managerial compensations in African SMEs," Small Business Economics, Springer, vol. 46(3), pages 493-501, March.
    • Handle: RePEc:kap:sbusec:v:46:y:2016:i:3:d:10.1007_s11187-015-9692-7
    DOI: 10.1007/s11187-015-9692-7
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    References listed on IDEAS

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    1. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    2. Van Biesebroeck, Johannes, 2005. "Firm Size Matters: Growth and Productivity Growth in African Manufacturing," Economic Development and Cultural Change, University of Chicago Press, vol. 53(3), pages 545-583, April.
    3. Eifert, Benn & Gelb, Alan & Ramachandran, Vijaya, 2008. "The Cost of Doing Business in Africa: Evidence from Enterprise Survey Data," World Development, Elsevier, vol. 36(9), pages 1531-1546, September.
    4. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," The World Bank Research Observer, World Bank, vol. 21(2), pages 241-265.
    5. Hongbin Cai & Hongbin Li & Albert Park & Li-An Zhou, 2013. "Family Ties and Organizational Design: Evidence from Chinese Private Firms," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 850-867, July.
    6. Soderbom, Mans & Teal, Francis, 2004. "Size and efficiency in African manufacturing firms: evidence from firm-level panel data," Journal of Development Economics, Elsevier, vol. 73(1), pages 369-394, February.
    7. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
    8. Haddad, Lawrence & Maluccio, John A, 2003. "Trust, Membership in Groups, and Household Welfare: Evidence from KwaZulu-Natal, South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 573-601, April.
    9. Dirk Willem te Velde, 2003. "Do Workers in Africa Get a Wage Premium if Employed in Firms Owned by Foreigners?," Journal of African Economies, Centre for the Study of African Economies, vol. 12(1), pages 41-73, March.
    10. Céline Kauffmann, 2005. "Financing SMEs in Africa," OECD Development Centre Policy Insights 7, OECD Publishing.
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    Cited by:

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    2. Hanqing Fang & James J. Chrisman & Joshua J. Daspit & Kristen Madison, 2022. "Do Nonfamily Managers Enhance Family Firm Performance?," Small Business Economics, Springer, vol. 58(3), pages 1459-1474, March.
    3. Decker, Stephanie & Estrin, Saul & Mickiewicz, Tomasz, 2020. "The tangled historical roots of entrepreneurial growth aspirations," LSE Research Online Documents on Economics 102989, London School of Economics and Political Science, LSE Library.

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