Ownership structure, founder leadership, and performance in Norwegian SMEs: implications for financing entrepreneurial opportunities

This study indicates that agency theory prescriptions regarding monitoring are more relevant in nonfounder firms but are redundant in founding family-led firms. Using a sample of 68 small- and medium-sized enterprises (SMEs) publicly traded in Norway, the empirical tests show that founding family leadership (CEO or chair) moderates the relationship between ownership structure and firm performance. This has major implications for founding family firms that seek to finance entrepreneurial opportunities. Specifically, nonfounder firms benefit from a low level of board and inside ownership, a high level of blockholder ownership, and a high level of foreign ownership because they face a context where agency costs are high. On the other hand, founding family firms benefit from a high level of insider ownership, a low level of blockholder ownership, and a low level of foreign ownership due to their context of low agency costs. (C) 2003 Elsevier Science Inc. All rights reserved.