Title: Psychological contract and social exchange in family firms

Authors: Timothy M. Madden; Laura T. Madden; Jason A. Strickling; Kimberly A. Eddleston

Addresses: Department of Management, East Carolina University, 3111 Bate Building, Greenville, NC 27858-4353, USA ' Department of Management, East Carolina University, 3108 Bate Building, Greenville, NC 27858-4353, USA ' Department of Management, University of Tennessee - Knoxville, 422 Stokely Management Center, Knoxville, TN 37996-0545, USA ' Department of Entrepreneurship and Innovation, Northeastern University, 209 Hayden Hall, 360 Huntington Ave, Boston, MA 02115-5000, USA

Abstract: This study tests a social exchange theory model that links firm family members' transactional and relational psychological contract obligations to firm performance. Evidence supports the hypotheses that organisational obligations are antecedents of individual contributions to firm performance in the psychological contract model. When family firms meet the employees' perceived obligations to their employees, the employees meet their perceived obligations to their employers. Participative decision-making and succession planning are of particular importance to maintain transgenerational control and evidence is found to support succession planning as fully mediating the relationship between participative decision-making and firm performance.

Keywords: family firms; family business; participative decision making; psychological contract; social exchange theory; succession planning; firm performance; perceived obligations; transgenerational control.

DOI: 10.1504/IJMED.2017.082543

International Journal of Management and Enterprise Development, 2017 Vol.16 No.1/2, pp.109 - 127

Received: 01 Aug 2015
Accepted: 08 Sep 2016
Published online: 28 Feb 2017 *

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