A collaboration between the IAAEU and the University of Trier led to a forthcoming paper in the journal Small Business Economics. Jörn Block from the University of Trier and Alberto Palermo from the IAAEU, together with Jenny Kragl (EBS, Oestrich-Winkel) and Xi Guoqian (formerly at the University of Trier), collaborated on the forthcoming paper “Hiring Family or Non-Family Managers When Non-Economic (Sustainability) Goals Matter? A Multitask Agency Model”.

The paper focuses on family firms, the dominant form of ownership in many countries and industries. Empirical research shows that family managers run a large share of family firms. However, nepotism, altruism, lower managerial abilities, and a small pool of qualified family candidates may speak against family management. The authors provide a theoretical explanation for this apparent paradox. In a set-up with moral hazard and imperfect performance measurement, Block, Palermo, and co-authors consider the multitasking problem of managing economic and non-economic tasks in family firms.

The study not only has practical implications for family firms’ hiring decisions. By highlighting the importance of non-economic goals, it also contributes to the current discussion about compliance with firms’ sustainability goals.