Family ties, firm performance and managerial compensations in African SMEs
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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.
KeywordsFamily ties Managerial compensation African SMEs
JEL ClassificationsL26 M12 M52 O55
I thank the associate editor Erik E. Lehmann, an anonymous referee, Ousman Gajigo, Christa Jensen and Adam Pellillo for helpful comments.
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