Risk Aversion in Family Firms in the Context of Economic Theories and Models

Academic Paper from the year 2017 in the subject Business economics - Business Management, Corporate Governance, grade: 1,3, University of Applied Sciences Aalen, language: English, abstract: This paper examines the risk willingness respectively aversion of family businesses in the context of various economic theories and models, in particular on the basis of New Institutional Economics. The results and evidence of other scientific studies are compiled and condensed by means of a systematic literature review. Especially the topic of risk aversion is very interesting when talking about family firms. It could be assumed that family firms were more risk averse than non-family firms because of the accumulation of the families´ wealth in the firm. This was in line with agency theory. This assumption, while generally understandable, is highly questioned due to recent research. Risk aversion may be situational and depending on the circumstances of the family firm.