Innovation and familiness: the moderating role of altruism

This study aims to explain innovativeness of family firms in light of the behavioural agency theory (Ross, 1973; Eisenhardt, 1989; Jensen, 1994) by considering the moderating role of altruism on financial slack. By using the metaphor of contracts, agency theory (Argyris, 1957; March & Simon, 1958; Haire, 1959; Jensen & Meckling, 1976; Hart & Holmstrom, 1986) explains the controversial relationship between a principal delegating a task to an agent: the two parties might have different goals and preferences, for that the principal has to pay a high cost of monitoring the agent (agency cost) to verify its conduct. According to Ross (1973), the general assumptions of the model are the bounded rationality of humans, the pursuit of self-interest, and a general risk aversion. For that, the misalignment of such factors determines an information asymmetry and might cause moral hazard or adverse selection.