Abstract
This paper builds upon two complementary theoretical perspectives, stewardship and stagnation (Miller, Le Breton-Miller and Scholnick, 2008), to explore the non-linear effects of family sources of power (Klein, Astrachan and Smyrnios, 2005) on performance via small, unlisted companies. Lagged performance data drawn from 294 small, privately held family firms in Italy show an inverted U-shaped relationship between family involvement in ownership and return on assets and a positive relationship between family involvement in management and return on equity. The paper provides a theoretical explanation for the literature's inconsistent findings by drawing on stewardship and stagnation theory using a representative sample of family firms. Investigating the constructs reflecting power in family firms adds to the nomological net of the literature that examines differences within family firms. The focus on small family businesses, an under-researched segment of family businesses, complements recent findings on public family firms. Utilizing lagged performance data of small, unlisted companies responds to the call in the family firm literature to improve methodological design and rigor.