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Southern University College of Business E-Journal

Abstract

Objective: In the context of family firms, this research endeavors to establish human capital as an antecedent of top management team transactive memory systems and examine the deleterious effects of non-family managers on that team. Additionally, the interaction of non-family managers and human capital on the top management team transactive memory system is considered. Methodology: Primary data were collected from 151 executives at Automobile and Motorcycle dealers. Linear regression analysis was utilized to test the hypothesized relationships. Findings: Human capital is an important antecedent to the development of transactive memory systems in family firms. Non-family managers’ participation in the top management teams reduces the ability of top managers to specialize, view other team members as credible, and effectively coordinate their actions. When family managers possess high levels of human capital, the negative relationship between non-family managers and the top management team’s transactive memory system is attenuated. Originality: This research fills a void by identifying the importance of transactive memory systems in family firms. Moreover, the findings bridge an important gap between the transactive memory system and top management team demography literatures. The findings herein are amongst the earliest to examine transactive memory systems in top management teams and establish the consequences of non-family managers in family firms. Family firms can overcome the liabilities of non-family managers by avoiding nepotism and promoting or hiring the most talented managers. Limitations: To reduce background noise, the sample is limited to two industries in a single geographic area. Practical Implications: As family firms grow, increasing participation of non-family managers will be required. Firms should be aware of the deleterious effect of non-family managers’ participation in the top management team. To avoid negative consequences of non-family managers, the firm must identify mechanisms, including nepotism avoidance and hiring the most talented managers, to harness the benefits of the diverse top management team.

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