Firm performance and managerial entrenchment: the case of Tunisian family firms

This study aims to verify empirically, in the case of a group of family firms in Tunisia, the effect of managerial entrenchment on firms' performance. The results of the principal component regression show that the entrenchment concept is well explained by two dimensions: 'experience capitalisation' and 'skills - belongings'. Both of these dimensions positively affect firms' performance, with the latter significantly so. The positive effect of experience capitalisation is thwarted by the old managers belonging to the same relational networks as the equity holders. Overall, we find support for our hypothesis that managerial entrenchment positively affects firm performance in the case of family firms. We also find that the relationship between entrenchment and performance seems to be nonlinear.