Datta, Amlan2020-09-282020-09-282020-09-28http://hdl.handle.net/10393/41113http://dx.doi.org/10.20381/ruor-25337This study clarifies how family firms use the vesting provision of incentive grants and calibrate the interests of non-family executives so that they merge better with the firms’ interests. Given the risks that family firms confront when they are considering strategic decisions, this study finds that family-owned firms provide more risk-based incentives to their non-family executives, primarily when the firms are performing below their aspirational level. Moreover, these firms rely more often on relative performance measures to assess the efficacy of their non-family executives as their performance deteriorates. These findings stand in stark contrast with the literature on this topic, which suggests that firms always use risk-based incentives and absolute performance measures to reward their executives regardless of the firms’ performance.enFamily BusinessVestingThesis