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Abstract Drawing on grounded theory and using the case of Hong Kong Li & Fung Group, this study examines the role of family power cost in determining family power concentration of family firms. It argues that the family power cost consists of family power allocation cost and family power execution cost. Family power allocation cost means transaction costs which can not be eliminated through the market transactions and family rules in the power allocation, including specificity locking cost, private information cost, irregularity cost and power motivation coefficient etc. Family power execution cost refers to supervision cost, collective decision cost and risk bearing cost etc. Further study found that the factors influencing the family power cost are summed up from the three dimensions of family human resource, family social capital and family material capital.
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Received: 27 May 2013
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2014, Vol. 11 
