Family governance mechanismsrelevance and heterogeneity

Resumen

The main objective of this doctoral thesis is to study the adoption and usefulness of family governance mechanisms (i.e., family constitutions, family councils, and family meetings) in a context-sensitive way. This doctoral thesis is a compilation of three research articles. Family firms represent the most common type of organization in economies all over the world (Sharma, Chrisman, & Gersick, 2012). Family firms differ from non-family firms because three overlapped systems, the family, the ownership, and the business (Gersick, Lansberg, Desjardins, & Dunn, 1999). Family governance emerges as a tool to mitigate conflicts among these systems and thus complement corporate governance (Suess, 2014). The main family governance mechanisms are family constitution, family council, and family meetings (Suess, 2014). Family constitution is a normative agreement between family members to organize their relationships with the firm (Uhlaner, Berent-Braun, Jeurissen, & de Wit, 2012). Family council provides a structured forum to discuss family needs and firm expectations (Davis, Hampton, & Lansberg, 1997). Family meetings are the simplest form of governance that facilitate communication among family members (Aronoff, Ward, & Astrachan, 1996). This thesis contributes to the extant family business literature. First, it contributes to agency theory by considering the usefulness of family governance to improve firm performance, by mitigating family blockholder conflicts and family owners vs. extended family conflicts (Villalonga, Amit, Trujillo, & Guzmán, 2015), taking into consideration the influence of the family business heterogeneity and its context (Basco & Suwala, 2020; Westhead & Howorth, 2007). Second, it contributes to systems theory (Habbershon, Williams, & Westhead & Howorth, 2007). Second, it contributes to systems theory (Habbershon, Williams, & MacMillan, 2003; Swartz, 1989), in particular, to social systems theory (von Schlippe & Frank, 2013) highlighting its instrumentality to understand why some family firms adoptperspective (Berrone, Cruz, Gomez-Mejia, & Larraza-Kintana, 2010) by showing that governance mechanisms are also valuable and useful tools in handling and solving family business conflicts associated with the desire to preserve family businesses’ socioemotional wealth. This doctoral thesis implements quantitative and qualitative methodologies. Firstly, using a multivariate regression analysis by testing the positive influence of family constitution on firm performance on a sample of 530 Spanish privately held family firms. Secondly, this thesis uses a classificatory method, two-step cluster approach, to test on a different sample of 490 Spanish family firms to allow for a deeper understanding of the influence of heterogeneity in the implementation of family governance. Thirdly, the thesis uses a qualitative method, narrative analysis to examine family governance and conflict resolution in a different institutional context, Swedish family businesses. Empirical findings show that, in the Spanish context characterized by a low conflict aversion, typical from Latin collectivistic societies (Hofstede, 2001), the adoption of family governance, particularly family constitutions, positively influences the firm performance. This positive relationship is stronger when the firm has nonfamily management, has non concentrated family ownership, and later generations control the firm. When observing the process of family governance mechanisms adoption in this context, findings show that family firms adopt family governance mechanisms depending on their heterogeneity in terms of needs of communications, family involvement in ownership and management, generation, and size. Larger and relatively older firms are more likely to implement family governance mechanisms. Family firms with fewer dominant shareholders and a low involvement of family members in managerial positions are more likely to adopt family councils. While family firms with high family involvement in management are more likely to adopt family constitutions. Conversely, findings of this thesis show that in the Swedish context characterized by a low conflict aversion, typical from Scandinavian individualistic cultures (Hofstede, 2001), family governance mechanisms are also considered valuable and useful tools in handling and solving conflicts, particularly family meetings that foster their socioemotional wealth preservation.