Family constitution to manage family firms’ agency conflicts

  1. Pablo Rodriguez-Garcia 1
  2. Susana Menéndez-Requejo 1
  1. 1 University of Oviedo, Oviedo, Spain
Revista:
Business Research Quarterly

ISSN: 2340-9444,  2340-9436

Año de publicación: 2023

Volumen: 26

Número: 2

Páginas: 150-166

Tipo: Artículo

DOI: 10.1177/2340944420980444 DIALNET GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: Business Research Quarterly

Objetivos de desarrollo sostenible

Resumen

This research examines the effectiveness of Family Constitution or Family Protocol agreements in mitigating each type of agency conflict in family firms. We performed a qualitative analysis, through a case study, and found that the succession process is the main driver for implementing this family governance mechanism. Our findings also show that a family constitution is useful in reducing three of the four agency conflicts described in the literature, specifically between family owners and managers, between family shareholders, and with the family at large. Key agreements include training and experience terms for family members to join the firm, transfer clauses of shares inter-vivos and causa mortis, and the development of family governance bodies. However, creditors are generally unaware of the protocol’s existence, hindering its potential positive effects, which has important implications for practitioners. Creditors point out its potential usefulness as a hint of orderly and structured continuity of the business.

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