This study analyzes the relationship between implementing a Family Constitution (Protocol) and future family business performance. We analyze a unique sample of 530 Spanish family businesses. Half of these firms received financial aid from the government to implement a Family Protocol during 2003-2013. The analysis reveals that family businesses that implemented a Family Constitution had significantly improved performance within 2 years after the implementation. The positive relationship between the implementation of a Family Constitution and future firm performance is stronger for firms that had a nonfamily CEO, had multiple family owners, or were controlled by later generations.

PurposeThis research is aimed to better understand what characteristics of family firms create a context in which family governance systems are more frequently adopted.Design/methodology/approachWe analyse a sample of 490 Spanish family businesses using cluster analysis, and we identify four different types of family businesses whose characteristics are associated to the adoption of different family governance systems, i.e. family councils and family protocols. The comparison between clusters of the baseline parameters was performed using one-way analysis of variance (ANOVA) for parametric variables, the χ2 test for parametric variables and Kruskal-Wallis for nonparametric variables. By conducting between-profile analysis of covariance (ANCOVA), we tested for differences in the dependent variables (i.e. the existence of family councils and/or existence of family protocols) between the clusters, using cluster membership as the independent variable.FindingsTaking into account the characteristics of family firms in terms of ownership structure, management involvement, and family and organizational complexity, we identify four different contexts that create different communication needs and are related to the use of different family governance mechanisms. We characterize the different contexts or types of family firms as: founder-centric, protective, consensual and business-evolved. Our findings show that family protocols are associated to contexts with high family involvement in management and family complexity, while family councils are more frequent when there is a separation of managerial and ownership roles and there is a high organizational and family complexity.Research limitations/implicationsThe study highlights the value of social systems theory in order to explain the association between the characteristics of different firm types and contexts, and the use of family councils and family protocols to govern the relationship between the owner family and the business.Practical implicationsFamily governance mechanisms are widely recommended by practitioners and scholars. However, they are usually adopted only by a small percentage of family firms. This study helps to better understand what family governance systems may be more appropriate in different contexts and relativize the necessity of these governance mechanisms in function of the communication needs created within each context.Social implicationsThe improvement of family governance mechanisms helps to increase the likelihood of survival and durability of family firms. These firms contribute to more than 60% of employment in most developed countries. Consequently, good governance in family firms has social implications in terms of labour conditions and stability.Originality/valueMost family firms don't use family protocols or family councils to govern the relationship between the owner family and the firm. However, little is known about the reasons for this lack of structuration of the family-firm relationship. Using social systems theory, our research contributes to better understand the conditions in which business families are more prone to use structured forms to manage this relationship, as well as the reasons that may be constraining their adoption.

No abstract

PurposeThis study explores the family governance structures that family firms employ to manage family business tensions.Design/methodology/approachBuilding on socioemotional wealth perspective and adopting a narrative methodological approach, the study analyses nine unique narratives of representatives of three Swedish family firms.FindingsThe study illustrates how the hybrid arena created between formal and informal family meetings is used as a governance structure for mitigating tensions by reinforcing family relational ties.Research limitations/implicationsBased on the findings, this study suggests how reliance on hybrid arena informs the field of family business management and governance and suggests future research directions.Practical implicationsThe findings of this study provide opportunities for family business practitioners, including owners, family members, family firm advisers and other stakeholders, to effectively manage family business tensions and foster socioemotional wealth.Originality/valueIn family firms, tensions can arise due to a desire for the preservation of socioemotional wealth. The authors show that these tensions may be managed by using informal and formal family meetings that create a hybrid arena where family members separate family and business issues and emotional and rational reactions, thereby avoiding negative emotions and creating a culture of harmony within the family.

No abstract