Corporate board composition in family businesses: Evidence from the Czech Republic

Abstract

This paper examines the issue of board composition of family businesses which were established in the Czech Republic in the 1990s, after more than 40 years of private enterprises being forcefully suspended by the socialist regime. So far, there has been no available research investigating manufacturing sector in the Czech Republic (CR) from the perspective of board composition, i.e. the representation of external members and gender diversity, on the characteristic behaviours of the boards of family businesses and their strategic adaptability. This longitudinal study of four family businesses provides valuable information which have not yet been observed against the background of board composition in the manufacturing sector. The results of the interviews conducted in these businesses yield interesting findings about the fact that gender diversity along with the exclusive representation of family members on a corporate board has a very positive influence on strategic adaptability and an impact on the current direction of the business. The results of the study also show how family businesses fulfilling these conditions are better able to cope with negative external influences (e.g. the financial crisis).

Mapping women's involvement in family firms: A review based on bibliographic coupling analysis

“…(2016*) reveal a negative relationship between fault‐lines and both board control and service role performance. Odehnalova and Pirozek (2018*) focus on strategic adaptability, showing that gender diversity and the representation of family members on boards positively influence the strategic adaptability of the business, even in times of crisis and recession. The literature also reveals a positive impact of the presence of female directors on family firms’ risk‐taking behaviour (Mukarram et al., 2018a*; Poletti‐Hughes & Briano‐Turrent, 2019*), which contrasts with the traditional notion that women are risk averse.…”

The state of family business research in the Visegrád countries

“…, 2021, relationships with external stakeholders (Węcławski and Pernsteiner, 2019; Nikodemska-Wołowik and Bednarz, 2019; Domańska and Zajkowski, 2022) and the specifics of human resource management Horváthová et al ., 2020; Hradský, 2020; Machek, 2017. Surprisingly, only a few articles deal with the structure of the top management team or its behaviour Odehnalová and Pirožek, 2018; Bukalska et al. , 2021.…”

“…The influence of the transition economy from the perspective of the composition of the board of directors on the strategic adaptability of FBs was presented by Odehnalová and Pirožek (2018). They found in Czech cases that management boards of FBs characterised by nepotism, paternalism, a focus on sustainability, risk aversion and centralisation, were able to adapt to the environment much better than a company that did not meet these conditions.…”

“…This lack of existing patterns of continuity and organic succession makes generational succession more difficult, particularly when compared to stagnating, mature economies. Succession depends much more often on blood ties than on skills and knowledge, with family patriarchy being the dominant principle (Gashi and Ramadani, 2013;Odehnalov a and Piro zek, 2018;Ramadani et al, 2017, Motylska-Kuzma et al, 2022. Differences in this regard have been noted, particularly when compared to companies from Anglo-Saxon cultures (Gupta and Levenburg, 2017).…”

“…In particular, the low level of trust in strangers appears to be an important social factor. As a result, family ownership is highly concentrated (around 80%) (Feito-Ruiz and Menéndez-Requejo, 2022) and family members dominate management (Fotea and Echevarria, 2017; Odehnalová and Pirožek, 2018; Wieszt, 2019; Yordanova, 2016). This social attitude was not conducive to the development of FBs and sometimes created negative emotions towards family entrepreneurs.…”