The substitution of governance mechanisms in the evolution of family firms

Abstract

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Researching Family Business Growth

“…In addition, governance in family firms is much more complex compared to their non‐family counterparts because of the coexistence of business, ownership and family subsystems that all have their own governance mechanisms which may interact with each other (Suess, 2014). For example, the governance of the family subsystem consists of voluntary mechanisms such as a family council and a family constitution (Suess, 2014), which can even be substitutes for the corporate governance mechanisms of the firm such as the board of directors (Van Aaken et al ., 2017). As the family council serves as a forum to develop policies and (growth) strategies that reflect the family's long term objectives, which may be written down in a family constitution (Suess, 2014), it is important to understand how the interactions between family involvement in the TMT and family governance mechanisms influence the subsequent growth rate of the firm.…”

Monitor or Advise? How Family Involvement Affects Supervisory Board Roles in Family Firms

“…Although there is a long debate about the definition, characteristics, and number of board roles (Minichilli et al 2012), the majority of the literature that deals with the working of the boardroom finds two board roles: monitoring and advisory (e.g., Corbetta and Salvato 2004;Finkelstein et al 2009;Hillman et al 2000;Hillman and Dalziel 2003;Zattoni et al 2015). We follow van den Heuvel et al (2006) as well as van Aaken et al (2017) and aggregate groups of interrelated board tasks to board roles. Thereby, board tasks are sub-activities that boards fulfill within their board roles.…”

Coupling Family Business Research with Organization Studies: Interpretations, Issues and Insights

“…The active involvement of members of the controlling family introduces different types of power and discretionary activities that may have substantial effects on how CEO duality plays out. For example, a family CEO might be less at risk of self-serving behaviour due to his or her embeddedness in family structures and might thus need less board monitoring to rein him or her in (van Aaken, Rost, & Seidl, 2017). This may, in turn, reduce the negative effects of CEO duality while allowing the positive aspects to play out more strongly.…”