Board Composition and Family Firms’ Profitability. Do Generational Stage and Performance Level Matter?
International Journal of Economic Behavior, vol. 10, n. 1, 2020, 3-13
This article examines the relationship between board composition and family firms’ performance. Namely, by adopting the theoretical framework of socio-emotional wealth and analyzing a sample of Italian medium-sized family firms, we investigate how the presence of non-family directors affects their financial performance, considering the generational stage as a moderating variable. Findings suggest that a higher presence of non-family directors has a less positive effect on first-generation family firms than in later generations of family firms. Furthermore, by adopting a quantile regression, results show that this effect is more striking in low-performing family businesses than in high.
Keywords: Family Businesses; Board of directors; Firm performance; Non-family directors; Corporate governance; Generational stage; First-generation family firms; Quantile regression
Anderson, R.C., & Reeb, D.M. (2004). Board composition: balancing family influence in S&P 500 firms. Administrative Science Quarterly, 49(2), 209-237.
Ansari, I. F., Goergen, M., & Mira, S. (2014). The determinants of the CEO successor choice in family firms. Journal of Corporate Finance, 28, 6-25.
Arosa, B., Iturralde, T., & Maseda, A. (2010). Outsiders on the board of directors and firm performance: Evidence from Spanish non-listed family firms. Journal of Family Business Strategy, 1(4), 236-245.
Arrondo-García, R., Fernández-Méndez, C., & Menéndez-Requejo, S. (2016). The growth and performance of family businesses during the global financial crisis: The role of the generation in control. Journal of Family Business Strategy, 7(4), 227-237.
Arzubiaga, U, Kotlar, J., De Massis, A., Maseda, A., & Iturralde, T. (2018). Entrepreneurial orientation and innovation in family SMEs: Unveiling the (actual) impact of the Board of Directors. Journal of Business Venturing, 33(4), 455-469.
Astrachan, J. H., & Jaskiewicz, P. (2008). Emotional returns and emotional costs in privately held family businesses: Advancing traditional business valuation. Family Business Review, 21(2), 139-149.
Bammens Y., Voordeckers, W., & Van Gils A. (2011). Boards of directors in family businesses: a literature review and research agenda. International Journal of Management Reviews, 13(2), 134-152.
Barontini, R., & Caprio, L. (2006). The effect of family control on firm value and performance: Evidence from continental Europe. European Financial Management, 12(5), 689-723.
Basco, R., & Voordeckers, W. (2015). The relationship between the board of directors and firm performance in private family firms: A test of the demographic versus behavioral approach. Journal of Management & Organization, 21(4), 411-435.
Bassani, G., & Cattaneo, C. (2020), Professionalization and managerialization in family firms: A still open issue. In Leotta A. (ed.) Management Controlling and Governance of Family Businesses: Theoretical Insights and Empirical Evidence from Italy. Switzerland: Springer.
Berrone, P., Cruz, C., & Gómez-Mejía, L.R. (2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Family Business Review, 25(3), 258-279.
Blanco-Mazagatos, V., De Quevedo-Puente, E., & Delgado-García, J. B. (2016). How agency conflict between family managers and family owners affects performance in wholly family-owned firms: A generational perspective. Journal of Family Business Strategy, 7(3), 167-177.
Breton‐Miller, L., & Miller, D. (2009). Agency vs. stewardship in public family firms: A social embeddedness reconciliation. Entrepreneurship Theory and Practice, 33(6), 1169-1191.
Breton‐Miller, L., & Miller, D. (2013). Socioemotional wealth across the family firm life cycle: A commentary on “Family Business Survival and the Role of Boards”. Entrepreneurship Theory and Practice, 37(6), 1391-1397.
Calabrò, A., Torchia, M., Jimenez, D. G., & Kraus, S. (2020). The role of human capital on family firm innovativeness: the strategic leadership role of family board members. International Entrepreneurship and Management Journal. https://doi.org/10.1007/s11365-020-00657-y.
Cavaco, S., Crifo, P., Rebérioux, A., & Roudaut, G. (2017). Independent directors: Less informed but better selected than affiliated board members? Journal of Corporate Finance, 43, 106-121.
Cesaroni, F. M., Chamochumbi, D., & Sentuti, A. (2017). Firm performance and economic crisis: Family versus non-family businesses in Italy. African Journal of Business Management, 11(11), 229-240.
Chua, J.H., Chrisman, J.J., & Sharma, P. (1999). Defining the family firm by behavior. Entrepreneurship Theory and Practice, 23(4), 19-39.
Chua, J. H., Chrisman, I. J., Steier, I. P., & Rau, S. B. (2012). Sources of heterogeneity in family firms: An introduction. Entrepreneurship Theory and Practice, 36(6), 1103-1113.
Ciambotti, M., & Palazzi, F. (2015). Medie imprese italiane: un'indagine sui valori d’impresa. Piccola Impresa/Small Business, (1), 10-30.
Clarysse, B., Knockaert, M., & Lockett, A. (2007). Outside Board Members in High Tech Start-ups. Small Business Economics, 29(3), 243-259.
Collin, S. O. Y., & Ahlberg, J. (2012). Blood in the boardroom: Family relationships influencing the functions of the board. Journal of Family Business Strategy, 3(4), 207-219.
Coltorti, F., Resciniti, R., Tunisini, A., & Varaldo, R. (Eds.) (2013). Mid-sized Manufacturing Companies: The New Driver of Italian Competitiveness. Switzerland: Springer.
Conyon, M. J., & He, L. (2017). Firm performance and boardroom gender diversity: A quantile regression approach. Journal of Business Research, 79, 198-211.
Corbetta, G., Minichilli, A., Quarato, F. (2015). Observatory on all the medium-sized and large family controlled companies in Italy, Bocconi University.
Corbetta, G., Minichilli, A., & Quarato, F. (2017). Observatory on all the medium-sized and large family controlled companies in Italy, Bocconi University.
Corbetta, G., & Salvato, C. A. (2004). The board of directors in family firms: One size fits all? Family Business Review, 7(2), 119-134.
Cruz, C., & Nordqvist, M. (2012), Entrepreneurial orientation in family firms: a generational perspective. Small Business Economics, 38(1), 33-49.
Cucculelli, M., & Micucci, G. (2008). Family succession and firm performance. Evidence from Italian family firms. Journal of Corporate Finance, 14, 17-31.
Cucculelli, M., Le Breton-Miller, I., & Miller, D. (2016). Product innovation, firm renewal and family governance. Journal of Family Business Strategy, 7(2), 90-104.
Daspit, J. J., Chrisman, J. J., Sharma, P., Pearson, A. W., & Mahto, R. V. (2018). Governance as a Source of Family Firm Heterogeneity. Journal of Business Research, 84, 293-300.
Dolenc, P., Grum, A., & Laporsek, S. (2012). The effect of financial/economic crisis on firm performance in Slovenia-A micro level, difference-in-differences approach. Montenegrin Journal of Economics, 8(2), 207-222.
Fernández-Temprano, M. A., & Tejerina-Gaite, F. (2020). Types of director, board diversity and firm performance. Corporate Governance: The International Journal of Business in Society, 20(2), 324-342.
Ferreira, D. (2010). Board diversity. In: Anderson, R., Baker, H.K. (Eds.), Corporate Governance: A Synthesis of Theory, Research, and Practice, 225-242. Hoboken, NJ: John Wiley & Sons.
Gabrielsson, J. (2007). Boards of directors and entrepreneurial posture in medium-size companies: Putting the board demography approach to a test. International Small Business Journal, 25(5), 511-537.
Gabrielsson, J., & Huse, C. (2005). Outside directors in SME board: A call for theoretical reflections. Corporate Board: Roles, Duties & Composition, 1(1), 28-37.
García, A. M., Jainaga, T. I., de Castro, G. A., Boulkeroua, L., & Cooper, S. (2019). Family board ownership, generational involvement and performance in family SMEs: a test of the S-shaped hypothesis. European Journal of Management and Business Economics, 28(3), 285-300.
Garcia-Castro, R., & Aguilera, R. V. (2014). Family involvement in business and financial performance: A set-theoretic cross-national inquiry. Journal of Family Business Strategy, 5(1), 85-96.
García-Ramos, R., Díaz-Díaz, B., & García-Olalla, M. (2017). Independent directors, large shareholders and firm performance: the generational stage of family businesses and the socioemotional wealth approach. Review of Managerial Science, 11(1), 119-156.
Gersick, K. E., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business. Boston, MA: Harvard Business School Press.
Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms. Academy of Management Annals, 5(1), 653-707.
Gómez, M., Isaac, J., Gómez Betancourt, G. E., & Betancourt Ramírez, J. B. (2016). Board of director in the family business and its impact on socioemotional wealth. Revista Espacios. Retrieved from http://repositorio.cuc.edu.co/handle/11323/1142
Gomez-Mejia, L. R., Makri, M., & Larraza Kintana, M. (2010). Diversification decisions in family-controlled firms. Journal of Management Studies, 47(2), 223-252.
Gottardo, P., & Moisello, A. M. (2017). Socioemotional wealth and probability of financial distress. African Journal of Business Management, 11(13), 285-292.
Granata, D., & Chirico, F. (2010). Measures of value in acquisitions: family versus nonfamily firms. Family Business Review, 23(4), 341-354.
Gόmez-Mejia, L. R., Haynes, K. T., Nunez-Nickel, M., Jacobson, K. J. L., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52(1), 106-137.
Hoy, F., & Sharma, P. (2010). Entrepreneurial family firms. New York, NY: Prentice Hall.
Huse, M. (2005). Accountability and creating accountability: a framework for exploring behavioural perspectives of corporate governance. British Journal of Management, 16 (Suppl.), 65-79.
Iacono, M. P., Martinez, M., Mercurio, L., & Mangia, G. (2013). Exploring the relationship between governance, Power of control and organizational conflict: a survey on small and medium Italian family firms. Piccola Impresa/Small Business, (1), pp. 33-55
Kellermanns, F. W., Eddleston, K. A. (2006). Corporate Entrepreneurship in Family Firms: A Family Perspective, Entrepreneurship theory and practice, 30(6), 809-830.
Kellermanns, F. W., Eddleston, K. A., Sarathy, R., & Murphy, F. (2012). Innovativeness in family firms: a family influence perspective. Small Business Economics, 38(1), 85-101.
Koenker, R., & Gilbert, B. (1978). Regression quantiles. Econometrica, 46(1), 33-50.
Kowalewski, O., Talavera O., & Stetsyuk, I. (2010). Influence of family involvement in management and ownership on firm performance. Family Business Review, 23(1) 45-59.
Lane, S., Astrachan, J., Keyt, A., & McMillan, K. (2006). Guidelines for family business boards of directors. Family Business Review, 19(2), 147-167.
Lee, J. (2006). Family firm performance: Further evidence. Family Business Review, 19 (2), 103-114.
Maseda, A., Iturralde, T., Arosa, B. (2015). Impact of Outsiders on Firm Performance over Different Generations of Family-Owned SMEs. Journal of Small Business Management, 53(4), 1203-1218.
Mazzi, C. (2011). Family business and financial performance: Current state of knowledge and future research challenges. Journal of Family Business Strategy, 2(3), 166-181.
Mazzola, P., Sciascia, S., & Kellermanns, F. W. (2013). Non-linear effects of family sources of power on performance. Journal of Business Research, 66(4), 568-574.
Mediobanca & Unioncamere (2015). Le medie imprese industriali italiane 2005-2014, Mediobanca Ufficio Studi.
Minichilli, A., Brogi, & M., Calabrò A. (2016). Weathering the storm: Family ownership, governance, and performance through the financial and economic crisis. Corporate Governance: An International Review, 24(6), 552-568.
Minichilli, A., Corbetta, G., & MacMillan, I. (2010). Top management teams in family controlled companies: ‘Familiness’, ‘faultliness’, and their impact on financial performance. Journal Management Studies, 47(2), 205-222.
Minichilli, A., Zattoni, A., & Zona, F. (2009). Making boards effective: An empirical examination of board task performance. British Journal of Management, 20(1), 55-74.
Muñoz-Bullon, F., Sanchez-Bueno, M. J., & Suárez-González, I. (2017). Diversification decisions among family firms: The role of family involvement and generational stage. Business Research Quarterly, 21(1), 39-52.
Mussolino, D., & Calabrò, A. (2014). Paternalistic leadership in family firms: Types and implications for intergenerational succession. Journal of Family Business Strategy, 5(2), 197-210.
Mustapha, Y. I., & Nafiu, A. I. (2017). Relationship Between Board Structure Variables And Performance Of Listed Manufacturing Firms In Nigeria. The International Journal of Economic Behavior-IJEB, 7(1), 131-147.
Myers, R.H. (1990). Classical and modern regression with applications, 2nd ed. PWS-Kent, Boston.
Naldi, L., Cennamo, C., Corbetta, G., & Gómez-Mejía, L. (2013). Preserving Socioemotional Wealth in Family Firms: Asset or Liability? The Moderating Role of Business Context. Entrepreneurial Theory Practice, 37(6), 1341-1360.
Nordqvist, M., Sharma, P., & Chirico, F. (2014). Family firm heterogeneity and governance: A configuration approach. Journal of Small Business Management, 52(2), 192-209.
O’Boyle Jr E.H., Pollack J.M., & Rutherford, M.W. (2012). Exploring the relation between family involvement and firms financial performance: A meta-analysis of main and moderator effects. Journal Business Venturing, 27(1), 1-18.
Poletti-Hughes, J., & Briano-Turrent, G. C. (2019). Gender diversity on the board of directors and corporate risk: A behavioural agency theory perspective. International Review of Financial Analysis, 62, 80-90.
Sacristan-Navarro, M., Gomez-Anson, S., & Cabeza-Garcia, L. (2011). Family ownership and control, the presence of other large shareholders, and firm performance: Further evidence. Family Business Review, 24(1), 71-93.
Samara, G., Jamali, D., & Lapeira, M. (2019). Why and how should SHE make her way into the family business boardroom? Business Horizons, 62(1), 105-115.
Sandu, P. (2019). A framework of family business professionalization. International Journal of Entrepreneurship, 23(1), 1-8.
Sciascia, S., & Mazzola, P. (2008). Family involvement in ownership and management: Exploring nonlinear effects on performance. Family Business Review, 21(4), 331-345.
Sciascia, S., Mazzola, P., Astrachan, J. H., & Pieper T., M. (2013). Family Involvement in the Board of Directors: Effects on Sales Internationalization. Journal of Small Business Management, 51(1), 83-99.
Sciascia, S., Mazzola, P., Astrachan, J. H., & Pieper, T. M. (2012). The role of family ownership in international entrepreneurship: Exploring nonlinear effects. Small Business Economics, 38(1), 15-31.
Sciascia, S., Mazzola, P., & Chirico, F. (2013). Generational involvement in the top management team of family firms: exploring nonlinear effects on entrepreneurial orientation. Entrepreneurship. Theory and Practice, 37(1), 69-85.
Sciascia, S., Mazzola, P., & Kellermanns, F. W. (2014). Family management and profitability in private family-owned firms: Introducing generational stage and the socioemotional wealth perspective. Journal of Family Business Strategy, 5(2), 131-137.
Sentuti, A., Cesaroni, F.M., Bassani G., & Cattaneo, C. (2020), Beyond the founder. Which conditions can favor or hinder the professionalization of family firms? In Leotta A. (ed.) Management Controlling and Governance of Family Businesses: Theoretical Insights and Empirical Evidence from Italy. Switzerland: Springer.
Songini, L., Morelli, C., Gnan, L., & Vola, P. (2015). The why and how of managerialization of family businesses: evidences from Italy. Piccola Impresa/Small Business, (1), 86-118.
Terjesen, S., Sealy, R., & Singh, V. (2009). Women directors on corporate boards: A review and research agenda. Corporate Governance: An International Review, 17(3), 320-337.
Umans, I., Lybaert, N., Steijvers, T., & Voordeckers, W. (2020). Succession planning in family firms: family governance practices, board of directors, and emotions. Small Business Economics, 54(1), 189-207.
Voordeckers, W., Van Gils, A., & Van den Heuvel, J. (2007). Board composition in small and medium-sized family firms. Journal of Small Business Management, 45(1), 137-156.
Westhead, P., & Howorth, C. (2006). Ownership and management issues associated with family firm performance and company objectives. Family Business Review, 19(4), 301-316.
Wright, M., & Kellermanns, F. W. (2011). Family firms: A research agenda and publication guide. Journal of Family Business Strategy, 2(4), 187-198.
Zellweger, T. M., Eddleston, K. A., & Kellermanns, F. W. (2010). Exploring the concept of familiness: Introducing family firm identity. Journal of Family Business Strategy, 1(1), 54-63.
Zellweger, T. (2017). Managing the family business: Theory and practice. Cheltenham, UK: Edward Elgar Publishing.
L'opera è pubblicata sotto Licenza Creative Commons -CC Attribution-ShareAlike 4.0