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Family Business Survival and the Role of Boards

Authors

  • Nick Wilson,

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    • Nick Wilson is Professor of Finance at Credit Management Research Center, Leeds University Business School, University of Leeds, Leeds, UK.
  • Mike Wright,

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    • Mike Wright is Professor of Entrepreneurship, Head of the Innovation and Entrepreneurship Group, and Director of the Center for Management Buy-out Research, Imperial College Business School, London, UK, and Visiting Professor at University of Ghent, Ghent, Belgium.
  • Louise Scholes

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    • Louise Scholes is Senior Lecturer in Entrepreneurial Management at Durham University Business School, Durham, UK.

  • Thanks to participants at the Theories of Family Firms conference in Edmonton, May 2012, for comments on an earlier draft and to Danny Miller, Isabelle Le Breton-Miller, Eric Gedajlovic, the guest editors, and two anonymous reviewers for very helpful comments.

Please send correspondence to: Nick Wilson, tel.: +44 (0)113 343 4472; e-mail: nw@lubs.leeds.ac.uk, to Mike Wright at mike.wright@imperial.ac.uk, and to Louise Scholes at louise.scholes@durham.ac.uk.

Abstract

We explore the vexing question of whether family firms are more likely to survive than nonfamily firms, focusing on the role of board composition. Utilizing a unique data set of over 700,000 private family and nonfamily firms in the U.K. during 2007–2010, we find that family firms are significantly less likely to fail than nonfamily firms. We identify the board characteristics associated with survival/failure in all firms and determine that it is these characteristics that are important in explaining the lower failure probability of family firms. We conclude with an agenda for further research on boards and family firm survival.

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