Family Business Performance from a Governance Perspective: A Review of Empirical Research

Authors

  • Julio Pindado,

    Corresponding author
    1. Department of Business Administration, Universidad de Salamanca, Salamanca, Spain
    2. Family Business Centre, Universidad de Salamanca, Salamanca, Spain
    3. Leeds University Business School, University of Leeds, Leeds, UK
    Search for more papers by this author
  • Ignacio Requejo

    1. Department of Business Administration, Universidad de Salamanca, Salamanca, Spain
    2. Family Business Centre, Universidad de Salamanca, Salamanca, Spain
    Search for more papers by this author

  • The authors would like to thank Herman Aguinis, Kevin Keasey, the editor Oswald Jones and three anonymous referees for comments and suggestions on previous versions of this paper. The authors are also grateful to the Research Agency of the Spanish Government, DGI (Grant ECO2010-20741), and Regional Government of Castilla y Leon (Grant SA382A11) for financial support. Pindado acknowledges the financial support from the Education Ministry at the Regional Government of Castilla y Leon (Grant GR144). All errors are our own responsibility.

Abstract

Given the complexity of the family business phenomenon, empirical research has still reached no consensus on whether family control is beneficial or detrimental to firm performance. To shed new light on this issue, this paper covers more than 350 articles published in 37 top finance and management journals. More specifically, it provides an in-depth analysis of the family business governance system in three steps. First, after examining the various family business definitions and measures of performance used in empirical research, the authors discuss the findings on the direct effect of family control on performance in different geographical regions. Second, the authors pay special attention to the choice of ownership structures by business families and analyse how family owners influence strategic decisions faced by their corporations, including the succession process. Finally, the authors explore the interaction of family control with other governance devices to gain a better understanding of family firms' corporate decision-making and performance. The holistic approach highlights the need to contemplate the multiple relations that exist among the various governance dimensions of family firms to explain their unique performance. In addition to enhancing understanding of family business conduct, the authors emphasize the need to go beyond the borders of the family firm to identify its external antecedents and consequences. By integrating the finance and management perspectives and analysing the theoretical frameworks and methodologies used in these disciplines, the review highlights the need for interdisciplinary collaboration to advance family business research and thus to consolidate it as a distinctive academic field.

Ancillary