Business & Management Studies, Trending Research

Dynamics of corporate governance mechanisms – family firms’ performance relationship- a meta-analytic review

Dynamics of corporate governance mechanisms - family firms’ performance relationship- a meta-analytic review

The results provide deeper insights into effective corporate governance for family firms and concrete suggestions for equipping the board with suitable attributes to enhance firm performance.

Authors

Sumedha Chauhan, Professor, Jindal Global Business School, O.P. Jindal Global University, Sonipat, Haryana, India.

Parul Gupta, Management Development Institute Gurgaon, Sector17, Gurugram, Haryana, India.

Summary

The corporate board is considered an effective corporate governance mechanism (CGM) of family firms (FF), playing a critical monitoring role and enhancing FF performance. FF and corporate governance (CG) literature, however, shows mixed opinions about the relationship between various board attributes and its impact on FF performance.

FFs are, in general, quite different from non-FFs in their ownership structures, family shareholders’ involvement and control on the board, and the implications of the agency problem.

Therefore, the association between governance mechanisms (in the form of board attributes) and FF performance is not null. The present study aims to provide a clearer understanding of the relationships between board attributes and FF performance by performing a meta-analysis of 47 recent empirical publications in varying contextual settings.

Although results indicated that several board attributes have significant relationships with FF performance, variations in their strength and direction were reported in two contextual settings: country culture and the legal origin of the firm.

Our results provide deeper insights into effective CG for FFs and concrete suggestions for equipping the board with suitable attributes to enhance firm performance. This study explains why managers should consider contextual settings when making decisions about an FFs’ board structure.

Published in: Journal of Business Research

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