Developing Governance Research: Family Business Idiosyncrasies
Special issue call for papers from Journal of Family Business Management
Family Business Governance: Role, relevance and impact
Rebecca Fakoussa, Kingston University, UK; Céline Barrédy, Associate Professor, University Montesquieu Bordeaux IV, France; Esra Memili, Assistant Professor of Entrepreneurship, The Bryan School of Business and Economics, The University of North Carolina, Greensboro, USA; Manisha Singal, Assistant Professor, Hospitality and Tourism Management, Virginia Tech, USA.
Call for Papers:
The Journal of Family Business Management aims to provide a wide ranging forum for the inter-disciplinary discussion and information exchange on family business related topics, with the aim of advancing both conceptual development and application of empirical methodologies, leading to an improvement in our understanding of family businesses.
Recognizing that family businesses count between 80% and 98% of all the business in world’s free economy and create between 49% and 75% of GDP according the country (Poza, 2013) , this call for papers invites submissions for a special issue entitled, to be guest co-edited by an international team Rebecca Fakoussa (Kingston University, UK) Associate Professor Céline Barrédy (University of Bordeaux, France), Assistant Professor Esra Memili (University of North Carolina-Greensboro, USA) and Assistant Professor Manisha Singal (Pamplin College of Business, Virginia Tech, USA).
Family firms are the most dominant ownership form in the world (Poza, 2013 ; Burkart, Panunzi, & Shleifer, 2003). Further, in developing markets and emerging economies, their footprint is much larger than in the developed world. Family involvement leads to the pursuit of particularistic goals and strategies (Carney, 2005). Globally, corporate governance is the way in which the relations between owners and managers are organised in firms (Morck, 2007 ). Governance in family business “refers to the ability to optimally discipline and control the nature of the relationship between family members, shareholders, and managers in such a way that the enterprise prospers and the family promotes and protects its unity—as much for the family’s sake as for the company’s, given that family unity represents a source of value that can be translated into competitive advantage” (Poza, 2013; Poza et al., 2004 ). Thus governance in family firms is expected to be distinct and different from that in non-family firms.
According to the Institute for Family Business , family businesses must manage two facets of governance - (a) Corporate governance, covering the direction of business operations, and (b) family governance, providing a framework of rules that define family members' roles and responsibilities, and how the family interacts with their business. Then, different tools could be developed along family business life to create the match between the family and the company in a value creation perspective, both for the family and the business. Part of the corporate governance, is the board functioning.
“The determination of the broad uses to which organizational resources will be deployed and the resolution of conflicts among the myriad participants in organizations” (Daily et al., 2003b: 371). According to Gourevitch and Shinn (2005), corporate governance encompasses both the structure of power within each firm that determines allocation of money (i.e., who gets the cash flow, who allocates jobs, who decides on research and development, on mergers and acquisitions, in hiring and firing CEOs, on subcontracting to suppliers, on distributing dividends or buying back shares or investing in new equipment) and responsibility (i.e., who is liable for wrongdoing, misuse of funds, or poor performance). Accordingly, Gedajlovic et al. (2004: 910) define governance as “a system of incentives, authority relations, and norms of legitimacy”.
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community. Corporate governance is the analysis of the family business value creation and value distribution among different family business stakeholders. The corporate governance issue deals with arrangements between the family and the business and its evolution along generations and transfers processes.
Family governance is distinguished by the unification of ownership and control (Carney, 2005). The extent and nature of ownership required to establish effective control depend upon the institutional context in which a firm is located. In some contexts, effective control may require an absolute majority of voting stock to be concentrated in the hands of the family. In other contexts, such as publicly-traded firms, the use of dual-class shares may allow substantial control at even relatively lower levels of equity ownership.
"The focus of family governance should be to find consensus on matters where owners' wishes matter most, as well as to provide family members with a shared sense of identity and mission that transcends their individual interests in the business.… While every family business is unique, embracing systematic governance processes can help any family business achieve goals shared by virtually all: orderly decision making, peaceful continuity, and the freedom to make decisions based on the highest and best purposes of both the business and the family. "
(Aronoff and Ward, 2011:84)
The ownership, control, and governance of corporations has wide ranging implications for the national and global economic environment. Despite the common feature of transgenerational ownership, the heterogeneity of family firms in terms of age, size, life-cycle, and nature and the extent of ownership and the diversity of contexts in which they are embedded like countries, institutional and social background often make it difficult to understand the various motivations and influences of governance mechanisms in family firms. Governance scholars stress the need for research on other governance mechanisms besides ownership and management, such as current practices in board composition, or duties and functions of boards (Pye and Pettigrew, 2005). Furthermore little is known about the impact, relevance and effectiveness of many espoused mechanisms for family business governance, i.e. family councils, family retreats.
Why is a special issue on Governance topics in Family Businesses important?
‘Governance’ of family firms represents a growing research area that differs from corporate governance of non-family corporations because the owner and family members may perform multiple roles in the business, relationships between key stakeholders are enduring, and the shares of family firms are, to a degree, illiquid (Benavides-Velasco, 2013). Corporate governance as a research topic has assumed great importance due to, not only multi-disciplinary interest from scholars in diverse fields such as finance, law, ethics, and strategy, but also its wide implications for business, politics and society.
With this call, we seek to understand the macro-processes as well as the micro-processes and behavioural antecedents that may explain individual and team actions that govern the management of the family firm.
Theoretical, empirical, and practice-based papers are invited for this special issue that explore various aspects of governance within family businesses and in particular which may focus on the practice of governance and the impact and effect of governance mechanisms and approaches. Manuscripts are especially welcome in areas such as:
• Differences between publicly-traded family firms and non-family firms in terms of corporate governance
• Family governance idiosyncrasies (e.g. socioemotional wealth, family life-cycle, family retreats, family meetings, favouritism/nepotism, and succession) in the corporate arena
• Family governance in corporations and organizational outcomes such as firm strategies (e.g. internationalization, financial engineering, or innovation), behaviour (e.g. value creation), performance, and shareholder value.
• Corporate governance structure and organization in publicly-traded family firms (e.g. CEO duality, board independence, TMT and board composition, advisory board, family council, family constitution, codes of conduct, etc.)
• Decision-making processes in corporate governance in family firms and its evolution through family business life-cycle.
• Agency, Stewardship and other theories of family firm governance
• Effectiveness and impact of family governance structures and methods, e.g. family councils.
Given the diverse nature of family businesses in the global context, it is likely that scholars may be working in areas not specified above. All types of methodologies of research are welcome, quantitative and qualitative. Case studies or other forms of qualitative, analytical research or setting with inductive data analysis (Creswell, 2013) may be particularly useful in building theory in family firm governance. (see McNulty, Zattoni and Douglas, 2013).
For further information or to enquire as to the appropriateness of a topic for this special issue, please contact Rebecca Fakoussa – [email protected], Esra Memili – [email protected], Céline Barrédy – [email protected] or Manisha Singal –[email protected]. All submissions must be made through the on-line portal for the Journal of Family Business Management.
Full papers submission deadline is Friday February 27th 2015. Submit this via scholarone: http://mc.manuscriptcentral.com/jfbm
Final acceptances will be made by 27th April 2015.