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The adoption of governance mechanisms in family businesses: an institutional lens

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dc.contributor.author Parada, Maria Jose
dc.contributor.author Gimeno, Alberto
dc.contributor.author Samara, Georges
dc.contributor.author Saris, Willem E.
dc.date.accessioned 2021-04-27T08:09:16Z
dc.date.available 2021-04-27T08:09:16Z
dc.date.issued 2020
dc.identifier.citation Parada MJ, Gimeno A, Samara G, Saris W. The adoption of governance mechanisms in family businesses: an institutional lens. Journal of Family Business Management. 2020 Apr 29:1-18. DOI: 10.1108/JFBM-07-2019-0054
dc.identifier.issn 2043-6238
dc.identifier.uri http://hdl.handle.net/10230/47222
dc.description Data de publicació electrónica: 29-04-2020
dc.description.abstract Purpose Despite agreement on the importance of adopting governance structures for developing competitive advantage, we still know little about why or how governance mechanisms are adopted in the first place. We also acknowledge that family businesses with formal governance mechanisms in place still resort to informal means to make decisions, and we lack knowledge about why certain governance mechanisms are sometimes, but not always, effective and functional. Given these research gaps, and drawing on institutional theory, we aim to explore: How are governance structures adopted and developed in family firms? Once adopted, how do family businesses perceive these governance structures? Design/methodology/approach Using Mokken Scale Analysis, a method suitable to uncover patterns/sequences of adoption/acquisition over time, we analyze a dataset of 1,488 Spanish family firms to explore if there is a specific pattern in the implementation of governance structures. We complement the analysis with descriptive data about perceived usefulness of such structures. Findings Our findings highlight two important issues. Family businesses follow a specific process implementing first business governance (board of directors, then executive committee), followed by family governance (family council then family constitution). We suggest they do so in response to institutional pressures, given the exposure they have to business practices, and their need to appear legitimate. Despite formal adoption of governance structures, family businesses do not necessarily consider them useful. We suggest that their perception about the usefulness of the implemented governance structures may lead to their ceremonial adoption, resulting in a gap between the implementation and functionality of such structures. Research limitations/implications Our article contributes to the family business literature by bringing novel insights about implementation of governance structures. We take a step back to explain why these governance mechanisms were adopted in the first place. Using institutional theory we enrich governance and family business literatures, by offering a lens that explains why family businesses follow a specific process in adopting governance structures. We also offer a plausible explanation as to why governance structures are ineffective in achieving their theorized role in the context of family businesses, based on the family's perception of the unusefulness of such structures, and the concept of ceremonial adoption. Practical implications There is no single recipe that can serve the multiple needs of different family businesses. This indicates that family businesses may need diverse levels of development and order when setting up their governance structures. Accordingly, this study constitutes an important point of demarcation for practitioners interested in examining the effectiveness of governance structures in family firms. We show that an important pre-requisite for examining the effectiveness of governance structures is to start by investigating whether these structures are actually being used or are only adopted ceremonially. Originality/value Our paper expands current knowledge on governance in family firms by taking a step back hinting at why are governance structures adopted in the first place. Focusing on how governance is implemented in terms of sequence is novel and relevant for researcher and practitioners to understand how this process unfolds. Our study uses institutional theory, which is a strong theory to support the results. Our paper also uses a novel method to study governance structures in family firms.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Emerald
dc.relation.ispartof Journal of Family Business Management. 2020 Apr 29:1-18
dc.rights © Maria Jose Parada, Alberto Gimeno, Georges Samara and Willem Saris. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial & non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/ legalcode.
dc.rights.uri http://creativecommons.org/licences/by/4.0/
dc.title The adoption of governance mechanisms in family businesses: an institutional lens
dc.type info:eu-repo/semantics/article
dc.identifier.doi http://dx.doi.org/10.1108/JFBM-07-2019-0054
dc.subject.keyword Family business
dc.subject.keyword Governance
dc.subject.keyword Institutional theory
dc.subject.keyword Institutional pressures
dc.subject.keyword Ceremonial adoption
dc.rights.accessRights info:eu-repo/semantics/openAccess
dc.type.version info:eu-repo/semantics/publishedVersion

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