The board of directors as a part of family business governance – multilevel participation and board development

Abstract

In this study, I examine the board of directors as a part of family business governance. Both
\nboards and governance have increased their attractiveness as a research topic lately. Research
\non boards has concentrated mostly on the study of different board attributes, like composition,
\nand the relationship of these attributes to the firm’s performance. Family business governance
\nstudies are criticized for ignoring the multifaceted needs of companies. More research
\nobserving the context and contingencies affecting the governance and board of directors
\nis needed.
\nThe objective of this study is to clarify: 1) how the board participates in family business governance,
\nand 2) how the board develops along with the firm’s and family’s development. The
\nstudy is implemented as qualitative research, and the longitudinal process approach has been
\nused as it provides the opportunity to examine development in context. Selection criteria for
\nthe two cases selected for this study are: active board of directors, at least one implemented
\nsuccession, and interviewees available from two generations and from different positions in
\nthe firm. The data consists of interviews and secondary data, and it is collected from different
\ndata sources. The analysis was done selecting first some critical events from both cases to
\ncloser examination, and analysing them by using content analysis technique.
\nSeveral conclusions were drawn basing on the findings. First, the family business board participates
\nin the firm’s activities much more widely than it is customary to think. Second, the
\nfamily business board is not a static part of the business, but it develops and it has to develop
\nfor different reasons. Third, ownership is not only the basis for the board’s activities or existence,
\nbut the relationship between the board and ownership is two-way. The board contributes
\nto a large extent to the ownership decisions, and in this way to the management of ownership.
\nFourth, according to the cases, the board has many unrecognized possibilities to facilitate
\nsuccession in family firms.