The role of the board of directors in the value creation process and performance of family businesses

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Abstract

An important feature of family firms is that the controlling shareholders normally aim to maintain their investment in the long term. The theme of performance stability might be of great importance for a family firm’s survival over time. We hypothesize that family firm owner-managers are likely to choose as board members those outsiders who are able to help the firm overcome problems of performance stability over time. We then test the hypotheses through empirical analysis. Our findings suggest that the number of independents on the board of a family firm has no impact on performance stability. Instead, we find that interlocking directors can provide a significant contribution to the achieving of lower performance variability.

Keywords: Performance Variability, Board of Directors, Corporate Governance, Family Firm

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G32, L10, M21

Received: 05.08.2023
Accepted: 06.10.2023
Published online: 11.10.2023

How to cite this paper: Napoli, F. (2023). The role of the board of directors in the value creation process and performance of family businesses. Business Performance Review, 1(1), 8–21. https://doi.org/10.22495/bprv1i1p1