This paper explores the relationship between family governance practices and financial performance of the business and family assets of business-owning families. A business-owning family that shares a focus on preserving and growing wealth as a family is defined as the enterprising family. Results of the study are consistent with predictions about the functioning of the enterprising family derived from research using social capital theory and group dynamics, especially with respect to teams. Family governance practices (family constitution, family code of conduct, clear selection and accountability criteria, family council, formal family communication mechanisms and family reunions) are hypothesized to build a strong and unified business-owning family functioning as a team. Results show that these practices are positively associated with financial performance. This relationship is mediated by a focus on preserving and growing business wealth as a family. Analyses are conducted on a sample of 64 family businesses from 18 countries.
Small Business Economics – Springer Journals
Published: Mar 9, 2010
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