Although family firms share many aspects common to all firms, the embeddedness of business relationships in family relationships originate some unique organizational characteristics. Corporate governance is increasingly recognized as a critical organizational factor, but previous research has been mainly focused, in an agency perspective, on large publicly traded companies with dispersed ownership. A little attention has been directed to family firms that may be considered as a theoretically distinct form of governance, originating overlooked needs to develop specified agency models for owner managed or privately held firms, by recognizing their different typologies. Corporate governance has both enterprise and accountability dimensions that need to be effectively balanced to carry out the firm’s strategies. As an example, value creation may be favoured by design differences between boards able to hire skilled directors and boards focused on reducing agency conflicts. The objective of this paper is to develop understanding of how unique characteristics of family firms affect relationships between strategic dynamics and corporate governance. Furthermore, we investigate how changes in the firms’ strategic orientation, depending on differing stages of their life cycle, will require following variations in established corporate governance practices to achieve an appropriate rebalance between accountability and enterprise dimensions.Corporate governance effectiveness stems from its fit with the firm’s strategic needs, with the aim of achieving a suitable balance between accountability and enterprise dimensions. Furthermore, the role of family ownership and management will be explored, addressing how they influence the effectiveness of the corporate governance established arrangements and their conditioning on strategic decision making.Firms commonly vary their strategic orientation passing through different stages of their life cycle and these changes may require appropriate adaptations in corporate governance established practices. The agency perspective emphasizes monitoring and control, but underestimated enterprise role takes relevance along a firm’s evolutionary path, in example gaining knowledge or other resources. Understanding the association between the strategic orientation and corporate governance functions and their consistent changes along the firm’s life cycle is a useful premise to a dynamic view of corporate governance effectiveness and its contribution to value creation. Aiming to explore the value creation dimension of corporate governance, the theoretical framework underpins a resource based perspective to combine strategies and resources in a family business context. This paper develops a longitudinal case-study approach to explore key contingency factors affecting relationships between the firm’s strategic orientation and the corporate governance system along its organizational life cycle. It addresses an Italian family firm which shifted, over the last years, from crisis to growth and then went public but it still remains a family business. It represents an interesting evidence showing changes in its strategic orientation and in its corporate governance system.This paper aims to provide several contributions to the development of knowledge on corporate governance in family firms. First, it extends research on corporate governance pointing out how the value creation dimension of corporate governance, such as strategy and resource role may have become critical along the firm’s life cycle. Second, it focuses how the corporate governance mechanisms may be differently managed to fit with the strategic needs arising from the firm’s organizational life cycle. Furthermore, it explores family business specificities influencing relationships between corporate governance structures and process and the firm’s strategic orientation. In a dynamic view, it will investigate how a family firm may overcome strategic transitions by appropriately rebalancing its resources and accountability.
DI TOMA, Paolo e Stefano, Montanari. "Strategic change and corporate governance adaptation in the context of a family firm" Working paper, Dipartimento di Economia Aziendale - Università di Modena e Reggio Emilia, 2009.