Corporate governance in family businesses from Latin America, Spain and Portugal

Abstract

Purpose The purpose of this paper is to summarize what is known about corporate governance in family firms from Ibero-American countries based on published research. Methodology The authors conducted a literature search to identify the articles that have been published about the corporate governance of family firms in Latin America, Spain, and Portugal between 1980 and 2014. The authors found 38 articles that provide the sample for this review. Findings The results indicate that research on governance in Ibero-American family firms has focussed on understanding structures and processes related to the business and ownership systems. However, generalization of results across the region is difficult because of the lack of systematic approach of studies and the focus on a small number of countries. Research limitations/implications There are at least two limitations of this work: the small sample of projects identified for the review and the lack of systematic approach to research. Both of these may be due to the importance given to publishing the university context in this part of the world. As the culture of knowledge changes, the authors expect that research in this area will grow. Originality/value Although previous research indicates that cultural characteristics affect governance system choices and understanding of family firms, not many studies explore the importance of culture in governance choices of family firms. This paper provides a baseline of the understanding of governance in Ibero-American family firms, and identifies important area for future research.

Corporate governance in the largest family firms in Latin America

“…Generally speaking, while Latin America "is the second most important emerging region in the world, after Southeast Asia, with an aggregated gross domestic product (GDP) roughly that of China's and three times larger than India's" and where families play a fundamental role in the business sector, relatively little family firm research concerning the region has been published (Vassolo et al, 2011). Additionally, research on family firm governance in Latin America lacks a systematic approach with a focus on a small number of countries (Cort es and Botero, 2016).…”

The role of conflict in the adoption of governance practices in family businesses

“…The study illustrates that family governance is neglected not only by researchers as shown by Cortés and Botero (2016), but also by enterprises with advanced family life cycles. This despite the fact that, conflicts related to the family are those that produce the most destructive consequences for the family business (Ward, 2004;Dana and Smyrnios, 2010).…”

“…Concerning the leadership variable, centralized decision-making and the absence of mechanisms to guide and optimize operations lead to low profitability and the generation of a hostile work environment (Belausteguigoitia, 2012). Business alternatives are limited when new generations (Davis and Harveston, 1999;Woodfield and Husted, 2017), women (Keating and Little, 1997;Cortés and Botero, 2016) and external specialists (Briano and Poletti, 2017) are excluded from decision making. On the other hand, in an enterprise that lacks direction with defined roles and responsibilities (Kidwell et al, 2012) and performance monitoring and evaluation instruments (Vandebeek et al, 2016), there is also a lack of incentive to innovate and improve efficiency of operations in the different areas.…”

“…Corporate governance was originally conceived to manage the relationship between ownership and business in non-family businesses; however, its implementation has been extended to the family business, ignoring that family business contexts require a broader vision that includes family governance (Cortés and Botero, 2016). The complexity of family businesses gives rise to different conflicts, yet family and corporate governance can aid in mitigating or avoiding them (Brenes et al, 2011;Suess, 2014;Kubíček and Machek, 2020), in favour of the harmony between family members, financial performance and the preservation of family wealth (Bammens et al, 2008;Siebels and Knyphausen, 2011).…”

Timely reporting and family ownership: the Portuguese case

“…Vieira (2016) mentions that family businesses represent about 60 per cent of firms listed in the Portuguese capital market. Family firms may account for 80 to 85 per cent of the Portuguese firms, generating over 75 per cent of new jobs and contributing with over 70 per cent of the GDP (Cortés and Botero, 2016). The Portuguese setting, in which family firms constitute not only a significant proportion of listed firms, but also of the Portuguese firms in general, may lead to different results from those obtained in countries where the contribution of family firms to the economy is less important.…”