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

Abstract

PurposeLittle is known regarding triggers in the adoption of governance practices within family businesses. Enterprises can implement governance practices to avoid re-arising conflicts lived in the past. Moreover, the type of conflicts experienced can determine the order in which different types of governance practices are adopted, another issue that requires further investigation. To address these knowledge gaps, this study gathers evidence into how the adoption of governance practices is linked to the conflicts experienced in family businesses and how this adoption evolves.Design/methodology/approachA multiple case study was conducted with 15 family businesses in the agricultural sector. The conflicts experienced throughout the enterprises' trajectories and the governance practices adopted were analysed and classified according to their relationship with the family, business and ownership subsystems.FindingsThe study shows that there is no direct link between the conflicts experienced and the governance practices adopted in family businesses. The most recurrent conflicts have to do with the relationship between family and ownership; however, the adoption of governance practices is centred on the relationship between business and ownership. The practices that mediate the relationship between family and business are adopted second, and the practices that mediate the relationship between family and ownership are adopted last.Originality/valueThe study applies a classification of conflicts and governance practices that adjusts to the complexity of the family business. The research contributes to the field by providing an understanding of the integration of knowledge about the family business, governance systems and conflict.

Intergenerational Interaction and Change Management in Agricultural Family Businesses: An Analysis from the Rational, Emotional, and Contextual Dimensions

“…The professionalization of the agricultural business, especially family businesses, continues to be a pending matter. This is demonstrated by some studies carried out from the perspective of family business in this sector of the economy (for example, Islas-Moreno et al, 2021;Osornio-Macias, 2016).…”

Family social capital as a driver to leverage challenged transgenerational entrepreneurship

“…, 2020). As Islas-Moreno et al. (2021) state, in FFs, the intertwining of the family, business and ownership subsystems produces different types of conflicts that affect the performance and continuity of the FFs.…”

“…In this sense, despite FFs' abilities to innovate, they may be less willing to do so due to a set of non-economic factors, such as family members' risk aversion, resistance to losing control and emotional commitment to original strategies and activities (Chrisman et al, 2014;De Massis et al, 2014;Rondi et al, 2019;Wang et al, 2020). As Islas-Moreno et al (2021) state, in FFs, the intertwining of the family, business and ownership subsystems produces different types of conflicts that affect the performance and continuity of the FFs. Thus, this family entrenchment can undermine family social integration mechanisms that critically foster the knowledge acquisition and exploitation processes of successors (Daspit et al, 2016).…”

Unveiling the Global Corporate Governance Landscape in Family Firms: A Comprehensive Bibliometric Analysis

“…However, family firms, with their significant global presence (Andersson et al, 2018;De Massis et al, 2018;Villalonga & Amit, 2020) face a distinctive set of challenges concerning corporate governance. Current statistics paint a stark reality, revealing that only a minority of family firms successfully transition beyond the first generation (Islas-Moreno et al, 2022;Karam et al, 2019;Ng et al2021). The absence of clear succession plans often leads to conflicts, particularly in the second generation, where siblings frequently find themselves in disagreement (Karam et al, 2019).…”

“…This progression brings about additional intricacies, marked by the involvement of cousins, in-laws, partners, and their families, thereby heightening the potential for conflicts and diluting the shared mission of the family firm. The inclusion of family members in the workforce, whether individually or collectively, adds to the complexities of governance dynamics (Islas-Moreno et al, 2022;Saraswati & Darma, 2020). In this context, this study offers itself as an important endeavor, positioned within the particular corporate governance framework observed in family firms.…”