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Boards of directors in family firms: a generational perspective

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Abstract

The purpose of this study is to advance the understanding of boards of directors in family firms. Building on generational changes in family attributes, we argue that firms in a different generational phase have different governance needs and characteristics. With regard to board task needs, the empirical results indicate a convex generational evolution in the need for board advice, and a rise over the generations in the need for board control. With regard to board composition, we find that the likelihood of having an outside director on the board has a convex generational trend. This relationship seems to be fully mediated by the firm’s board task needs. Furthermore, the number of family directors seems to increase over the generations. This study demonstrates that it is important to consider the generational phase of the family firm in order to understand its governance system.

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Notes

  1. Only limited liability companies were selected because in Belgium, only this category of corporations has the legal obligation to have a board of directors with at least three directors (some exceptional cases allow only two directors). Auditors are not allowed to fulfill a director position. Accountants and attorneys are only allowed to take a director position under very special circumstances. Belgium could be classified as a French-civil law country (La Porta et al. 1998) with a one-tier board system. Since 2005, Belgium has a corporate governance code (Code Buysse) for closely held (family) corporations, which does not imply a legal obligation to comply.

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Acknowledgment

We greatly appreciate the comments of two anonymous referees and Johan Wiklund (editor) which helped to improve the article substantially. We also gratefully acknowledge the support of the Instituut voor het Familiebedrijf and its executive director Jozef Lievens in conducting a survey among Flemish family firms.

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Authors and Affiliations

  1. KIZOK Research Center, Hasselt University, Agoralaan – Building D, Diepenbeek, B-3590, Belgium

    Yannick Bammens & Wim Voordeckers

  2. Department of Organization and Strategy, Maastricht University, P.O. Box 616, Maastricht, 6200, The Netherlands

    Anita Van Gils

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  1. Yannick Bammens
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  2. Wim Voordeckers
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  3. Anita Van Gils
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Correspondence to Yannick Bammens.

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Appendix Literature overview of governance differences between generations
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Bammens, Y., Voordeckers, W. & Van Gils, A. Boards of directors in family firms: a generational perspective. Small Bus Econ 31, 163–180 (2008). https://doi.org/10.1007/s11187-007-9087-5

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