IDEAS home Printed from https://ideas.repec.org/a/eee/scaman/v33y2017i1p36-49.html
   My bibliography  Save this article

Please do not disturb! Differentiating board tasks in family and non-family firms during financial distress

Author

Listed:
  • Lohe, Fynn-Willem
  • Calabrò, Andrea

Abstract

Boards of directors represent a central factor for firm success by performing different tasks such as control, networking, or advice. Stemming from socioemotional wealth (SEW) literature, the aim of this article is to investigate the board tasks–financial performance relationship, showing their different contributions in family and non-family firms when firm survival is at stake. The main hypotheses are tested through moderated linear regression analyses. The findings suggest that while advisory tasks generally enhance financial performance in family firms, especially during turmoil, networking and control tasks have a detrimental effect when these firms suffer internal financial crises. Hence, we contribute to the SEW paradigm by underlining that family firms seem to accept performance hazards in order to protect family discretion and a positive public reputation even when they suffer severe hardship. In contrast, board advice supports utilizing family firms’ unique social capital and significantly bolsters financial performance, without disturbing the family and its SEW preservation needs.

Suggested Citation

  • Lohe, Fynn-Willem & Calabrò, Andrea, 2017. "Please do not disturb! Differentiating board tasks in family and non-family firms during financial distress," Scandinavian Journal of Management, Elsevier, vol. 33(1), pages 36-49.
    • Handle: RePEc:eee:scaman:v:33:y:2017:i:1:p:36-49
    DOI: 10.1016/j.scaman.2017.01.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0956522116300628
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.scaman.2017.01.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul Reynolds & Niels Bosma & Erkko Autio & Steve Hunt & Natalie De Bono & Isabel Servais & Paloma Lopez-Garcia & Nancy Chin, 2005. "Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–2003," Small Business Economics, Springer, vol. 24(3), pages 205-231, February.
    2. Mason A. Carpenter & Timothy G. Pollock & Myleen M. Leary, 2003. "Testing a model of reasoned risk‐taking: governance, the experience of principals and agents, and global strategy in high‐technology IPO firms," Strategic Management Journal, Wiley Blackwell, vol. 24(9), pages 803-820, September.
    3. Drakopoulou Dodd, Sarah & Anderson, Alistair & Jack, Sarah, 2013. "Being in time and the family owned firm," Scandinavian Journal of Management, Elsevier, vol. 29(1), pages 35-47.
    4. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May.
    5. van Ees, Hans & van der Laan, Gerwin & Postma, Theo J.B.M., 2008. "Effective board behavior in The Netherlands," European Management Journal, Elsevier, vol. 26(2), pages 84-93, April.
    6. Isabelle Le Breton–Miller & Danny Miller, 2013. "Socioemotional Wealth across the Family Firm Life Cycle: A Commentary on “Family Business Survival and the Role of Boardsâ€," Entrepreneurship Theory and Practice, , vol. 37(6), pages 1391-1397, November.
    7. Andrea Calabro & Donata Mussolino & Morten Huse, 2009. "The role of board of directors in the internationalisation process of small and medium sized family businesses," International Journal of Globalisation and Small Business, Inderscience Enterprises Ltd, vol. 3(4), pages 393-411.
    8. Collin, Sven-Olof Yrjö & Ahlberg, Jenny, 2012. "Blood in the boardroom: Family relationships influencing the functions of the board," Journal of Family Business Strategy, Elsevier, vol. 3(4), pages 207-219.
    9. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    10. Odd Jarl Borch & Morten Huse, 1993. "Informal Strategic Networks and the Board of Directors," Entrepreneurship Theory and Practice, , vol. 18(1), pages 23-36, October.
    11. Nick Wilson & Mike Wright & Louise Scholes, 2013. "Family Business Survival and the Role of Boards," Entrepreneurship Theory and Practice, , vol. 37(6), pages 1369-1389, November.
    12. David G. Sirmon & Michael A. Hitt, 2003. "Managing Resources: Linking Unique Resources, Management, and Wealth Creation in Family Firms," Entrepreneurship Theory and Practice, , vol. 27(4), pages 339-358, October.
    13. Jeroen Van Den Heuvel & Anita Van Gils & Wim Voordeckers, 2006. "Board Roles in Small and Medium‐Sized Family Businesses: performance and importance," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(5), pages 467-485, September.
    14. William S. Schulze & Franz W. Kellermanns, 2015. "Reifying Socioemotional Wealth," Entrepreneurship Theory and Practice, , vol. 39(3), pages 447-459, May.
    15. Jean‐Luc Arregle & Michael A. Hitt & David G. Sirmon & Philippe Very, 2007. "The Development of Organizational Social Capital: Attributes of Family Firms," Journal of Management Studies, Wiley Blackwell, vol. 44(1), pages 73-95, January.
    16. Jonas Gabrielsson & Henrik Winlund, 2000. "Boards of directors in small and medium-sized industrial firms: examining the effects of the board's working style on board task performance," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 12(4), pages 311-330, October.
    17. Jean-Luc Arrègle & Michael Hitt & David Sirmon & Philippe Véry, 2007. "The Development of Organizational Social Capital : Attributes of Family Firms," Post-Print hal-02312687, HAL.
    18. Andrea Calabrò & Donata Mussolino, 2013. "How do boards of directors contribute to family SME export intensity? The role of formal and informal governance mechanisms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 363-403, May.
    19. Christopher S. Tuggle & David G. Sirmon & Christopher R. Reutzel & Leonard Bierman, 2010. "Commanding board of director attention: investigating how organizational performance and CEO duality affect board members' attention to monitoring," Strategic Management Journal, Wiley Blackwell, vol. 31(9), pages 946-968, September.
    20. Narjess Boubakri & Omrane Guedhami & Dev Mishra, 2010. "Family control and the implied cost of equity: Evidence before and after the Asian financial crisis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 451-474, April.
    21. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    22. Jonas Gabrielsson, 2007. "Correlates of Board Empowerment in Small Companies," Entrepreneurship Theory and Practice, , vol. 31(5), pages 687-711, September.
    23. Bengt Johannisson & Morten Huse, 2000. "Recruiting outside board members in the small family business: an ideological challenge," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 12(4), pages 353-378, October.
    24. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    25. Michael Lubatkin & William S. Schulze & N Dino Richard, 2003. "Toward a theory of agency and altruism in family firms," Post-Print hal-02311679, HAL.
    26. John A. Pearce & Shaker A. Zahra, 1991. "The relative power of ceos and boards of directors: Associations with corporate performance," Strategic Management Journal, Wiley Blackwell, vol. 12(2), pages 135-153, February.
    27. Alessandro Minichilli & Cathrine Hansen, 2007. "The board advisory tasks in small firms and the event of crises," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 11(1), pages 5-22, March.
    28. Pettigrew, Andrew M., 1997. "What is a processual analysis?," Scandinavian Journal of Management, Elsevier, vol. 13(4), pages 337-348, December.
    29. Morten Huse & Alessandro Zattoni, 2008. "Trust, Firm Life Cycle, and Actual Board Behavior: Evidence from "One of the Lads" in the Board of Three Small Firms," International Studies of Management & Organization, Taylor & Francis Journals, vol. 38(3), pages 71-97, January.
    30. James J. Chrisman & Jess H. Chua & Franz Kellermanns, 2009. "Priorities, Resource Stocks, and Performance in Family and Nonfamily Firms," Entrepreneurship Theory and Practice, , vol. 33(3), pages 739-760, May.
    31. Keasey, Kevin & Martinez, Beatriz & Pindado, Julio, 2015. "Young family firms: Financing decisions and the willingness to dilute control," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 47-63.
    32. Randall Morck & Bernard Yeung, 2003. "Agency Problems in Large Family Business Groups," Entrepreneurship Theory and Practice, , vol. 27(4), pages 367-382, October.
    33. Schulze, William S. & Lubatkin, Michael H. & Dino, Richard N., 2003. "Toward a theory of agency and altruism in family firms," Journal of Business Venturing, Elsevier, vol. 18(4), pages 473-490, July.
    34. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    35. Michael Lubatkin & Eric Gedajlovic & William S. Schulze, 2004. "Crossing the threshold from founder management to professional management : A governance perspective," Post-Print hal-02311640, HAL.
    36. Michael N. Young & Mike W. Peng & David Ahlstrom & Garry D. Bruton & Yi Jiang, 2008. "Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 196-220, January.
    37. Dibrell, Clay & Moeller, Miriam, 2011. "The impact of a service-dominant focus strategy and stewardship culture on organizational innovativeness in family-owned businesses," Journal of Family Business Strategy, Elsevier, vol. 2(1), pages 43-51, March.
    38. Pugliese, Amedeo & Minichilli, Alessandro & Zattoni, Alessandro, 2014. "Integrating agency and resource dependence theory: Firm profitability, industry regulation, and board task performance," Journal of Business Research, Elsevier, vol. 67(6), pages 1189-1200.
    39. Franz W. Kellermanns & Kimberly A. Eddleston & Thomas M. Zellweger, 2012. "Article Commentary: Extending the Socioemotional Wealth Perspective: A Look at the Dark Side," Entrepreneurship Theory and Practice, , vol. 36(6), pages 1175-1182, November.
    40. Luis R. Gomez‐Mejia & Marianna Makri & Martin Larraza Kintana, 2010. "Diversification Decisions in Family‐Controlled Firms," Journal of Management Studies, Wiley Blackwell, vol. 47(2), pages 223-252, March.
    41. Eric Gedajlovic & Michael H. Lubatkin & William S. Schulze, 2004. "Crossing the Threshold from Founder Management to Professional Management: A Governance Perspective," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 899-912, July.
    42. Calabrò, Andrea & Torchia, Mariateresa & Pukall, Thilo & Mussolino, Donata, 2013. "The influence of ownership structure and board strategic involvement on international sales: The moderating effect of family involvement," International Business Review, Elsevier, vol. 22(3), pages 509-523.
    43. Danny Miller & Isabelle Le Breton-Miller & Alessandro Minichilli & Guido Corbetta & Daniel Pittino, 2014. "When do Non-Family CEOs Outperform in Family Firms? Agency and Behavioural Agency Perspectives," Journal of Management Studies, Wiley Blackwell, vol. 51(4), pages 547-572, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sanchez-Famoso, Valeriano & Pittino, Daniel & Chirico, Francesco & Maseda, Amaia & Iturralde, Txomin, 2019. "Social capital and innovation in family firms: The moderating roles of family control and generational involvement," Scandinavian Journal of Management, Elsevier, vol. 35(3).
    2. Domenico Rocco Cambrea & Andrea Calabrò & Maurizio La Rocca & Francesco Paolone, 2022. "The impact of boards of directors’ characteristics on cash holdings in uncertain times," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(1), pages 189-221, March.
    3. Quarato, Fabio & Cambrea, Domenico Rocco & Calabrò, Andrea, 2021. "Investment decisions of family firms in the three largest euro countries: the role of the financial crisis," Finance Research Letters, Elsevier, vol. 42(C).
    4. Åberg, Carl & Bankewitz, Max & Knockaert, Mirjam, 2019. "Service tasks of board of directors: A literature review and research agenda in an era of new governance practices," European Management Journal, Elsevier, vol. 37(5), pages 648-663.
    5. Bauweraerts, Jonathan & Arzubiaga, Unai & Diaz-Moriana, Vanessa, 2022. "Unveiling the global focus-performance relationship in family firms: The role of the board of directors," International Business Review, Elsevier, vol. 31(4).
    6. Sievinen, Hanna Maria & Ikäheimonen, Tuuli & Pihkala, Timo, 2020. "Owners’ rule-based decision-making in family firm strategic renewal," Scandinavian Journal of Management, Elsevier, vol. 36(3).
    7. Gerken, Maike & Hülsbeck, Marcel & Ostermann, Thomas & Hack, Andreas, 2022. "Validating the FIBER scale to measure family firm heterogeneity – A replication study with extensions," Journal of Family Business Strategy, Elsevier, vol. 13(4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Weiping Liu & Haibin Yang & Guangxi Zhang, 2012. "Does family business excel in firm performance? An institution-based view," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 965-987, December.
    2. Michael Carney & Marc Van Essen & Eric R. Gedajlovic & Pursey P.M.A.R. Heugens, 2015. "What do we know about Private Family Firms? A Meta–Analytical Review," Entrepreneurship Theory and Practice, , vol. 39(3), pages 513-544, May.
    3. Bauweraerts, Jonathan & Sciascia, Salvatore & Naldi, Lucia & Mazzola, Pietro, 2019. "Family CEO and board service: Turning the tide for export scope in family SMEs," International Business Review, Elsevier, vol. 28(5), pages 1-1.
    4. Arrondo-García, Rubén & Fernández-Méndez, Carlos & Menéndez-Requejo, Susana, 2016. "The growth and performance of family businesses during the global financial crisis: The role of the generation in control," Journal of Family Business Strategy, Elsevier, vol. 7(4), pages 227-237.
    5. Andrea Calabrò & Donata Mussolino, 2013. "How do boards of directors contribute to family SME export intensity? The role of formal and informal governance mechanisms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 363-403, May.
    6. Mazzi, Chiara, 2011. "Family business and financial performance: Current state of knowledge and future research challenges," Journal of Family Business Strategy, Elsevier, vol. 2(3), pages 166-181.
    7. D’Angelo, Alfredo & Majocchi, Antonio & Buck, Trevor, 2016. "External managers, family ownership and the scope of SME internationalization," Journal of World Business, Elsevier, vol. 51(4), pages 534-547.
    8. Jiang, Fuxiu & Shi, Wei & Zheng, Xiaojia, 2020. "Board chairs and R&D investment: Evidence from Chinese family-controlled firms," Journal of Business Research, Elsevier, vol. 112(C), pages 109-118.
    9. Lee, Tingko, 2019. "Management ties and firm performance: Influence of family governance," Journal of Family Business Strategy, Elsevier, vol. 10(2), pages 105-118.
    10. Hiebl, Martin R.W., 2013. "Bean counter or strategist? Differences in the role of the CFO in family and non-family businesses," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 147-161.
    11. García-Ramos, Rebeca & García-Olalla, Myriam, 2011. "Board characteristics and firm performance in public founder- and nonfounder-led family businesses," Journal of Family Business Strategy, Elsevier, vol. 2(4), pages 220-231.
    12. Ahlers, Oliver & Hack, Andreas & Kellermanns, Franz W., 2014. "“Stepping into the buyers’ shoes”: Looking at the value of family firms through the eyes of private equity investors," Journal of Family Business Strategy, Elsevier, vol. 5(4), pages 384-396.
    13. González L., Ana C. & Rodríguez, Yeny E. & Gómez, Juan M. & Chávez, Helmuth & Chea, Jaly, 2021. "Family business risk-taking and financial performance: Is it easier said than done?," Journal of Family Business Strategy, Elsevier, vol. 12(4).
    14. Franco Ernesto Rubino & Paolo Tenuta & Domenico Rocco Cambrea, 2017. "Board characteristics effects on performance in family and non-family business: a multi-theoretical approach," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(3), pages 623-658, September.
    15. Jean–Luc Arregle & Lucia Naldi & Mattias Nordqvist & Michael A. Hitt, 2012. "Internationalization of Family–Controlled Firms: A Study of the Effects of External Involvement in Governance," Entrepreneurship Theory and Practice, , vol. 36(6), pages 1115-1143, November.
    16. Patricio Duran & Nadine Kammerlander & Marc van Essen & Thomas Zellweger, 2016. "Doing More with Less : Innovation Input and Output in Family Firms," Post-Print hal-02276703, HAL.
    17. Jorge A. Durán-Encalada & Juan M. San Martin-Reyna & Héctor Montiel-Campos, 2012. "A Research Proposal to Examine Entrepreneurship in Family Business," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 8(3), pages 58-77.
    18. Craig, Justin B. & Dibrell, Clay & Garrett, Robert, 2014. "Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance," Journal of Family Business Strategy, Elsevier, vol. 5(3), pages 229-238.
    19. Casprini, Elena & Dabic, Marina & Kotlar, Josip & Pucci, Tommaso, 2020. "A bibliometric analysis of family firm internationalization research: Current themes, theoretical roots, and ways forward," International Business Review, Elsevier, vol. 29(5).
    20. Barros, Ismael & Hernangómez, Juan & Martin-Cruz, Natalia, 2016. "A theoretical model of strategic management of family firms. A dynamic capabilities approach," Journal of Family Business Strategy, Elsevier, vol. 7(3), pages 149-159.

    More about this item

    Keywords

    Boards of directors; Financial performance; Board tasks; Socioemotional wealth; Prospect theory; Behavioral agency model;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:scaman:v:33:y:2017:i:1:p:36-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/872/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.