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Outsiders on the board of directors and firm performance: Evidence from Spanish non-listed family firms

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  • Arosa, Blanca
  • Iturralde, Txomin
  • Maseda, Amaia

Abstract

The aim of the study was to examine firm performance in family SMEs and analyze the effects of outsiders (both affiliated and independent) on the board of directors while also considering the generational effect. To test our hypotheses that outside directors may act as either agents or stewards, we examined the relationship between firm performance and the proportion of affiliated and independent directors on the board, using data from non-listed family firms in Spain. Our findings indicate that affiliated directors have a positive impact on firm performance in family firms. It is also important to note the differences between family firms run by the first generation and those run by subsequent generations. The presence of independents on the board has a positive effect on performance when the firm is run by the first generation. However, when the firm is run by the second and subsequent generations, the presence of independents has no effect on performance.

Suggested Citation

  • Arosa, Blanca & Iturralde, Txomin & Maseda, Amaia, 2010. "Outsiders on the board of directors and firm performance: Evidence from Spanish non-listed family firms," Journal of Family Business Strategy, Elsevier, vol. 1(4), pages 236-245, December.
  • Handle: RePEc:eee:fambus:v:1:y:2010:i:4:p:236-245
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    Cited by:

    1. Michel, Alexandra & Kammerlander, Nadine, 2015. "Trusted advisors in a family business's succession-planning process—An agency perspective," Journal of Family Business Strategy, Elsevier, vol. 6(1), pages 45-57.
    2. Segaro, Ethiopia L. & Larimo, Jorma & Jones, Marian V., 2014. "Internationalisation of family small and medium sized enterprises: The role of stewardship orientation, family commitment culture and top management team," International Business Review, Elsevier, vol. 23(2), pages 381-395.
    3. Nehme Azoury & Elie Bouri, 2015. "Principal–principal conflicts in Lebanese unlisted family firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(2), pages 461-493, May.
    4. De Massis, Alfredo & Kotlar, Josip & Campopiano, Giovanna & Cassia, Lucio, 2013. "Dispersion of family ownership and the performance of small-to-medium size private family firms," Journal of Family Business Strategy, Elsevier, vol. 4(3), pages 166-175.
    5. Audretsch, David B. & Hülsbeck, Marcel & Lehmann, Erik E., 2013. "Families as active monitors of firm performance," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 118-130.
    6. Siri Terjesen & Eduardo Barbosa Couto & Paulo Morais Francisco, 2016. "Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(3), pages 447-483, September.
    7. 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.
    8. Kashif Rashid & Aqil Waqar Khan, 2014. "Board Size and Board Independence: A Quantitative Study on Banking Industry in Pakistan," Oeconomics of Knowledge, Saphira Publishing House, vol. 6(4), pages 2-17, December.
    9. Sciascia, Salvatore & Mazzola, Pietro & Kellermanns, Franz W., 2014. "Family management and profitability in private family-owned firms: Introducing generational stage and the socioemotional wealth perspective," Journal of Family Business Strategy, Elsevier, vol. 5(2), pages 131-137.
    10. Tappeiner, Florian & Howorth, Carole & Achleitner, Ann-Kristin & Schraml, Stephanie, 2012. "Demand for private equity minority investments: A study of large family firms," Journal of Family Business Strategy, Elsevier, vol. 3(1), pages 38-51.
    11. Blanco-Mazagatos, Virginia & de Quevedo-Puente, Esther & Delgado-García, Juan Bautista, 2016. "How agency conflict between family managers and family owners affects performance in wholly family-owned firms: A generational perspective," Journal of Family Business Strategy, Elsevier, vol. 7(3), pages 167-177.
    12. 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.
    13. Woods, Jeremy A. & Dalziel, Thomas & Barton, Sidney L., 2012. "Escalation of commitment in private family businesses: The influence of outside board members," Journal of Family Business Strategy, Elsevier, vol. 3(1), pages 18-27.
    14. repec:spr:intemj:v:14:y:2018:i:1:d:10.1007_s11365-017-0473-4 is not listed on IDEAS

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