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They Are Not All the Same! Investigating the Effect of Executive versus Non‐executive Family Board Members on Firm Performance

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  • Rodrigo Basco
  • Giovanna Campopiano
  • Andrea Calabrò
  • Sascha Kraus

Abstract

Drawing on faultlines and challenging the assumption that family board members form a homogenous subgroup, we hypothesize that the distinction between executive and non‐executive family board members can create faultlines that affect firm performance. We propose that the discrepancy between results and goals can activate and exacerbate faultlines. Using a sample of 421 family small and medium‐sized enterprises (SMEs), we find a U‐shaped relationship between the ratio of family executive board members and firm performance showing the consequences of relationship‐based and task‐related faultlines. Moreover, we find that the U‐shaped relationship occurs when firms perceive that they under‐achieve their objectives, whereas a reverse J‐shaped relationship appears when firms over‐achieve their objectives.

Suggested Citation

  • Rodrigo Basco & Giovanna Campopiano & Andrea Calabrò & Sascha Kraus, 2019. "They Are Not All the Same! Investigating the Effect of Executive versus Non‐executive Family Board Members on Firm Performance," Journal of Small Business Management, Taylor & Francis Journals, vol. 57(S2), pages 637-657, November.
    • Handle: RePEc:taf:ujbmxx:v:57:y:2019:i:s2:p:637-657
    DOI: 10.1111/jsbm.12535
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    Citations

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    Cited by:

    1. Svenja Jarchow & Christoph Kaserer & Henry Keppler, 2023. "Family firm performance in times of crisis—new evidence from Germany," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 543-580, September.
    2. Basco, Rodrigo & Hair, Joseph F. & Ringle, Christian M. & Sarstedt, Marko, 2022. "Advancing family business research through modeling nonlinear relationships: Comparing PLS-SEM and multiple regression," Journal of Family Business Strategy, Elsevier, vol. 13(3).
    3. Danilo Bertoni & Daniele Cavicchioli & Laure Latruffe, 2023. "Impact of business transfer on economic performance: the case of Italian family farms," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 48(2), pages 186-213.
    4. Emma García-Meca & Domingo J. Santana-Martín, 2023. "Board gender diversity and performance in family firms: exploring the faultline of family ties," Review of Managerial Science, Springer, vol. 17(5), pages 1559-1594, July.

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