‘Helping the Family’: The Mediating Role of Outside Directors in Ethnic Chinese Family Firms
Human Relations, Vol. 60, No. 2, pp. 285-314, 2007
31 Pages Posted: 27 Oct 2011
Date Written: September 30, 2007
This article explores the nature and process of non-executive director (NED or non-executive) influence in quoted, family controlled firms (FCFs) through two company case studies in Singapore. Existing views of the non-executive role in such firms have been derived from theory, with traditional and ‘new’ agency approaches and resource dependence theory each offering differing prescriptions of the role. The article reviews this literature and suggests the potential value of qualitative research for understanding and reconciling competing prescriptions of the NED role. It then presents two case studies which explore the processes whereby independent non-executives seek to influence decision-making during critical incidents in the life of two FCFs. Based on these cases the article critiques the zero-sum view of power and the ‘nuclear’ conception of the family that informs much of the suspicious and hostile perspective of family control held by some agency scholars. In contrast, the article argues for a relational conception of power through which NEDs, despite the reality of family power and control, achieve effective influence through playing a vital mediating role in a web of firm and family relationships. This involves NEDs in defending the collective interest in the continuity of an ‘extended’ family of the firm against the damaging intrusion of ‘family altruism’ and managerial opportunism. Such a role can augment the authority of nonexecutives and the board whilst allowing necessary changes to be implemented.
Keywords: board studies, corporate governance, family firms, family-controlled firms, non-executive directors, overseas Chinese families
JEL Classification: M13
Suggested Citation: Suggested Citation