Governance Systems in Family SMEs: The Substitution Effects between Family Councils and Corporate Governance Mechanisms

27 Pages Posted: 16 Mar 2015

See all articles by Luca Gnan

Luca Gnan

Bocconi University; University of Rome Tor Vergata - Tor Vergata Economics University Foundation

Daniela Montemerlo

University of Insubria; SDA Bocconi

Morten Huse

Norwegian School of Management (BI) - Department of Innovation and Economics; MH Management Consultants; University of Witten/Herdecke; BI Norwegian Business School

Date Written: April 2015

Abstract

The main objective of this paper is to explore the role of family councils vis‐à‐vis corporate governance mechanisms. Particularly, the paper explores whether family councils perform only their distinctive family governance role or if they also substitute for the roles performed by corporate governance control mechanisms. Based on a sample of 243 Italian family SMEs, our research findings show that the family council partially substitutes the shareholders' meeting and the board of directors in playing their respective corporate governance roles of ownership and monitoring. These findings are interpreted in the light of both agency and relational perspectives.

Suggested Citation

Gnan, Luca and Montemerlo, Daniela and Huse, Morten, Governance Systems in Family SMEs: The Substitution Effects between Family Councils and Corporate Governance Mechanisms (April 2015). Journal of Small Business Management, Vol. 53, Issue 2, pp. 355-381, 2015, Available at SSRN: https://ssrn.com/abstract=2578107 or http://dx.doi.org/10.1111/jsbm.12070

Luca Gnan (Contact Author)

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

University of Rome Tor Vergata - Tor Vergata Economics University Foundation ( email )

Via Columbia 2
Rome, 00133
Italy

Daniela Montemerlo

University of Insubria ( email )

Via Ravasi 2
Varese, 21100 21100
Italy

SDA Bocconi ( email )

Via Bocconi 8
Milan, Milan 20136
Italy

Morten Huse

Norwegian School of Management (BI) - Department of Innovation and Economics ( email )

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Norway

MH Management Consultants ( email )

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N 1339 Vøyenenga
Vøyenenga
Norway

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University of Witten/Herdecke ( email )

Alfred-Herrhausen-Straße 50
Witten, 58448
Germany

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

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