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CEO leadership and board decision processes in family-controlled firms: comparing family and non-family CEOs

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Abstract

This study examines the impact of board decision processes on board task performance in family firms, contingent upon the presence of a family or a non-family CEO. Bridging insights from behavioral research on boards and the upper echelons perspective, it is suggested that influence of board decision processes on performance benefits from different aspects of CEO attributes. To the extent that family and non-family CEOs exhibit different cognitive frames, it is hypothesized that board processes contribute differently to board task performance, depending on whether a family or a non-family CEO is at the helm. An empirical analysis of a sample of Italian family firms provides support for two hypothesized effects: Use of knowledge and skills is more beneficial for board task performance under a non-family CEO; cognitive conflict is more beneficial under a family CEO. Contrary to expectations, the effects of effort norms do not differ between the two settings. This study contributes to research on both boards and family firms; new opportunities for advancements are discussed.

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Notes

  1. Alternative models of work groups for corporate decision making have been developed (e.g., Hambrick 2007; Carmeli et al. 2008). Hambrick (1994, 1995, 2007) proposed the concept of behavioral integration for TMTs. This model is appropriate for TMTs constantly working for their firm and captures the extent to which top executives engage in bilateral interactions with the CEO rather than working together as a team (see Hambrick 2007: 336). This model differs from boards of directors whose activities more immediately reflect the cognitive task performed by task forces. See Jackson (1992) for a discussion. Given the specific properties of boards, Forbes and Milliken (1999) explicitly draw from Jackson (1992) (Forbes and Milliken 1999: 492).

  2. Family CEOs may be innovative, especially in the early years following the foundation of a family business. However, extant research acknowledges that “although founders of family firms often base their firm on innovative ideas, over time they may lose their entrepreneurial edge” (Kellermans et al. 2008: 5; see also Salvato 2004). This study does not explore new family businesses, investigating instead established medium to large family firms. The theory and findings are thus limited to this context.

  3. Even with a high portion of family members, non-family CEOs influence decision processes, not as much through power exercise but rather through the different cognitive frames and information/topics they bring to board discussions.

  4. Zattoni et al. (2015) examine family influence as an antecedent to board processes and explore the effect of family involvement on board task performance only empirically by testing for a mediation effect.

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  1. Department of Economics and Management, University of Trento, Via Inama, 5, 38122, Trento, Italy

    Fabio Zona

  2. ICRIOS Bocconi University, Via Roentgen, 1, 20136, Milan, Italy

    Fabio Zona

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Zona, F. CEO leadership and board decision processes in family-controlled firms: comparing family and non-family CEOs. Small Bus Econ 47, 735–753 (2016). https://doi.org/10.1007/s11187-016-9764-3

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