Understanding governance dynamics and success factors in family-owned businesses: A focus on corporate governance in family firms

Abstract

Family firms represent a significant segment of the global economy, and their unique governance challenges have garnered increasing attention. This study provides a comprehensive examination of corporate governance in family firms, aiming to shed light on the dynamics, mechanisms, and success factors that shape effective governance practices. Through a literature review, key findings emerge regarding the influence of family dynamics on governance, the importance of balancing family and business interests, and the role of specific governance mechanisms such as boards and family councils. The study highlights the criticality of effective communication, transparency, and professionalization in family firm governance, along with the separation of ownership and management. Moreover, the implications of succession planning and leadership development, as well as the integration of family values and culture, are explored. Practical implications for family firms are discussed, emphasizing the need for strategic decision-making, accountability, and long-term sustainability. Furthermore, potential future research directions are suggested, including investigating communication strategies, examining the impact of different governance structures, and exploring the role of technology in family firm governance. This study contributes to the understanding of corporate governance in family firms and provides a foundation for guiding family firms toward effective governance practices and long-term success.