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An exploratory study on a new corporate governance mechanism: Evidence from small family firms

Josiane Fahed‐Sreih (Department of Economics and Management, School of Business, and Institute of Family and Entrepreneurial Business, Lebanese American University, Byblos, Lebanon)

Management Research News

ISSN: 0140-9174

Article publication date: 1 January 2009

Abstract

Purpose

The purpose of this paper is to explore relationships between different governance configurations and firm survival. The objective is to describe the alternative mechanisms through which the owning family takes a stake in the governance of the firm.

Design/methodology/approach

The governance systems of 116 family enterprises in Lebanon are examined. The study integrates family, ownership, leadership and the business itself constituting the four structural elements of a family firm's governance system. Then, the study tests four hypotheses whether the family, the ownership, the leadership and the business dimensions influence positively firm survival/longevity. The other hypotheses tested concern the advisory services and the legal form of the board, and how that might affect the survival/longevity of the family firm.

Findings

This integrative view allows observation of interactions among the different structures, and the establishment of a coordinating governing structure. Hypotheses testing results show that family, leadership and business dimensions have an impact on the performance/survival of the firm, whereas the ownership dimension has no effect.

Research limitations/implications

Limitations of this paper relate to the relatively small size of the sample, and the sampled firms are young and small according to international standards. The study also suffers from common method bias and external validity.

Practical implications

The proposed framework allows the establishment of a governance structure, for control and co‐ordination. Ownership should be integrally separated from the other dimensions in the governance of a family firm to be able to achieve fairly good performance and ensure the survival and longevity of the firm.

Originality/value

No other studies have been conducted on Lebanon. Moreover, the study integrates the four governance mechanisms developed by Klein which was not done previously.

Keywords

Citation

Fahed‐Sreih, J. (2009), "An exploratory study on a new corporate governance mechanism: Evidence from small family firms", Management Research News, Vol. 32 No. 1, pp. 50-61. https://doi.org/10.1108/01409170910922023

Publisher

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Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited