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Family control and innovativeness in private firms: the mediating role of board task performance

Robin Deman (Department of Accounting and Finance, Faculty of Applied Economics, Antwerp Management School, University of Antwerp, Antwerp, Belgium)
Ann Jorissen (Department of Accounting and Finance, Faculty of Applied Economics, Antwerp Management School, University of Antwerp, Antwerp, Belgium)
Eddy Laveren (Department of Accounting and Finance, Faculty of Applied Economics, Antwerp Management School, University of Antwerp, Antwerp, Belgium)

Management Decision

ISSN: 0025-1747

Article publication date: 31 January 2018

Issue publication date: 20 February 2018

Abstract

Purpose

Although the majority of research explores the direct relationship between family control and innovativeness, the purpose of this paper is to investigate mediators that explain how family control is related to innovativeness. Grounded in agency theory, resource dependence theory, and the resource-based view of the firm, the authors suggest that this relationship operates through board task performance, that is, the level of directors’ involvement in control and service tasks.

Design/methodology/approach

To test the hypotheses, structural equation modeling is applied to cross-sectional survey data collected from 329 private firms that are located in Belgium. Family control is defined as 50 percent family ownership in combination with at least one family member being involved in the management or board of directors of the firm.

Findings

Four key results emerge from the analysis. First, family control is negatively associated with control task performance but does not affect service task performance. Second, control and service task performance positively influence innovativeness. Third, the negative relationship between family control and innovativeness is partially mediated by control task performance. Fourth, the presence of a family CEO and the percentage of family directors address heterogeneity among family controlled firms (FCFs).

Originality/value

This paper complements and extends existing research on the relationship between family control and innovativeness by adopting a governance perspective. The authors contribute to a deeper understanding of why FCFs are more or less innovative than nonfamily controlled firms and reveal underlying mechanisms previously uncovered.

Keywords

Acknowledgements

The authors would like to thank Bart Cambré, Marc Deloof, Roberto Flören, Wim Voordeckers, and seminar participants at the IFERA conference in Hamburg (2015, Germany) and the Research in Entrepreneurship and Small Business (RENT) conference in Zagreb (2015, Croatia) for their helpful comments and suggestions. Financial support from Antwerp Management School and the Flemish Agency for Innovation by Science and Technology (IWT, Grant No. SBO 90061) is gratefully acknowledged.

Citation

Deman, R., Jorissen, A. and Laveren, E. (2018), "Family control and innovativeness in private firms: the mediating role of board task performance", Management Decision, Vol. 56 No. 2, pp. 295-310. https://doi.org/10.1108/MD-09-2016-0665

Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited