A4 Conference proceedings

Governing Ownership - A Case Study About the Board’s Role in Family Business Ownership Decisions

Publication Details
Authors: Ikäheimonen Tuuli, Rautiainen Marita, Pihkala Timo
Publication year: 2016
Language: English
Title of parent publication: Proceedings of the 11th European Conference on Innovation and Entrepreneurship ECIE 2016
ISBN: 978-1-911218-07-4
eISBN: 978-1-911218-08-1
ISSN: 2049-1050
eISSN: 2049-1069
JUFO-Level of this publication: 0
Open Access: Not an Open Access publication

Well-functioning governance enables entrepreneurial intentions and behaviour to channel into organizational outcomes like strategic renewal, the creation of new ventures and improved performance in companies. The board of directors is the most central governance body, and especially board roles and composition have been popular topics among governance researchers. Despite this, the research on boards of directors in a family business context is still just emerging. In this study we will open a new path for the board role discussion and examine how the board of directors participates in the ownership-related decision-making of family businesses. The research is implemented as a qualitative case study, using two Finnish family businesses as cases. The findings from the cases show that the board has several tasks regarding ownership. These tasks include, for example, decisions about dividends, the evaluation of and decisions about acquisitions, and compensation negotiations in succession. The case studies suggest that the board also participates actively in the management of the ownership structure. As a conclusion we present that although ownership creates the basis for the activities and the essence of the board, the board also contributes, to a large extent, to the ownership decisions and in this way to the management of ownership. The findings presented in this paper contribute to the theoretical discussion of family business governance by presenting a new, ownership-related role for the board of directors. In addition, the findings reveal some interesting but little-researched topics, like the use of the dual stock-class system in family business succession. Simultaneously, we contribute to the practice by providing concrete examples of how the board participates in ownership-related decision-making and highlighting the need to manage ownership in order to secure family businesses' continuity from generation to generation.

Last updated on 2018-19-10 at 08:49