A Far-Reaching Parental Love? Co-Governance of Intergenerational Succession and Innovation Activities in Chinese Family Firms

ABSTRACT Motivated by the research gap on intergenerational succession dynamics of family firms, this study examines the effects of initiating intergenerational succession on firms' innovation activities. We propose that initiation of intra-family succession can result in founder–successor co-governance that represents a strategic transition to the succession and incorporates the two conflicting yet complementary directions of change and continuity. Grounded in the theory of altruism, we suggest that co-governance will positively affect firms' innovation activities and that this positive link is contingent on the idiosyncratic intra-family relationships of kinship type, age difference, and gender difference between the founder and the successor. Furthermore, we posit that co-governance will lead to a flow of resources to low risk, rather than more inventive but higher risk, innovations. Based on the unbalanced panel data of 4,694 firm-year observations in our sample from listed Chinese family firms during the 2006–2015 period, empirical analysis supports our hypotheses and confirms that when examining family firms' innovation, there is a need to take the heterogeneity of the intra-family governance structure more fully into consideration.

Understanding Governance Mechanisms in Small and Medium Family Firms in Latin America

Governance mechanisms help manage, direct, and control people, resources, and the interests of those involved in a firm. In family firms, understanding the use of governance mechanisms is particularly important given their rela-tionship with the sustainability of the family and the business. Even though we know a great deal about family business governance in North America and Europe, we still know very little regarding the use of governance mechanisms in small and medium (SME) family firms in Latin America, nor do we know whether the use of governance mech-anisms impacts financial performance. To address these gaps, this paper presents the results of a survey completed by 2287 representatives of family business SMEs from 24 Latin American countries. Participants indicated the like-lihood of their using different governance mechanisms and responded to questions concerning their businesses. Our results indicate that the small and medium Latin American family firms in our study were not very likely to use formal business and family governance mechanisms, however, the use of formal business governance mechanisms was related to financial performance. The implications of these results for research and practice are discussed.

The modern transformation of family governance: co-evolve of family authority and family formal institution

Purpose This paper aims to investigate the co-evolve relationship between informal relational governance (i.e. family involvement and personal authority) and family formal governance system in the process of growth and transformation. This co-evolve relationship is especially affected by the external institutional environment and market competition power. Thus, in the comprehensive process of deepening the reform and changing market, the modern transformation of family business means that rediscovery of unique superiority of family business and the core of this transformation is the governance of status privileges and private interests. Design/methodology/approach To test the hypotheses, this paper uses the 9th Chinese Private Enterprise Survey in 2010. A total of 4,900 questionnaires are issued, 4,614 are recovered and the total recovery rate is 94.16%. After clean the data, the study obtained 1,239 samples. To overcome the possible existence of heteroscedasticity, this study uses the feasible generalized least squares (FGLS) to estimate the model. Besides, as for dummy dependent variables, this study uses logistics regression. Findings This paper makes an empirical test for the evolution of family governance driven by institutional change and organizational growth willingness in the process of growth and transformation, including a co-evolve relationship between family involvement and governance institution. Meanwhile, the empirical analysis comes to the conclusion that the institutional constraint to relational governance improves firm performance, which further promotes the modern transformation of family business governance. Practical implications It is the key to transformation to the modern corporate organization that family business could beyond the intervention of the traditional nepotism, patriarchal authority and family will. The fundamental of this process is to take advantage of formal institutions to manage family power. Originality/value This paper discusses the modern transformation of the formal organization from the perspective of modern ideal dominant type proposed by Max Weber. Modern organization is a hybrid system of the non-personified and personified institution. The primary reason why modern organization suffered erosion and destruction is that informal institution (status and relationship network) were endowed with legal privileges and private interests in modern organization including family business. The governance of privileges and private interests has become the core issue that whether the family business could play an instrumental value and realize modern transformation successfully.

Toward a Theory of Family Social Capital in Wealthy Transgenerational Enterprise Families

Over generations, decaying family social capital is a primary cause of enterprise wealth loss in enterprise families that share ownership of multiple entities and multiple assets. We answer recent calls to uncover the origins of family social capital by studying seven old, wealthy, and large transgenerational enterprise families. We complement existing research on wealth creation through entrepreneurship by offering a deeper understanding of how family social capital is enhanced in transgenerational enterprise families. Our inductive qualitative study finds that enterprise family social capital appears to be enhanced by family governance, family learning, family identity, and physical grounding.

家族信託基礎構造與遺囑信託爭議問題研究──以福祉型信託內涵為核心開展

「福祉型信託」（Welfare Trusts）為家族治理（Family Governance）、家族事業所有權（Family Property Business Ownership）、家族財產事業經營管理（Family Property Business Management）所組成之「家族信託」（Family Trust）核心，具有民事信託與商業信託之雙面性，且非僅僅為單純之財產管理制度，而係「財產管理運用、活用以及傳承」機能之最大程度展現，以完整支援信託利益享有者包括生活及財產管理全盤支援架構建立之身心照護。有鑑於此，本文以我國信託法主要繼受之日本「信託法」法制規範及其相關學理與實務發展為比較法對象，以福祉型信託為核心，對家族信託與遺囑信託進行研究。首先，家族信託制度之建置上，須考量其與消費者權益調和、裁量信託使用界線與合理分配、共益定性、第三人介入之限制、責任信託之搭配。其次，針對永續傳承、連續受益人、特留分、目的信託與特定目的信託、「閉鎖性公司＋自益信託」架構等家族信託爭議問題，提出研究對策。再者，家族信託法制尚未完整建立前，應以前述福祉型信託為核心之家族信託為基礎，對信託行為與方法解釋與修正、受益人權益確保、遺囑信託受託催告、法院選任遺囑信託受託人、遺囑信託委託人之繼承人、替代遺囑信託等議題進行解析，俾使我國遺囑信託功能確實發揮與家族信託內涵相互搭配。最後，從家族信託架構下之委託人與受託人角色與功能，提出本文之結論與建議。<br />&ldquo;Welfare trust&rdquo;is the core of a family trust composed of family governance, family property business ownership, and family property business management. It has duality of civil trust and commercial trust in that it is not only a pure property management system, but also the maximum demonstration of the function of property management application, utilization, and inheritance to support the physical and mental care of the trust beneficiaries which include the establishment of a comprehensive support structure for life and a thorough property management. In the establishment of the family trust system, this article firstly argues that it is necessary to consider the coordination with consumer rights, discretionary trust boundaries and reasonable distribution, common benefits, restrictions on third party intervention, and liability trust. Secondly, this article puts forward the research results on the controversial issues of family trust such as perpetual inheritance, continuous beneficiaries, legally reserved portion, purpose trusts and special purpose trusts, and&ldquo;closed company with self-benefit trust&rdquo;structure. Furthermore, before the establishment of a complete family trust legal structure, it is important to analyze the combination of testamentary trust and family trust, interpretation and amendment of trust behaviors and methods to ensure the rights and interests of the beneficiaries, and the appointment the trustee of the testamentary trust by the court, the successor of the settlor of the testamentary trust, and alternative testamentary trust (trust with successive beneficiaries). Finally, the article provides conclusions and suggestions from the perspective of the settlor and the trustee of trust.<br />

Determinants of family meetings in private family businesses

PurposeFamily governance mechanisms serve to govern and strengthen relations between the family and the business, as well as the relationships between the members of the business family itself. However, despite agreement on the importance of adopting family governance structures, explicit research on the determinants of family governance mechanisms is currently missing. Therefore, the purpose of this study is to uncover the determinants of family meetings. In order to do so, the social systems theory is used to unravel several determining factors of this crucial form of family governance mechanisms in private family firms.Design/methodology/approachThe authors perform a qualitative study by conducting semi-structured interviews in eight Belgian private family firms in order to discover the antecedents of the implementation of family meetings. The authors use a pattern-matching technique as an analytical strategy.FindingsThe findings of the study highlight the importance of “soft,” relational, qualitative issues as antecedents of family meetings as opposed to previous research on family governance, which predominantly focused on “hard,” quantitative measures (e.g. family ownership). The findings of the study also provide novel insights into the origins of the family component (i.e. family meetings) of family business governance.Originality/valueWhile the current literature has only focused on describing the different types of family governance and their positive consequences for the family firm, the authors take a step back to explain why family meetings, as a form of family governance, are adopted in the first place. Second, the authors demonstrate the instrumentality of the social systems theory in understanding the family's needs that necessitate the implementation of family governance mechanisms.