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Monitor or Advise? How Family Involvement Affects Supervisory Board Roles in Family Firms

Author

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  • Dominik van Aaken

    (University of Salzburg)

  • Maximilian Göbel

    (University of Salzburg)

  • Daniel Meindl

    (Ludwig Maximilian University of Munich)

Abstract

This paper examines how the involvement of family members in family firms affects the roles of supervisory boards in two-tier board systems. Taking an agency and resource-based perspective, we argue that the occurrence of monitoring and advisory tasks of the board depends on the entanglement of family management and family ownership. This entanglement creates special governance requirements for family firms in two-tier board systems. We use a unique dataset of 186 German family firm observations to show that family involvement in management as well as a high family ownership reduces the occurrence of the monitoring tasks that the supervisory board performs. Moreover, we show that a growing number of owning family branches increases the monitoring tasks. We also provide evidence that family involvement increases the occurrence of the advisory tasks in relation to the monitoring ones.

Suggested Citation

  • Dominik van Aaken & Maximilian Göbel & Daniel Meindl, 2020. "Monitor or Advise? How Family Involvement Affects Supervisory Board Roles in Family Firms," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(2), pages 193-224, April.
    • Handle: RePEc:spr:schmbr:v:72:y:2020:i:2:d:10.1007_s41464-020-00088-w
    DOI: 10.1007/s41464-020-00088-w
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    More about this item

    Keywords

    Board roles; Board tasks; Family involvement; Family management; Family ownership; Supervisory board; Two tier board system;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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