Exploratory case studies of Board of Directors in SME Family Businesses
Rebecca Fakoussa (SBRC, Kingston Business School)
Analysis and Discussion
• Roles of the Board include define, review and
articulate the vision, mission and core values of
the organisation.
• 65% of all businesses are family businesses in the
UK (IFB, 2008)
Stewardship Theory
Basic assumption
Assumes inherent conflict of interest
between managers’ behaviours and
interests and the interests of principals.
Assumes alignment of interest and
behaviour of managers and the
interest of principals.
Model of man
Economic, self-serving
Self actualising, collective serving
Motivation
Lower order (economic) needs – Extrinsic
Higher order needs – Intrinsic
Identification
Low value commitment
High value commitment
Use of power
Institutional
Personal
Management
philosophy
Control oriented
Risk orientation: control mechanism
Time frame: short term
Objective: cost control
Involvement oriented;
Risk orientation: trust
Time frame: long term
Objective: Performance
Culture
Individualism – high power distance
Collectivism – low power distance
Psycholo
gical
factors
• Board of Directors, ‘fountain of
power’ (Sundaramurthy & Lewis
2003) are the highest point of a company and the
strategic leadership of the company (Institute of
Directors, 2011).
Agency Theory
Situational
factors
Context and aims
(Davis, et. al., 1997)
Case
Guiding research question:
How do individuals and groups affect the decision.
making process in family businesses boards?
-
Define the legal roles of Directors.
Examine Directors role on individual Boards.
Ascertain underlying dynamics on Boards.
Create a family business Board model.
Methods
• Narrative enquiry
•
1
2
3
4
5
6
7
8
Phantom Rubber
Stamp
Minimal Nominal
Active
Catalyst
Review Participation Participation
Never knows
what to do, if
anything; no
degree of
involvement
Formally
reviews
selected
issues that
officers bring
to its attention.
Permits officers
to make all
decisions. It
votes as the
officers
recommend on
action issues.
Involved to a degree
in the performance
or review of selected
key decisions,
indicators, or
programs of
management.
non exec
Motorhomes
Founder
Approves, questions,
and makes final
decisions on mission,
strategy, policies and
objectives. Performs
fiscal and
management audits
Takes the leading
role in establishing
and modifying the
mission, objectives,
strategy, and
policies. It has a very
active strategy
committee.
Rhubarb buses
MD
Mountain dew
MD
Paperclip
Consulting
Furniture
Logistics
Electrical
Poutziouris et al., ( 2006)
Current Challenges
• Dynamics: copreneurs, father son/daughter,
siblings, non-family member and non-executives.
• Conflict of interests: Ownership, management,
family and individual.
• Organising / classifying businesses.
• Writing-up : case by case or synthesis?
exploring the story
• (Connelly and Clandinin, 2006)
• Case Study
• (Yin, 1993)
• Examining each Board as a case
• Qualitative, semi structured interviews
Implications - Deeper understanding of the ‘black
box’ boardroom dynamics and the decision making
process.
• Interviewing the Board of Directors.
• executives, non-executives.
• family members, non-family members.
Models of Family Firms
Family
Business
• Two circle model
(Beckhard and Dyer, 1983; Lansberg 1983)
Impact - Improved best practice models, better
training and awareness for Directors, practitioners
and policy makers. Potentially improvement for the
bottom line through in-depth understanding of Board
processes.
Family
• Three circle model
(Taguiri and Davis, 1982)
Management
Business
Business
• Developmental model
(Gersick et al., 1997)
Ownership
Family
FACULTY OF BUSINESS AND LAW