Governance in Family Business Groups: Resolving Multiple Contingencies to Sustain Entrepreneurial Capability

Abstract

Family business groups (FBGs) are ubiquitous throughout the world. FBGs also pose unique governance issues that merit attention in order to explain FBGs’ evolution and longevity, as well as to understand FBGs’ performance on a variety of dimensions. In this chapter, we develop a framework to highlight the governance issues in FBGs, starting from understanding governance as managing goal congruence among different stakeholders and recognizing the owning family as an entrepreneurial entity. We suggest that an optimal FBG governance system involves a dynamically contingent system, based on managing complexity at both macro and micro levels, and that optimal governance in an FBG protects and enhances the capability of the owners to be entrepreneurial and construct opportunities from its environment. Based on our exposition, we provide several directions in which to advance research in this area.