Governance and Goal Formation among Family Businesses

Abstract

This paper reports the results of a survey of over 600 family businesses, examining the influence of organizational governance processes consisting of external participation and operating policies on the importance ascribed to various organizational and family goals. Working from a base of resource dependency, the relationships between organizational and family goals are presented as partially mediated by firms' dependency on extraorganizational sources of capital. The results suggest that the inclusion of outsiders on firms' boards may increase the access to external capital, and that increasing dependency on external capital resources may exert significant influence on organizational goals and objectives. Finally, family control of internal governance mechanisms seems to impact on family goals.