Family Firm Governance Results Linked to Context

THIS IS WHAT EMERGES FROM A STUDY CONDUCTED BY AMORE, MINICHILLI, CORBETTA AND COAUTHORS IN 20 ITALIAN REGIONS

Cultural and institutional differences across geographic regions can have an important impact on the financial performance of family firms. This is one of the results highlighted by “Institutional logics, family firm governance and performance,” a paper co-authored by Mario Daniele Amore, Alessandro Minichilli, Guido Corbetta, Danny Miller, and Isabelle Le Breton-Miller. The authors tested the impact of cultural context on the relationship between family governance and financial performance in the 20 regions of Italy. They measured the strength of family and market logics at the regional level using data from the World Value Survey, a collection of individual-level surveys carried out around the world. It contains a large array of questions going from religion to political participation, to attitude towards merit and family ties.

“Family-intensive governance does best where market logic predominates,”  Minichilli says. “In regions where family logic is not counteracted by market logic, firm’s performance worsens – possibly owing to a lack of meritocracy inside the firm. In other words, family governance is not positive or negative in itself: it depends on the community context.” The analysis was also conducted using family and market logics to construct a value matrix. “This analysis shows that family governance performs the best where both logics are weak.”

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by Claudio Todesco