Family governance: Organizing the business family for family business continuity

The success and continuity of family businesses largely depend on the way the associated business family organizes itself and its relation to the business. Hence, family governance is critically important for family businesses, but, when compared to business governance, far less researched. This paper-based doctoral thesis tries to fill this void by shedding light on why business families decide to develop family governance measures and how these measures influence the functioning of the family and the business system. To comprehensively investigate the phenomenon, three studies were conducted: (1) a research-oriented systematic literature review to identify and structure the current state of research, (2) an empirically-quantitative study to explore the relation between family governance, business family identity and the transgenerational orientation of the business and (3) a single case study employing new systems theory combined with objective hermeneutics to gain a deeper knowledge on the developmental context, the implementation process and the effects of a complex family governance system. Results indicate that business families mainly develop family governance measures for the preparation of the succession phase and for the mitigation of family conflicts. Functional family governance can have far-reaching effects: Through strengthening the family’s identity as a business family it contributes to sustaining the transgenerational orientation of the business, creates structures within the business family, facilitates the cooperation with stakeholders in the business and finally can also entail financial benefits.