Top Management Teams in Family-Controlled Companies: ‘Familiness’, ‘Faultlines’, and Their Impact on Financial Performance

18 Pages Posted: 18 Jan 2010

See all articles by Alessandro Minichilli

Alessandro Minichilli

Bocconi University - Department of Management and Technology

Guido Corbetta

Bocconi University - Department of Management and Technology

Ian C. MacMillan

University of Pennsylvania - Management Department

Abstract

This article examines the affect of family management on performance of the company. We examine how familiness can provide further insights beyond the classical demographic measures of top management teams (TMTs) in explaining variations in firms' financial performance. We combine arguments on the ‘bright’ and ‘dark’ side of family involvement in the firm; we complement positive predictions on family involvement with negative predictions and develop family firm-specific measures of TMTs' familiness. Results indicate that while the presence of a family CEO is beneficial for firm performance, the coexistence of ‘factions’ in family and non-family managers within the TMT has the potential to create schisms among the subgroups and consequently hurt firm performance. We find support for a hypothesized U-shaped relationship between the ratio of family members in the TMT and firm performance. Additional evidence related to interactions between firm listing and CEO type on firm performance is then presented and discussed.

Suggested Citation

Minichilli, Alessandro and Corbetta, Guido and MacMillan, Ian C., Top Management Teams in Family-Controlled Companies: ‘Familiness’, ‘Faultlines’, and Their Impact on Financial Performance. Journal of Management Studies, Vol. 47, Issue 2, pp. 205-222, March 2010, Available at SSRN: https://ssrn.com/abstract=1537412 or http://dx.doi.org/10.1111/j.1467-6486.2009.00888.x

Alessandro Minichilli (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Guido Corbetta

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Ian C. MacMillan

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

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