The impact of family cohesion on behavioral board processes: an examination of family firm heterogeneity

Abstract

This study examines variations across family firms in behavioral board processes. We present a framework which clarifies how control on the one hand, and trust as a facilitator of advice on the other, can be employed in a complementary manner by boards in their relationship with the CEO. Building on this framework, we develop hypotheses on the association between family cohesion and these behavioral processes within family firm boards. The empirical results suggest that boards operating under cohesive family bonds to the CEO have a better understanding of those domains where the CEO is trustworthy and of those domains where control is required. Moreover, cohesive family bonds appear to stimulate advice interactions between the board and the CEO. A downside of strong family cohesion seems to be its negative influence on the effectiveness of the control exercised by boards over the family CEO.