Board role performance and faultlines in family firms: The moderating role of formal board evaluation

Abstract

Recent research on the actual behaviour of boards suggests that more attention should be given to group dynamics in boards of directors. Therefore, we investigate if faultlines are detrimental to the role performance of boards of directors in family firms. In contrast to previous studies that only focus on one attribute, we use a more encompassing measure of faultlines, which is based on three attributes simultaneously (family-membership, type of directorship, and gender). Furthermore, we investigate the moderating role of formal board evaluation. Findings suggest a negative relationship between faultlines and both board control and service role performance. Interestingly, our study indicates that in boards that use formal evaluations, the negative effect of faultlines on control role performance is reversed. We discuss implications for faultline theory and research on boards of directors. (C) 2016 Elsevier Ltd. All rights reserved.