top of page

Family governance as a critical success factor in strategic change

The way in which a family firm is run has an impact on the way it handles strategic change. There are two important bodies in the management of a (family) firms: the top management team on the one hand and the Board of Directors or Advisory Board on the other. For example, the presence of a well-functioning Board of Directors or Advisory Board appears to have a positive impact on strategic changes within family firms. It is therefore promising that no less than 68% of the participating family indicate that one of these two bodies plays an active role in their family firm. Of the non-family firms, 71% indicate having an active Board of Directors or Advisory Board.

In many family firms, the line between the family on the one hand and the business on the other is blurred. One system influences the other and vice versa, as such that, in addition to the company, the family itself must also be well managed. For this, family firms can introduce so-called family governance mechanisms. This can be done, for example, in the form of a family charter, which can be seen as a “constitution” for the family in which the rules of the game are laid down. The results of the survey show that 21.7% of the family firms have such a constitution. These firms indicate that they mainly include guidelines on succession, (share) ownership, the role of the family in the business and family values in this constitution. In addition, it appears that the presence of such a family constitution is positively related to initiating strategic changes. There is especially a strong positive relationship with strategic changes in the field of sustainability and corporate social responsibility.

Another family governance mechanism is the family council or the family forum. This is a family meeting where members of the corporate family come together to discuss matters pertaining to the family firm. 25% of the participating family businesses indicate that they have such a family council or forum. The results showed that the presence of such a family council is also positively related to strategic changes. In this family council, the company's financial position, investments and long-term strategies appear to be discussed above all.

The values ​​that are central to the family firm also appear to have an impact on strategic changes. The value that family firms consider to be the most important is the value of “reliability”. However, in regard to strategic changes, values ​​such as “success”, “challenge”, “dominance”, “creativity”, and “ambition” appear to have a positive impact. It is therefore beneficial that, in general, family firms also seem to attach great importance to these values. The value “tradition” appears to be negatively related to initiating and implementing strategic changes.


bottom of page