Alessandro Minichilli

Board task performance: An exploration of micro- and macro-level determinants of board effectiveness

This paper addresses recent calls to narrow the micro–macro gap in management research (Bamberger, 2008), by incorporating a macro-level context variable (country) in exploring micro-level determinants of board effectiveness. Following the integrated model proposed by Forbes and Milliken (1999), we identify three board processes as micro-level determinants of board effectiveness. Specifically, we focus on effort norms, cognitive conflicts and the use of knowledge and skills as determinants of board control and advisory task performance. Further, we consider how two different institutional settings influence board tasks, and how the context moderates the relationship between processes and tasks. Our hypotheses are tested on a survey-based dataset of 535 medium-sized and large industrial firms in Italy and Norway, which are considered to substantially differ along legal and cultural dimensions. The findings show that: (i) Board processes have a larger potential than demographic variables to explain board task performance; (ii) board task performance differs significantly between boards operating in different contexts; and (iii) national context moderates the relationships between board processes and board task performance. Copyright

When Do Non‐Family CEOS Outperform in Family Firms? Agency and Behavioural Agency Perspectives

Family firms represent a globally dominant form of organization, yet they confront a steep challenge of finding and managing competent leaders. Sometimes, these leaders cannot be found within the owning family. To date we know little about the governance contexts under which non-family leaders thrive or founder. Guided by concepts from agency theory and behavioural agency theory, we examine the conditions of ownership and leadership that promote superior performance among non-family CEOs of family firms. Our analysis of 893 Italian family firms demonstrates that these leaders outperform when they are monitored by multiple major family owners as opposed to a single owner; they also outperform when they are not required to share power with co-CEOs who are family members, and who may be motivated by parochial family socioemotional priorities.

Gender Interactions Within the Family Firm

We analyze whether gender interactions at the top of the corporate hierarchy affect corporate performance. Using a comprehensive data set of family-controlled firms in Italy, we find that female directors significantly improve the operating profitability of female-led companies. To mitigate endogeneity concerns, we assess executive transitions using a triple-difference approach complemented by propensity score matching and instrumental variables. Finally, we show that the positive effect of female interactions on profitability is reduced when the firm is located in geographic areas characterized by gender prejudices and when the firm is large. This paper was accepted by Brad Barber, finance.

A Contingency Model of Boards of Directors and Firm Innovation: The Moderating Role of Firm Size

This study asserts that the effects of board characteristics on firm innovation need to be evaluated with reference to contingency variables. A literature review suggests that relatively few studies adopt a contingency view when examining the outcomes of boards of directors. This study examines the influence on firm innovation of characteristics such as board size, outsider ratio and board diversity, and suggests that their influence is contingent upon firm size. The model is tested on a sample of Italian companies and finds support for the contingency hypothesis. This study advances research on boards of directors by emphasizing the importance of context.

Faster Route to the CEO Suite Nepotism or Managerial Proficiency

The aim of this article is to investigate the differences between the careers of CEOs in family and nonfamily firms and the differences between the careers of family and nonfamily CEOs within family firms. Extant literature focuses on the family or nonfamily nature of firm leadership, especially around CEOs’ transitions. It predicts that agency considerations prevail in favoring the appointment of family members and insiders as CEOs and in granting them faster and quicker careers. In contrast, detailed analysis of the entire careers of 100 CEOs—from their graduation to their first appointment as CEO—shows that the accumulation of human capital throughout a manager’s career prevails over agency considerations in predicting CEO appointments.

An Institution-Based View of Large Family Firms: A Recap and Overview:

This article sketches the contours of an institution-based view of family ownership and control in large firms, with a focus on institutional roots, institutional relatedness, and institutional transitions. The institution-based view brings considerable continuity to family-firm research. It also offers significant novelty in helping resolve some puzzles. Specifically, it answers why the Berle and Means hypothesis on the “inevitability” of separation of ownership and control has not received support in many parts of the world. Finally, its broad scope enables us to integrate institution-based arguments with an important recent debate on the socioemotional wealth (SEW) priorities of family firms.

Local Political Uncertainty, Family Control and Investment Behavior

Estimating difference-in-differences models on a comprehensive dataset of Italian companies, we provide novel insights into the literature on political uncertainty and firm investment. We first establish that local political uncertainty leads to declining investment. Next, we show that family control neutralizes this effect: family firms are more likely than other firms to invest during politically uncertain times, especially when operating in industries dependent on public spending and/or managed by family members. Finally, we document that this investment resilience of family firms under political uncertainty translates into significantly greater profitability and growth.

Financial performance and non-family CEO turnover in private family firms under different conditions of ownership and governance.

Manuscript Type Empirical Research Question/Issue Family firms, as insider-controlled companies, should be less likely to exhibit CEO turnover after poor performance and may thus promote enhanced focus on long-term goals. However, when a non-family CEO is in charge, the relatively limited empirical evidence is contrasting. Some studies find that only family CEOs are immune from the threat of dismissal following poor financial performance, other studies show that family firms discipline their CEOs for poor financial performance regardless of their family status. In this work, we try to reconcile these contrasting findings and investigate what ownership and governance conditions influence the owners’ pressure on the CEO to achieve short-term financial results. Research findings/insights Drawing on a longitudinal dataset that covers the entire population of Italian medium and large family companies, we find that when family ownership is concentrated in the hands of few family shareholders or there is a low number of family members involved in the board of directors, non-family CEOs are less likely to be dismissed after poor performance. Theoretical/Academic Implications Our study, adopting the behavioural agency theory as the guiding framework, highlights the importance for the governance decisions of the potential goal divergence among principals in closely held ownership structures. Our results also add to the still scant literature on the relationship between family owners and non-family CEOs. Practitioner/Policy Implications Our research suggests that family business owners, in the decision to hire a non-family CEO should not only assess their gaps in managerial skills but also carefully consider the ownership structure and family involvement conditions. On the side of professional non-family managers, our results offer insights on ways to address the employment relationship with the controlling family.

Principi per il Governo delle Societt Non Quotate a Controllo Familiare. Codice di Autodisciplina (Corporate Governance Principles for Unlisted Family-Controlled Companies. Code of Corporate Governance.)

Italian Abstract: Il Codice – che nasce dalla necessità di dotare l’Italia di uno strumento per il governo delle Società non quotate a controllo familiare alla luce anche delle esperienze in atto in altri Paesi europei e delle evidenze scientifiche ormai chiare – propone di superare i modelli di governance tradizionali, al fine di incrementare efficienza ed efficacia dei meccanismi di governance. English Abstract: The Code - which is based on the need to provide Italy with a governance tool for unlisted family companies, on the background of the experience of other European countries and in the light of clear scientific evidence, proposes to go beyond the previous family governance models, in order to enhance efficient and effective mechanisms.