This paper reports the results of a survey of over 600 family businesses, examining the influence of organizational governance processes consisting of external participation and operating policies on the importance ascribed to various organizational and family goals. Working from a base of resource dependency, the relationships between organizational and family goals are presented as partially mediated by firms' dependency on extraorganizational sources of capital. The results suggest that the inclusion of outsiders on firms' boards may increase the access to external capital, and that increasing dependency on external capital resources may exert significant influence on organizational goals and objectives. Finally, family control of internal governance mechanisms seems to impact on family goals.
AgleB. R.MitchellR. K.SonnefeldJ. A. (1999), ‘Who matters to CEOs? An investigation of stakeholder attributes and salience, corporate performance, and CEO values’, Academy of Management Journal, Vol 42, No 5, pp 507–525.
2.
AldrichH. E.FiolC. M. (1994), ‘Fools rush in? The institutional context of industry creation’, Academy of Management Review, Vol 19, No 4, pp 645–670.
3.
AndersonJ. C.GerbingD. W. (1988), ‘Structural equation modeling in practice: A review and recommended two-step approach’, Psychological Bulletin, Vol 103, No 3, pp 411–423.
4.
AstrachanJ.KolenkoT. (1994), ‘A neglected factor explaining family business success: Human resource practices’, Family Business Review, Vol 7, No 3, pp 251–262.
5.
BarnesL. B.HershonS. A. (1976), ‘Transferring power in the family business’, Harvard Business Review, July–August, pp 105–114.
6.
BartonS.GordonP. (1987), ‘Corporate strategy: Useful perspectives for the study of capital structure?’Academy of Management Review, Vol 12, No 1, pp 67–75.
7.
BartonS.MathewsC. H. (1989), ‘Small firm financing implications from a strategic management perspective’, Journal of Small Business Management, Vol 27, No 1, pp 1–7.
8.
BeekunR. I.GinnG. O. (1993), ‘Business strategy and international linkages within the acute care hospital industry: An expansion of the Miles and Snow typology’, Human Relations, Vol 46, No 11, pp 1291–1318.
9.
BensonB.CregoE. T.DruckerR. H. (1990), Your Family Business: A Successful Guide for Growth and Survival, Business One Irwin, Homewood, IL.
10.
BentlerP. M.BonettD. G. (1980), ‘Significance tests and goodness of fit in the analysis of covariance structures’, Psychological Bulletin, Vol 88, pp 588–606.
11.
BermanS. L.WicksA. C.KothaS.JonesT. M. (1999), ‘Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance’, Academy of Management Journal, Vol 42, No 5, pp 488–506.
12.
BlalockH. M. (1985), Causal Modeling in Social Sciences, Academic Press, New York, NY.
13.
BollenK. A. (1989), Structural Equations with Latent Variables, Academic Press, New York, NY.
14.
ChagantiR.DeCarolisD.DeedsD. (1996), ‘Predictions of capital structure in small ventures’, Entrepreneurship Theory and Practice, Vol 20, No 2, pp 7–18.
15.
ChildJ. (1972), ‘Organizational structure, environment, and performance: The role of strategic choice’, Sociology, Vol 6, pp 1–22.
16.
ClarkT.VaradarajanP. R.PrideW. M. (1994), ‘Environmental management: The construct and research propositions’, Journal of Business Research, Vol 29, pp 23–38.
17.
ConnollyT.ConlonE. J.DeutschS. J. (1980), ‘Organizational effectiveness: A multiple constituency approach’, Academy of Management Review, Vol 5, pp 211–217.
18.
CronbachL. J. (1951), ‘Coefficient Alpha and the internal structure of tests’, Psychometrika, Vol 16, No 3, pp 287–334.
19.
DancoL. A. (1991), ‘Do boards of directors really help small businesses?’Small Business Forum, Vol 9, No 3, pp 88–93.
20.
DavisP.SternD. (1980), ‘Adaptation, survival, and growth of the family business: An integrated systems perspective’, Human Relations, Vol 34, No 4, pp 207–224.
21.
DavisP. S.HarvestonP. D. (1998), ‘The influence of family on the family business succession process: A multi-generational perspective’, Entrepreneurship Theory and Practice, Vol 22, No 3, pp 55–74.
22.
DiamondD. (1991), ‘Monitoring and reputation: The choice between bank loans and directly placed debt’, Journal of Political Economy, Vol 99, pp 688–721.
23.
DiMaggioP. J.PowellW. W. (1983), ‘The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields’, American Sociological Review, Vol 48, pp 147–163.
24.
DyerW. G.Jr (1986), Cultural Change in Family Firms: Anticipating and Managing Business and Family Transitions, Jossey-Bass Publishers, San Francisco, CA.
25.
EhrlichS. B.DeNobleA. F.MooreT.WeaverR. R. (1994), ‘After the cash arrives: A comparative study of venture capital and private investor involvement in entrepreneurial firms’, Journal of Business Venturing, Vol 9, pp 67–82.
26.
EmersonR. M. (1962), ‘Power dependence relations’, American Sociological Review, Vol 27, No 1.
27.
EpelandW.HirschP. (1990), ‘Ownership changes, accounting practice and the redefinition of the corporation’, Accounting, Organization, and Society, Vol 15, pp 77–96.
28.
EtzioniA. (1964), Modern Organizations, Prentice Hall, Englewood Cliffs, NJ.
29.
FinkleT. A. (1998), ‘The relationship between boards of directors and initial public offerings in the biotechnology industry’, Entrepreneurship Theory and Practice, Vol 22, No 3, pp 5–30.
30.
FornellC.BooksteinF. (1982), ‘A comparative analysis of two structural equation models: LISREL and PLS applied to consumer exit voice theory’, Journal of Marketing Research, Vol 19, pp 440–452.
FrancisA. (1991), ‘Families, firms, and finance capital: The development of UK industrial firms with particular reference to their ownership and control’, Family Business Review, Vol 4, No 2, pp 231–261.
33.
GlueckW. F. (1980), Business Policy and Strategic Management, McGraw-Hill, New York, NY.
34.
GoldwasserT. (1986), Family Pride, Dodd, Mead and Company, New York, NY.
35.
Greenwald, M., and Associates (1993), Major Findings of the Family Business Survey, Massachusetts Mutual Life Insurance Co, Springfield, MA.
36.
HallJ.HoferC. W. (1993), ‘Venture capitalists' decision criteria in new venture evaluation’, Journal of Business Venturing, Vol 8, pp 25–42.
37.
HallR. H. (1975), Occupations and Social Structure, 2 ed, Prentice-Hall, Englewood Cliffs, NJ.
38.
HallR. H. (1977), Organizations: Structure and Process, Prentice-Hall, Englewood Cliffs, NJ.
39.
HarrisonJ. S.FreemanR. E. (1999), ‘Stakeholders, social responsibility, and performance: Empirical evidence and theoretical perspectives’, Academy of Management Journal, Vol 42, No 5, pp 479–487.
40.
HittM. A. (1988), ‘The measuring of organizational effectiveness: Multiple domains and constituencies’, Management International Review, Vol 28, pp 28–40.
41.
JoreskogK. G.SorbomD. (1986), LISREL: Analysis of Linear Structural Relationships by the Method of Maximum Likelihood (VIII), Scientific Software Inc, Mooresville, IN.
42.
KarsaiJ.WrightM.FilatotchevI. (1997), ‘Venture capital in transition economies: The case of Hungary’, Entrepreneurship Theory and Practice, Vol 21, No 4, pp 93–110.
43.
KatzD.KahnR. L. (1966), The Social Psychology of Organizations, John Wiley and Sons Inc, New York, NY.
44.
LeaJ. W. (1991), Keeping it all in the Family, John Wiley and Sons Inc, New York, NY.
45.
LevinR. I.TravisV. R. (1987), ‘Small company finance: What the books don't say’, Harvard Business Review, Nov–Dec, pp 30–32.
46.
LuomaP.GoodsteinJ. (1999), ‘Stakeholders and corporate boards: Institutional influences on board composition and structure’, Academy of Management Journal, Vol 42, No 5, pp 553–563.
47.
MacMillanI. C.KulowD. M.KhoylianR. (1988), ‘Venture capitalists involvement in their investments: Extent and performance’, Journal of Business Venturing, Vol 4, pp 27–47.
48.
McGrathR. G. (1999), ‘Falling forward: Real options reasoning and entrepreneurial failure’, Academy of Management Review, Vol 24, No 1, pp 13–30.
49.
MilesR. H. (1982), Coffin Nails and Corporate Strategy, Prentice-Hall, Englewood Cliffs, NJ.
50.
MintzbergH. (1973), The Nature of Managerial Work, Harper and Row, New York, NY.
51.
MizruchiM. S. (1983), ‘Who controls whom? An examination of the relationship between management and board of directors in large American corporations’, Academy of Management Review, Vol 8, No 3, pp 426–435.
52.
ModiglianiF.MillerM. (1958), ‘The cost of capital finance and the theory of investment’, American Economic Review, Vol 48, pp 261–297.
53.
Newsweek (1993), 12 December.
54.
NunnallyJ. C. (1967), Psychometric Theory, McGraw-Hill, New York, NY.
55.
NunnallyJ. C. (1978), Psychometric Theory, McGraw-Hill, New York, NY.
56.
PenningsJ. (1980), Interlocking Directorates, Jossey-Bass, San Francisco, CA.
57.
PerrowC. (1961), ‘The analysis of goals in complex organizations’, American Sociological Review, Vol 26, pp 859–866.
58.
PetersenM. A.RajanR. G. (1994), ‘The benefits of lending relationships: Evidence from small business data’, Journal of Finance, Vol 49, pp 3–37.
59.
PfefferJ. (1972), ‘Size and composition of corporate boards of directors: The organization and its environment’, Administrative Science Quarterly, Vol 17, No 2, pp 218–228.
60.
PfefferJ. (1981). Power in Organizations. Pitman Publishing, Boston, MA.
61.
PfefferJ.SalancikG. (1978), The External Control of Organizations: A Resource Dependence Perspective, Harper and Row, New York, NY.
62.
PozaE. J. (1989), Smart Growth: Critical Choices for Business Continuity and Prosperity, Jossey-Bass Publishers, San Francisco, CA.
63.
QuinnR. E.RohrbaughJ. (1983), ‘A spatial model of effectiveness criteria: Towards a competing values approach to organizational analysis’, Management Science, Vol 29, pp 363–377.
64.
RobinsonR. B. (1982), ‘The importance of ‘outsiders’ in small firm strategic planning’, Academy of Management Journal, Vol 25, No 1, pp 80–93.
65.
RosensteinJ. (1988), ‘The board and strategy: Venture capital and high technology’, Journal of Business Venturing, Vol 3, pp 159–170.
66.
SalancikG. R.PfefferJ. (1974), ‘The bases and uses of power in organizational decision making: The case of a university’, Administrative Science Quarterly, Vol 19, pp 453–473.
67.
SheehanR. (1967), ‘Proprietors in the world of big business’, Fortune, July.
68.
SimonH. (1964), ‘On the concept of organizational goal’, Administrative Science Quarterly, Vol 9, pp 1–22.
69.
StevensonW. B.PearceJ. L.PorterL. W. (1985), ‘The concept of ‘coalition’ in organization theory and research’, Academy of Management Review, Vol 10, pp 256–268.
70.
UngsonG. R.BraunsteinD. N. (1982), Decision Making, Kent, Boston, MA.
71.
WaltonR. E.DuttonJ. M. (1969), ‘The management of interdepartmental conflict: A model and review’, Administrative Science Quarterly, Vol 14, pp 73–84.
72.
WardJ. L. (1990), Keeping the Family Business Healthy, Jossey-Bass, San Francisco, CA.
73.
WelshWhite (1981), ‘A small business is not a little big business’, Harvard Business Review, Vol 59, No 4, pp 18–32.
74.
WhiteR. E.HammermeshR. G. (1981), ‘Toward a model of business unit performance: An integrative approach’, Academy of Management Review, Vol 6, pp 213–223.
75.
YuchtmanE.SeashoreS. E. (1967), ‘A system model for organizational effectiveness’, American Sociological Review, Vol 32, pp 891–903.
