Management Controlling and Governance of Family Businesses: Theoretical Insights and Empirical Evidence from Italy (Contributions to Management Science)

This book addresses a selection of major topics in family businesses, namely ‘managerialization’ and ‘professionalization’, succession, internationalization, access to financial markets, and how governance and control systems can help family firms respond to common problems inherent in the business. Written by prominent experts, the respective chapters highlight the interactions between these topics in order to develop a systems view of the distinctive challenges, and of the potential roles that governance and control systems can play in these contexts. The book is divided into two main parts, the first of which reviews the current literature and develops a comprehensive theoretical framework. Based on these theoretical insights, the second part then interprets and discusses the empirical evidence, including case studies on family-run firms in Italy. Contents 7 Contributors 9 List of Figures 10 List of Tables 12 Introduction 13 Governing Family Business Challenges. Theoretical Insights 17 An Overview of Family Business. Profiles, Definitions and the Main Challenges of the Business Life Cycle 18 1 Introduction 18 2 Family Businesses Profiles and Features 20 3 Family Businesses Life-Cycle Model 24 4 Main Challenges of Family Businesses 27 5 Conclusions 32 References 34 Professionalization and Managerialization in Family Firms: A Still Open Issue 40 1 Introduction 40 2 Professionalization 42 2.1 The Evolutionary Meaning of Professionalization 42 2.2 Relevant Factors in Processes of Professionalization 44 2.3 Professionalization and Performance 48 3 Managerialization 49 3.1 Definitions and Theoretical Approaches 49 3.2 How the Design of Formal Management Control Systems Mitigates Critical Issues 50 3.3 How the Use of Formal Management Control Systems Affects Firm Performance 52 4 A Tight Relationship 53 5 Conclusion and Research Agenda 54 References 55 The Survival of Family Businesses: The Challenge of Succession 61 1 Introduction 61 2 Succession in Family Business: A Complex and Multidimensional Process 63 3 Succession as an Opportunity to Be Seized 66 4 Handling the Succession Process 69 5 The Role of External Advisors 72 6 Conclusions 79 References 80 The Growth of Family Businesses: The Path to Internationalization 85 1 Introduction 86 2 Family Management and the Process of Internationalization: A Review of Literature 88 3 The Process of Internationalization 90 3.1 Internationalization and Performances 92 3.2 Location, Timing, Degree and Forms of Internationalization 93 4 The Strategies for Internationalization and the Family Business 97 5 The Process of Internationalization as the Driving Force of the Change of the Family Business 99 6 The Choices of Location, Timing and Degree of Internationalization in the Family Business 101 7 Conclusions 102 References 104 Investment Decisions in Listed Family Firms: Risk Aversion and Emotional Attachment 106 1 Introduction 106 2 Definitional Concerns 107 3 Peculiarities of Listed Family Firms 108 4 Underinvestment Problem and the Role of Board of Directors 109 4.1 The Role of Board Monitoring 111 4.2 The Role of CEO Emotional Involvement 112 4.3 Conclusions 113 References 114 Governing Family Businesses: A Research Map 118 1 Introduction to a Map of Family Business Topics 118 2 Mapping Family Business Topics as Networks Distributed in Space: The Challenges of Managerialization and Professionalization, Internationalization and Relations with Financial Markets 121 2.1 Mapping Managerialization and Professionalization: Family and Non-family Members as a Network Distributed in Space 121 2.2 Mapping Internationalization: Domestic and Foreign Markets as a Network Distributed in Space 123 2.3 Mapping Relations with Financial Markets: Family Business and Financial Investors as a Network Distributed in Space 126 3 Mapping Family Business Topics as Networks Distributed in Time: The Challenge of Succession 128 4 Packaging the Maps: Governing Family Businesses to Manage Interdependent Networks 132 4.1 Interdependence Among All the Challenges 132 4.2 The Governance Systems Package for Managing Interdependencies 135 5 Reassembling All the Family Business Challenges Through the Governing Systems Package: Drawing a Unitary Map of Research 139 References 143 Field and Empirical Evidence on Governing Family Business Challenges from Italian Family Firms 150 Learning Financial Language to Face Ongoing Challenges. The Case of Greenlife 151 1 Introduction 151 2 Company Profile and Research Methodology 153 3 A Family firm’s Challenges and Their Interdependence: The Case of Greenlife 155 3.1 Starting the Professionalisation Process Through a Non-family General Director 156 3.2 Starting the Managerialisation Process Through the Introduction of Managerial Control Tools 158 3.3 The Spread of Financial Language and the New Challenges of Greenlife 161 4 Conclusions 163 References 166 Professionalization and Managerialization: Original Levers from Molino Nicoli Spa 168 1 Introduction 169 2 Who is Molino Nicoli Spa? 170 2.1 The Main Historical Paths 170 2.2 The Firm Organization 171 2.3 The Markets and Products 173 2.4 The Corporate Governance 175 3 The Levers of Professionalization and Managerialization 176 3.1 Injection Of High Professional Skills/Abilities 176 3.2 Family Members’ Willingness and the Introduction of Governance Mechanisms 177 3.3 Internal Coaching to Develop New Methods and Practices of Work 177 3.4 Construction of a Family–Non-family Partnership for Strategic Purposes 178 3.5 Introduction of Organizational Routines 178 3.6 Introduction of Management Control Systems and an ERP to Support the Decision Making in the Short and Long Term 179 3.7 Introduction of a Management Accounting and Control Function 181 4 The Emerging Framework 181 5 Conclusion 185 References 185 Beyond the Founder. Which Conditions Can Favor or Hinder the Professionalization of Family Firms? 188 1 Introduction 189 2 Methodology 190 3 The Two Case Studies 190 3.1 Teseo S.p.A. 190 3.2 Volta S.p.A. 194 4 Discussion and Conclusions 197 References 200 Internationalisation in Family Businesses. The Case of Mamagra 202 1 Introduction 202 2 Theoretical Foundations for the Study of the Empirical Case 204 3 The Internationalisation of Family Businesses. Empirical Evidence 207 4 Concluding Comments 214 References 216 Family Ownership and Investment Decisions. An Empirical Analysis on the Role of Board Monitoring and CEO Emotional Attachment 219 1 Introduction 219 2 Research Method 220 2.1 Institutional Setting 220 2.2 Sample 222 2.3 Variables 222 2.4 Model 224 3 Results 224 3.1 Descriptive Statistics 224 3.2 Empirical Results 226 4 Conclusions 229 References 229 Discussing and Concluding Remarks 231 Front Matter ....Pages i-xiii Introduction (Antonio Leotta)....Pages 1-4 Front Matter ....Pages 5-5 An Overview of Family Business. Profiles, Definitions and the Main Challenges of the Business Life Cycle (Antonio Leotta, Carmela Rizza, Daniela Ruggeri)....Pages 7-28 Professionalization and Managerialization in Family Firms: A Still Open Issue (Cristiana Cattaneo, Gaia Bassani)....Pages 29-49 The Survival of Family Businesses: The Challenge of Succession (Annalisa Sentuti, Francesca M. Cesaroni)....Pages 51-74 The Growth of Family Businesses: The Path to Internationalization (Elena Cristiano)....Pages 75-95 Investment Decisions in Listed Family Firms: Risk Aversion and Emotional Attachment (Claudia Frisenna, Davide Rizzotti)....Pages 97-108 Governing Family Businesses: A Research Map (Gaia Bassani, Cristiana Cattaneo, Elena Cristiano, Antonio Leotta)....Pages 109-140 Front Matter ....Pages 141-141 Learning Financial Language to Face Ongoing Challenges. The Case of Greenlife (Antonio Leotta, Carmela Rizza, Daniela Ruggeri)....Pages 143-159 Professionalization and Managerialization: Original Levers from Molino Nicoli Spa (Gaia Bassani, Cristiana Cattaneo, Francesca M. Cesaroni, Annalisa Sentuti)....Pages 161-180 Beyond the Founder. Which Conditions Can Favor or Hinder the Professionalization of Family Firms? (Annalisa Sentuti, Francesca M. Cesaroni, Gaia Bassani, Cristiana Cattaneo)....Pages 181-194 Internationalisation in Family Businesses. The Case of Mamagra (Elena Cristiano)....Pages 195-211 Family Ownership and Investment Decisions. An Empirical Analysis on the Role of Board Monitoring and CEO Emotional Attachment (Claudia Frisenna, Davide Rizzotti)....Pages 213-224 Discussing and Concluding Remarks (Antonio Leotta)....Pages 225-233