The Dynamics of Family Firms : An Institutional Perspective on Corporate Governance and Strategic Change

The governing dynamics that characterize family firms is investigated in this study by combining theories on corporate governance and strategic change with institutional theory in an in-depth analysis of two longitudinal case studies of Swedish family firms.A model of the intersection of corporate governance and the strategy process is presented. Interviews, observations, and documentary studies were used to track two small, manufacturing family firms.In one firm, a third-generation son assumed the office of CEO after his father stepped down, initiating a major change in the firm’s governance system.Although quite similar to the first firm, the second firm experienced little change after its founding father gave his oldest son the reins. The studies suggested that family companies can move toward new corporate governance systems during times of substantial strategic change.When changes in the processes of governance take place along with changes in the corporate governance system, institutional change can take place within family businesses. (SAA)