Chapter 2: Owning family governance within the two dimensions of the family business
The word governance is derived from a Greek term that means “to steer.” For family firms, the purpose of governance is to steer the entire enterprise toward desired outcomes, which often include outcomes beyond financial performance. Current governance research focuses primarily on traditional corporate governance and on business profitability as the measure of performance. However, family owned businesses include family governance structures beyond those traditionally examined, and outcomes important to the owning family that are typically not measured. In effect, current family business research overlays the governance structures and outcome measures used in non-family business research. And yet, this research does not fully account for the range of structures and outcomes preferred by business owning families. Based on a summary of 12 years of research, Yu, Lumpkin, Sorenson, and Brigham (2012) depict the overall landscape of family business with governance holding the central position in the family enterprise. Unlike previous research that focuses on some individual elements of governance and associated outcomes, particularly financial performance, the Yu et al. research summarizes the components of governance and the overall family business landscape in which it resides, referred to in this book as “A Map of the Landscape of Family Business” or Landscape Map. The Landscape Map summarizes the major outcomes, potential reach, and central role of governance.
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