The Modern Firm, Corporate Governance and Investment
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The Modern Firm, Corporate Governance and Investment

Edited by Per-Olof Bjuggren and Dennis C. Mueller

This book explores the revolutionary development of the theory of the firm over the past 35 years. Despite rapid progress in the field, new developments in the microeconomic and industrial organization literature have been relatively scant. This book attempts to redress the balance by providing a comprehensive overview of the theory of the firm before moving on to examine firms and the organization of their economic activities. The contributors also investigate the impact of ownership structure and board composition on firm performance and study how the institutional framework of an economy affects investment decisions.
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Chapter 12: Board Governance of Family Firms and Business Groups with a Unique Regional Dataset

Lluís Bru and Rafel Crespí


Lluís Bru and Rafel Crespí 1. INTRODUCTION This study is a detailed description with methodological contribution to the measurement of a set of family business groups in the Balearics region in Spain that belong to either the Balearic Family Business Association (ABEF) or the nationwide association, the Spanish Family Business Institute (IEF). Before we discuss the object of our study, we will examine the main aspects that characterize the family business as an economic organization. Next, we will display their economic activity and relevance in the region’s economy. Subsequently, we will take a closer look at the economic behaviour and organization of the 556 companies that belong to the 50 family business groups. In our description we will examine these companies on two levels. First, each individual company will be contemplated as a separate economic entity. Second, we will offer a specific description of each family business group. For this, we have used the data we have on the family companies and their boards of directors as the essential basic information for our study. The main methodological innovation of our study is that the Spanish ‘two-surnames’ system allows us to analyse in detail the family ties among administrators at both the firm and the business group level. 2. OUR DEFINITION OF THE FAMILY BUSINESS What is understood by the term ‘family business’? We might define the family business as a company that fulfils two basic requirements: persistent belonging to individuals within a single family circle, and being governed by...

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