Family Businesses are a vital component of the economic health of many counties, they account for 95% of operating companies and represent 62% of the total trade activities in several countries across the world. Related studies show that less than 30% of family businesses survive to the second generation and fewer than 6% survive beyond the third Generation. despite these alarming facts and figures, the related literatures remain scarce.
this research study aims to contribute to the development of knowledge on sustainability of family business. More specifically, it empirically examines the impact of corporate governance practices on family business performance and sustainability.
To achieve this goal, a literature review was conducted to provide an original conceptualization of sustainability of family businesses and the main factors affecting it. A complex model was built to illustrate the effects of corporate governance practices on family businesses sustainability, and a set of hypotheses covering the interrelationships between the constructs were extracted. Then, a reliable and valid scale was developed and piloted. The experimental fieldwork was conducted on a sample of 200 executives working in Lebanese family businesses. Correlation, regression and Probit analysis techniques were used to test the hypotheses.
The output of this study provides family businesses executives with a model illustrating the impact of “corporate governance” on “Sustainability of family business”, as well as a deeper understanding of the complex phenomena of family business, the main factors affecting its viability and the information needed to develop customized solutions; the statistical results shed the light on 4 main empirically supported recommendations; 1) Corporate governance as a solution for family business viability syndrome, 2) Leadership is a “Bivalent” attributes of a family business, 3) Enforcing accountability in response to nepotism and poor risk management and 4) Finding the optimum balance between standardization of processes and competitive differentiation
The study satisfied the query of the researcher in the context in which it happened. Yet, it should also trigger several future research studies that can expand to a larger scope, a deeper analysis of the demographics or an enhanced and enriched model. Moreover, the output should trigger several debates about the type some relationships whether it is correlational or causality like TQM and sustainability, and a deeper analysis of the hypotheses that were practically supported but statistically not, or the opposite, such as leadership-sustainability or TQM-Risk Management.
Keywords: Family business, sustainability, Corporate governance, Leadership, Talent Management