Leading family firms: a double challenge

This article offers a conceptual framework of family business governance, with a special focus on extended family companies. The empirical base is made of 16 cases that we have been studying deeply for minimum 3 years. We posit that leaders of extended family firms face a double challenge, from two points of view. First, governance of ownership is just as critical as governance of the company. Second, for governance of both company and ownership the agency theory’s theoretical approach is necessary, but not sufficient. Particularly, the agency perspective, which looks at companies and their stakeholders from a contractual point of view, should be combined with a relational one that emphasizes the social side of relations that is particularly relevant in family firms. We also maintain that the two approaches suggest different governance and management systems which tend to “mix up”, sometimes complementing each other and sometimes overlapping; the advantages and disadvantages of such mix are discussed as well.