Walle ik, K is in
Doc o al Thesis
Co po a e go e nance in amily i ms: The No wegian
ma i ime sec o
PhD Se ies, No. 20.2009
P o ided in Coope a ion wi h:
Copenhagen Business School (CBS)
Sugges ed Ci a ion: Walle ik, K is in (2009) : Co po a e go e nance in amily i ms: The No wegian
ma i ime sec o , PhD Se ies, No. 20.2009, ISBN 9788759383995, Copenhagen Business School
(CBS), F ede iksbe g,
h ps://hdl.handle.ne /10398/7901
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/208728
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by-nc-nd/3.0/
The PhD School o Economics and Managemen PhD Se ies 20.2009
PhD Se ies 20.2009
Co po a e Go e nance in Family Fi ms
copenhagen business school
handelshøjskolen
solbje g plads 3
dk-2000 ede iksbe g
denma k
www.cbs.dk
ISSN 0906-6934
ISBN 978-87-593-8399-5
Co po a e Go e nance in Family Fi ms
The No wegian Ma i ime Sec o
K is in Walle ik
CBS PhD n 20-2009 K is in Walle ik • OMSLAG.indd 1 17/08/09 16:36:21
Co po a e Go e nance in Family Fi ms
K is in Walle ik
Co po a e Go e nance in Family Fi ms
The No wegian Ma i ime Sec o
1s edi ion 2009
PhD Se ies 20.2009
© The Au ho
ISBN: 978-87-593-8399-5
ISSN: 0906-6934
“The Doc o al School o Economics and Managemen is an ac i e na ional
and in e na ional esea ch en i onmen a CBS o esea ch deg ee s uden s
who deal wi h economics and managemen a business, indus y and coun y
le el in a heo e ical and empi ical manne ”.
All igh s ese ed.
No pa s o his book may be ep oduced o ansmi ed in any o m o by any means,
elec onic o mechanical, including pho ocopying, eco ding, o by any in o ma ion
s o age o e ie al sys em, wi hou pe mission in w i ing om he publishe .
Co po a e Go e nance in Family Fi ms
The No wegian Ma i ime Sec o
K is in Walle ik
A disse a ion submi ed o
Copenhagen Business School
2009

Acknowledgemen s
Comple ing his PhD- hesis has been possible due o all he suppo and encou agemen I ha e
ecei ed du ing he cou se o my doc o al esea ch. Wi hou he inancing om Agde Ma i ime
Resea ch Founda ion and Agde Resea ch, as well as he suppo om Ake Solu ions MH, his
p ojec would no ha e been possible o comple e. The e a e many people I would like o hank.
Fi s o all, I would like o hank my supe iso P o esso S een Thomsen a he Copenhagen
Business School o his pa ience and suppo . I wan o hank him o guiding me h oughou he
whole esea ch p ocess, and I g a e ully acknowledge he help and commen s along he way.
Ne e heless, he possible mis akes and p oblems in he hesis a e mine. I would also like o
since ely hank P o esso T ond Randøy a he Uni e si y o Agde o ac ing as my co-ad iso and
encou aging me du ing he en i e p ocess. In addi ion, I would like o collec i ely hank all my
esea ch colleagues a Agde Resea ch o hei suppo .
This PhD-p ojec , howe e , has indeed been a p ojec o he whole amily. I would like o exp ess
my g a i ude o my husband Mo en o his suppo , pa ience and encou agemen , and my h ee
daugh e s Ka h ine, Ma en and Cha lo e o gi ing me he inspi a ion and o unde s anding how
ime consuming such a esea ch p ojec can be. I would also like o hank my pa en s, Bjø g and
Oddmund, my sis e s Jo unn, Hege and Helene, my pa en s-in-law, Mål id and Ole Johnny, as well
as he es o my amily o hei help and suppo du ing his long p ocess. I could no ha e done
his wi hou you all.
K is iansand, July 2009
K is in Walle ik
Con en s
In oduc ion 1
Pape One:
Co po a e Go e nance in Family Fi ms 7
1.0 In oduc ion 8
1.1 Some Cha ac e is ics o he Family Fi m 10
1.2 Owne ship and Co po a e Go e nance 11
1.3 Di e en Go e nance Models 13
2.0 Theo e ical F amewo ks 15
2.1 Di e en Theo ies, hei Focus and he Use in Go e nance 15
2.2 Di e en Theo ies and hei Rele ance in he Go e nance o Family Fi ms 20
2.3 Family Owne ship in an Agency Theo y Pe spec i e 21
2.4 Family Owne ship in a Ne wo k and Social Capi al Theo y Pe spec i e 28
3.0 Family Fi m Go e nance – Va ious Go e nance Models 31
3.1 The Family Fi m 31
3.2 The Rela ional e sus he Con ac ual Go e nance Model 34
4.0 Family Fi m Go e nance – Va ious Rela ionships 37
5.0 Family Fi m Go e nance – A Rela ional Go e nance Model 41
6.0 Concluding Rema ks 44
Re e ences 45
Pape Two:
The E ec o Indus y Ne wo ks on Family Owne ship 55
1.0 In oduc ion 56
1.1 Family Owne ship as Mechanism o Reduce Agency P oblems 59
1.2 Family Owne ship as Response o he Business En i onmen 63
1.3 Family Owne ship due o Indus y Ne wo ks 67
2.0 Social Capi al, Rela ional Go e nance and Ne wo ks 68
2.1 Social Capi al and Rela ional Go e nance be ween Fi ms 68
2.2 Ins i u ional Theo y – “Isomo phism” 70
2.3 Indus y Ne wo ks and Clus e s 71
3.0 How can Ne wo ks A ec Family Owne ship in an Indus y? 74
3.1 Ne wo ks and Family Owne ship 74
3.2 Indus y Ne wo ks and Family Owne ship – P oposi ions 77
4.0 E ec s o Indus y Ne wo ks 81
4.1 Gene al Economic E ec s o Ne wo ks 81
4.2 Do Family Fi ms Gain mo e han o he Fi ms om S ong Ne wo ks? 82
5.0 Concluding Rema ks 89
Re e ences 90
Appendices 99
6

7
Pape One
CORPORATE GOVERNANCE IN FAMILY FIRMS
K is in Walle ik
Copenhagen Business School
2009
Abs ac
This pape su eys co po a e go e nance esea ch on amily i ms, paying special a en ion o
he unique elemen s in he go e nance o amily i ms. The esul is mainly a discussion o
co po a e go e nance in amily i ms, emphasizing how elemen s like us , al uism,
adi ions, amily ies, s ong ne wo ks, and ela ions a ec he go e nance s uc u e in hese
i ms.
I a gue ha amily i ms end o use a mo e “ ela ional go e nance model” compa ed o non-
amily i ms. This implies di e en mechanisms o selec ing manage s and boa d membe s,
which impac s he ela ionship be ween he owne s, manage s and boa d membe s. I p opose
ha social capi al embedded in ne wo ks and ela ions canno easily be aded o imi a ed and
ha his makes a di e ence in he go e nance o amily i ms e sus non- amily i ms. A
ela ional go e nance model may sol e some co po a e go e nance issues in a mo e op imal
manne in an en i onmen cha ac e ized by us and sha ed isions. Family i ms may also
gain om a ela ional go e nance model due o he special ai s ypical o hese i ms, like
amily ies, o e lapping oles in he i m, s ong pe sonal and social ne wo ks, as well as long
las ing comme cial ne wo ks.
Keywo ds: Family i ms, ela ional go e nance, amily ies, pe sonal ne wo ks
8
1.0 INTRODUCTION
Se e al s udies show ha he closely held o he amily i m is he no m o smalle i ms and,
in mos coun ies, e en o la ge companies (Shlei e and Vishny, 1997; La Po a e al.,
1999; Eisenbe g, 1976). La Po a e al. (1999), ind ha only one- hi d o la ge lis ed i ms
ha e dispe sed owne ship, sugges ing ha he image o he “Be le and Means” co po a ion as
he dominan owne ship s uc u e in he wo ld is misleading. The e is a g owing body o
esea ch in es iga ing he cha ac e is ics o concen a ed owne ship because o he speci ic
cos s and bene i s in closely held i ms (Claessens e al., 2000; Faccio and Lang, 2002). Since
amily owne ship is he mos common owne ship s uc u e in many coun ies (Shlei e and
Vishny, 1986), se e al s udies ha e also in es iga ed he cha ac e is ics o his case o he
closely held i m (Ami and Villalonga, 2006; Ande son and Reeb, 2003). Family i ms ha e
he special ci cums ances o amily ies be ween amily membe s and ac oss gene a ions, he
amily membe s o en ha e se e al oles in he i m, in addi ion o he amily o en being a
con olling block holde .
Gene ally, la ge owne s ha e s onge incen i es o moni o manage s as well as he powe o
en o ce hei own in e es s. This should in p inciple inc ease sha eholde s’ alue and inancial
pe o mance due o inc eased incen i es o moni o manage s and educe manage ial
oppo unism (Thomsen and Pede sen, 2000). Ne e heless, la ge sha eholde s may also ha e
an incen i e o ex ac p i a e bene i s igge ing agency p oblems and enhancing agency
cos s (Schulze e al., 2001). Consequen ly, amily owne ship could ha e bo h a posi i e and a
nega i e e ec on i m alue. Se e al s udies ha e analyzed he ela ionship be ween amily
owne ship and pe o mance, measu ing inancial pe o mance by he ma ke - o-book a io,
Tobin’s q o e u n on asse s (Ami and Villalonga, 2006; C onquis and Nilsson 2003;
Gomez-Mejia e al., 2001; Gedaljo ic and Shapi o, 2002; Ande son and Reeb, 2003;
Ande son, Mansi and Reeb, 2003; Gugle , 2003). These s udies d aw di e en conclusions
abou his ela ionship. Howe e , he a ious s udies a e conduc ed in di e en agency
con ex s and wi h di e en de ini ions o he amily i m, which may pa ly explain he
di e ging esul s. The a ia ions in esul s may also be due o i m, indus y o na ion speci ic
ac o s, o due o di e en means o ope a ions, s a egic decisions and go e nance s uc u es,
a ec ing bo h he cos s and he bene i s o high owne ship concen a ion and amily con ol.
Fo his eason, i seems di icul o es ablish one common ela ionship be ween amily
owne ship and pe o mance. This indica es ha he agency con ex o he s udies needs o be
aken in o conside a ion in he in e p e a ion o he esul s.
9
Due o he wo ldwide p e alence o amily i ms, he e should be some ad an ages wi h his
owne ship s uc u e ha o se s he di e si ica ion disad an ages, and so he op imal
owne ship s uc u e includes an analysis o he ade-o s be ween isk and incen i e
e iciency (Jensen and Meckling, 1976; Fama and Jensen, 1983; Demse z, 1983; Shlei e and
Vishny, 1997). An impo an issue in he discussion o amily i ms om a co po a e
go e nance pe spec i e is he ques ion o succession and how his should happen. Bu ka e
al. (2003) a gue ha he e a e h ee b oad heo ies o he bene i s o a amily o p ese ing
con ol. The i s bene i is ha he e is a signi ican “ameni y po en ial” o amily con ol,
e e ing o he non-pecunia y p i a e bene i s o con ol. This means u ili y o he ounde
ha does no come a he expense o p o i s and in cases whe e he ameni y po en ial is la ge
one can expec amilies o emain in con ol as long as hey can (Demse z and Lehn, 1985). A
second eason o p ese a ion o amily con ol is ha he amily name i sel is a ca ie o a
epu a ion in economic and poli ical ma ke s, gi ing ” epu a ional bene i s”, whe e hese
bene i s a e dilu ed i con ol is su ende ed o an ou side . A hi d heo y is he possibili y o
exp op ia ion o ou side in es o s ha comes wi h con ol (Bu ka e al., 2003).
In he analyses o amily i ms many ques ions a ise: Wha de e mines he di e ences in
amily con ol among coun ies? How should amily i ms be de ined? Wha in luences and
d i es amily owne ship? Do amilies use con olling de ices o enhance con ol? How do
amilies go e n he i m? Se e al o hese ques ions a e ou side he scope o his pape , which
will mainly be a discussion o co po a e go e nance in amily i ms, emphasizing how
elemen s like al uism, adi ions, amily ies, s ong ne wo ks and ela ions a ec go e nance
s uc u es in hese i ms. One may a gue ha he e a e some go e nance e iciencies in amily
i ms compa ed o o he i ms due o he social ins i u ion he amily ep esen s. Howe e ,
hese e iciencies may also be due o he go e nance models hey choose, whe e a mo e
ela ional go e nance model may ep esen a be e solu ion o go e nance p oblems in some
i ms and agency con ex s. In o de o discuss co po a e go e nance in amily i ms, I i s
in oduce some cha ac e is ics o he amily i m in addi ion o a gene al in oduc ion o
co po a e go e nance and why owne ship is pe cei ed o be such an impo an elemen .
The ea e , I discuss se e al o he heo ies used in he co po a e go e nance li e a u e and in
he analyses o amily i ms, wi h agency heo y being he mos cen al. My main in e es in
his pape is he special ac o s in he go e nance o amily i ms, whe e he go e nance
mechanisms a e a ec ed by amily ies, s ong ela ions and ne wo ks. Fo his pu pose, I
in oduce he ne wo k and social capi al heo y in o de o cap u e hese addi ional ai s.
10
1.1 Some Cha ac e is ics o he Family Fi m
The e is no common ag eemen on how o de ine wha he e m “ amily business” ac ually
means. The amily i m cons i u es a wide ange o i ms, om small owne -manage i ms o
la ge lis ed amily-con olled co po a ions (Mus akallio, 2002). Neubaue and Lank (1998)
s a e, ha a i m can be ega ded as a amily i m i a gi en amily holds he o ing con ol o
he i m. Ami and Villalonga (2006), s a e ha in amily i ms he amily is o en in con ol,
ei he h ough being a la ge block holde wi h cash low igh s, o hey ha e o he o ing
a angemen s enabling hem o emain in con ol. Randøy and Goel (2003) also ocus on he
deg ee o in luence and con ol h ough managemen posi ions o s ong ep esen a ion on he
boa d in de ining he amily i m.
E en hough amily i ms a e di e en , hey sha e some common cha ac e is ics. One cen al
elemen in amily i ms is he o e lapping oles o amily, owne ship and managemen . In
i ms wi h dominan amily owne ship, he amily o en has mul iple oles in he i m h ough
bo h managemen posi ions and boa d o di ec o s (Tagiu i and Da is, 1982). Family
in ol emen and he mul iple oles hey ha e may inc ease commi men o long- e m alue
c ea ion, bu i may also ep esen a challenge in se ing up op imal go e nance s uc u es in
hese i ms (Mus akallio, 2002). A second cha ac e is ic in amily i ms is he s ong ocus on
owne iden i y, wi h sha ed iden i y and common language o amilies, a s ong o ganiza ional
cul u e, and amily membe s’ business expe ise gained du ing ea ly childhood onwa ds (Ke s
de V ies, 1996; Neubaue and Lank, 1998; Mus akallio, 2002). Thi dly, al uism and
s ewa dship a e o en used as cha ac e is ics o amily i ms compa ed o o he owne ship
s uc u es, whe e amilies a e pe cei ed o ha e ocus on non-economic goals in addi ion o
he economic goals (Donaldson and Da is, 1991; Luba kin, Ling and Schulze, 2003; Ke s de
V ies, 1996). This mix u e o business and non-business goals may lead o manage ial
en enchmen whe e owne -manage s ac oppo unis ically by sa is ying hei own needs a
he expense o i m pe o mance and long- e m su i al (Mus akallio, 2002). A ou h ac o
is he su i al o he i m due o lack o managemen capabili ies in amily i ms, especially
ega ding he descendan s o ounde (Ge sick e al., 1997; Ke s de V ies, 1996). Finally,
sha es in amily i ms a e o a ce ain deg ee illiquid wi h he implica ion ha selling ou is
no always an op ion o he owne s o a amily business (Mus akallio, 2002). The abo e
men ioned elemen s a e some o he cha ac e is ics o en men ioned when discussing amily
owne ship as opposed o o he owne ship s uc u es. The e a e, howe e , addi ional issues
ela ed o amily i ms and o he go e nance o hese i ms ha will be discussed la e .
11
1.2 Owne ship and Co po a e Go e nance
Owne ship has been one cen al elemen in he co po a e go e nance esea ch due o he
e ec i has on how i ms ope a e and o ganize hemsel es (James, 1999), bu also due o he
ques ion o who con ols he i m (Bennedsen and Wol enzon, 2000). Hansmann (1996)
de ines a i m’s owne s as pe sons ha ing wo o mal igh s: “ he igh o con ol he i m and
he igh o app op ia e he i m’s p o i s” (Hansmann, 1996, page 11). Fama and Jensen
(1983a) ocus on esidual isk and esidual claims as impo an in he s udy o owne ship and
di e en o ms o economic o ganiza ion, whe eas Jensen and Meckling (1998) ocus on he
igh o sell he owne ship igh s in hei de ini ion o owne ship. Mus akallio (2002)
summa izes he di e en de ini ions o owne ship in o h ee elemen s: 1) he igh o con ol
he i m, 2) he igh o esidual claims and 3) he igh o sell owne ship igh s. In addi ion o
he de ini ion o owne ship, an impo an ques ion has been whe he owne ship should be
ea ed as endogenous o exogenous. Va ious s udies conclude di e en ly on his poin
(Himmelbe g e al., 1999; Gugle and Wiegand, 2003; Ekeland, 2002). In his pape I ea
owne ship as endogenous, whe e my main ocus is on he go e nance o amily i ms mo e
han he easons o amily owne ship.
Ea lie co po a e go e nance li e a u e ends o ocus on he di e ences be ween dispe sed
and concen a ed owne ship in he analyses o co po a e go e nance mechanisms. Dispe sed
owne ship no mally implies many small in es o s and sepa a ion be ween managemen and
con ol (Be le and Means, 1932). One excep ion o his could be cases whe e he e is a
de iance be ween cash low igh s and con olling igh s, ei he h ough mul iple sha e classes
o o he con olling de ices. Fama and Jensen (1983), s a e ha his s uc u e su i es
because o he bene i s o specializa ion o managemen and isk bea ing as well as con ol o
agency p oblems. The de ini ion o concen a ed owne ship may a y om coun y o coun y
depending on he legal en i onmen , he le el o in es o p o ec ion, as well as he size o
i ms. In he U.S, concen a ed owne ship in publicly lis ed i ms is o en de ined as 5% o
mo e o he o ing igh s (Ami and Villalonga, 2006). Due o he size o hese i ms, each
sha e-holde only holds a small ac ion o he equi y, and 5% is ega ded as a subs an ial
sha e o he equi y. In o he coun ies whe e concen a ed owne ship is mo e common, he
c i e ion is o en 20% o he o es, assuming ha 20% is enough o ha e e ec i e con ol o a
i m (La Po a e al., 1999). In de ining a amily i m, ac ual con ol and in luence o he i m
is o en emphasized, compa ed wi h pe cen age owne ship, ocusing on means o main aining
con ol like mul iple sha e classes o py amids (Neno a, 2003; Bu ka e al., 2003).

12
The inance li e a u e ocuses bo h on dispe sed and concen a ed owne ship, bu ends o
ha e a s ong sha eholde pe spec i e, especially ega ding he possible exploi a ion o
mino i y sha eholde s in publicly lis ed i ms (La Po a e al., 1999). Family i m esea ch, on
he o he hand, has o en been ound in he “managemen and en ep eneu ial” li e a u e, o en
ocusing on non-lis ed amily i ms. Howe e , in many coun ies he e is also a la ge
p opo ion o publicly lis ed amily i ms (Be and and Schoa , 2006), indica ing ha he e is
also a need o d aw he a en ion o his ype o amily i m. In his pape I ega d he amily
i m as a special case o he closely held i m, assuming ha he e a e di e ences in he
go e nance s uc u e depending on whe he he amily is he block holde o no . I ocus on
he special issues in he go e nance o amily i ms, whe e he go e nance mechanisms
should be se up o go e n bo h he i m and he amily.
The e a e di e en de ini ions o co po a e go e nance. Acco ding o Shlei e and Vishny
(1997, page 737), “co po a e go e nance deals wi h he ways in which supplie s o inance o
co po a ions assu e hemsel es o ge ing a e u n on hei in es men ”, wi h he co po a e
go e nance mechanisms supposedly p o iding his assu ance. This pe spec i e on co po a e
go e nance is o en e e ed o as ac i i ies o educe he p oblem o sepa a ion o owne ship
and con ol, o en ound in widely held i ms (Shlei e and Vishny, 1997). Bech , Bol on and
Roell (2002), de ine co po a e go e nance issues as being conce ned wi h he esolu ion o
collec i e ac ion p oblems among dispe sed owne s and he esolu ion o con lic s be ween
a ious co po a e claimholde s. They men ion ha a undamen al dilemma o co po a e
go e nance is ha egula ing la ge sha eholde s is necessa y, bu limi ing he powe o la ge
in es o s can also esul in g ea e manage ial disc e ion and scope o abuse. Bo h o hese
de ini ions s em om he agency heo y pe spec i e o he i m.
By adding he amily dimension o hese de ini ions, one may a gue ha he de ini ion by
Bech , Bol on and Roell (2002), ocusing on egula ing la ge sha eholde s applies. Howe e ,
he e a e addi ional elemen s in he go e nance o amily i ms like al uism, amily and
pe sonal ies, adi ions, as well as s ong ne wo ks (Luba kin, Ling and Schulze, 2003; Ke s
de V ies, 1996), indica ing ha i may be ele an o add o he heo e ical pe spec i es in o
he discussion and de ini ions o co po a e go e nance in amily i ms. The ela ional
dimensions should be conside ed when se ing up go e nance s uc u es in hese i ms and o
his pu pose I add he ne wo k heo y, including elemen s om he social capi al heo y, as
addi ional heo e ical amewo ks in he discussion o amily i m go e nance.
13
1.3 Di e en Go e nance Models
The co po a e go e nance li e a u e o en de ines co po a e go e nance mechanisms as
owne ship s uc u e, boa d s uc u e and managemen incen i es (Shlei e and Vishny, 1997).
How hese go e nance mechanisms a e used, and he ela ionship be ween hem, can be
de ined as he go e nance model o go e nance s uc u e (Mus akallio, 2002). Di e en
go e nance models may ep esen a beha io al dis inc ion and apply in di e en owne ship
s uc u es. Con ac ual and ela ional go e nance models ep esen wo such models.
1) The con ac ual go e nance model
Agency heo y iews he i m as a nexus o con ac s (Alchian and Demse z, 1972; Jensen
and Meckling, 1976), whe e hese con ac s speci y he na u e o esidual claims as well as
alloca ion o decision igh s (Fama and Jensen, 1983). In his agency con ex , con ac ual
go e nance add esses he aspec s o he o mal con ol exe cised by he boa d o di ec o s
wi h he aim o imp o ing s a egic decision-making (Mus akallio, 2002). This model s esses
he impo ance o owne ship s uc u e because o i s in luence on boa d composi ion and
boa d oles (Zah a and Pea ce, 1989). Bo h ex e nal and in e nal go e nance mechanisms a e
used o mi iga e he agency p oblems by p o ec ing sha eholde s agains manage ial
oppo unism (Jensen and Meckling, 1976). Howe e , amily i ms o en ely on in e nal
go e nance mechanisms due o he ac ha he ma ke o co po a e con ol is no as
a ailable o amily i ms and because o es ic ions on ade o hese sha es (Bennedsen,
2002). Key wo ds in he con ac ual go e nance model a e owne ship s uc u e, boa d
s uc u e, boa d moni o ing and boa d counsel, agency p oblems and con ol mechanisms.
2) The ela ional go e nance model
The ela ional go e nance model ocuses on he op imal use o he social capi al embedded in
social ela ionships among he owne - amily and he managemen (Mus akallio, 2002).
Whe he a amily i m is success ul depends on how i manages o eap he bene i s o long
las ing ela ionships, sha ed isions and us among amily membe s, and loyal y and long
adi ions (Ha ey, 1999a; Ouchi, 1980). Di e ences in i m pe o mance a e a esul o
di e ences in he abili y o c ea e and use he social and human capi al in he i m (Nahapie
and Ghoshal, 1998). G ano e e (1985) a gues ha he ela ional go e nance model can
complemen he con ac ual go e nance o amily i ms wi h he ocus on us , sha ed
isions, amily ins i u ions and social in e ac ion. Key wo ds in his model a e us , al uism,
ela ional con ac ing, and pe sonal ne wo ks.
14
I is a gene al pe cep ion ha he o e all objec i e o co po a e go e nance mechanisms is o
educe he agency p oblems h ough alignmen o objec i es be ween owne s and manage s,
and he eby educe agency cos s. Howe e , he op imal usage o he di e en co po a e
go e nance mechanisms depends on he agency con ex a i m ope a es wi hin. Fo his
eason, he co po a e go e nance li e a u e o en di ides he di e en go e nance mechanisms
in o in e nal and ex e nal ins umen s (Shlei e and Vishny, 1997). In e nal co po a e
go e nance mechanisms o en men ioned a e boa d s uc u e, managemen incen i es, and
owne ship s uc u e (Shlei e and Vishny, 1997), whe e he co po a e go e nance esea ch
seems o ega d owne ship as a e y impo an in e nal mechanism.
Howe e , owne ship in i sel also in ol es go e nance cos s such as cos s o con olling
manage s, cos s o collec i e decision-making and cos s o isk bea ing (Hansmann, 1996),
and he ela i e cos s a y wi h di e en o ms o owne ship. Di e en o ms o owne ship
also ha e di e en cha ac e is ics ega ding go e nance mechanisms. The ex e nal co po a e
go e nance mechanisms like p oduc compe i ion and he ma ke o co po a e con ol and
akeo e s a e supposed o ha e a disciplining e ec on manage s, educing he need o
in e nal go e nance s uc u es. E en hough mos esea che s ag ee ha p oduc ma ke
compe i ion is a powe ul o ce owa d economic e iciency, many a e skep ical as o whe he
his alone can sol e he p oblem o co po a e go e nance (Shlei e and Vishny, 1997; Bech ,
Bol on and Roell, 2002). The use o in e nal o ex e nal go e nance mechanisms can change
o e ime and wi hin di e en business en i onmen s.
This pape ocuses on how in e - ela ions be ween di e en in e nal go e nance mechanisms
change wi h di e en owne ship and he uniqueness in he go e nance o amily i ms.
Family i ms a e o in e es because hey seem o ha e g ea e ocus on owne iden i y and
social aspec s compa ed o non- amily i ms wi h la ge block holdings, and hey may use
o he go e nance mechanisms in hei go e nance s uc u e in o de o op imize he bene i s
o being a amily i m. Family owne ship pe se is no necessa ily a solu ion o go e nance
p oblems, bu in some con ex s a ela ional go e nance model can educe some o he
go e nance p oblems in hese i ms. The s uc u e o his pape is as ollows: Sec ion 2
p esen s di e en heo e ical amewo ks, and how hese apply o he analysis o he
go e nance o amily i ms. Sec ion 3 discusses ela ional and con ac ual go e nance
models. In sec ion 4, I discuss he di e en ela ionships in amily i ms. Sec ion 5 p esen s a
ela ional go e nance model and sec ion 6 has some concluding ema ks.
15
2.0 THEORETICAL FRAMEWORKS
In his sec ion, I i s p esen some o he heo ies used in co po a e go e nance esea ch, hei
ocus and hei use in he go e nance o i ms. The ea e I discuss how he di e en heo ies
a e ele an in he go e nance o amily i ms and how hey may sol e some o he speci ic
issues ha apply in hese i ms, including a discussion o he selec ion o he heo e ical
amewo ks o his pape .
2.1 Di e en Theo ies, hei Focus and he Use in Go e nance
Agency heo y is based on neoclassical economics, s udying he ela ionship be ween
manage s and owne s and assuming limi ed a ionali y and sel -in e es ed beha io o human
beings (Milg om and Robe s, 1992). I is conside ed he main heo e ical amewo k o
co po a e go e nance esea ch, due o he ocus on sepa a ion o owne ship and con ol
(Eisenha d , 1989; Zah a and Pea ce, 1989). Ne e heless, sepa a ion o owne ship and
con ol is no always he main p oblem in he go e nance o i ms. Some imes he la ges
p oblems a e exp op ia ion o mino i y sha eholde s (La Po a e al., 1997), manage ial
en enchmen (Shlei e and Vishny, 1997), myopic al uism (Luba kin, Ling and Schulze,
2003), o esou ce sca ci y (P e e , 1982). In o de o cap u e he di e en go e nance issues,
i may be alid o use o he heo ies in addi ion o agency heo y as heo e ical amewo ks o
he analysis o co po a e go e nance in i ms (Eisenha d , 1989). Table I gi es an o e iew o
some o he heo ies used in ea lie co po a e go e nance esea ch.
Table I: Theo e ical F amewo ks in he Co po a e Go e nance Li e a u e
Theo e ical amewo k: Focus: Use in go e nance:
Agency heo y Minimize p oblems o Rela ionship be ween owne s
sepa a ion o owne - and manage s, alignmen ,
ship and con ol con ac ual go e nance
T ansac ion cos heo y Minimize ansac ion Ve ical in eg a ion, s a egic
cos s alliances, ma ke s, hie a chy
Ins i u ional heo y Fo mal and in o mal Pa ne ing, coope a ion and
s uc u es, ins i u ional in e change, ne wo ks, ules,
agg ega ed p e e ences no ms, alues and sys ems
Resou ce dependency heo y Manage dependency Ne wo ks, boa ds, in a- i m
o c i ical esou ces go e nance
S ewa dship heo y Al uism, good s ewa d, Manage s a e us wo hy
no alignmen p oblem s ewa ds, ela ional go e nance
Social capi al heo y Resou ces c ea ed Ne wo ks and in e -o ganiza ional
h ough ela ionships ela ionships
Ne wo k heo y Ease ansac ions Ve ical and ho izon al ela ions in
h ough ne wo ks ne wo ks
(Sou ce o pa s o able I: Mus akallio, 2002)
22
Ad an ages wi h Family Owne ship in an Agency Theo y Pe spec i e
A solu ion o incen i e p oblems
Whe eas he neoclassical heo y o he i m igno es all incen i e p oblems wi hin i ms, he
p incipal-agen heo y highligh s hese p oblems and leads o a iche and mo e ealis ic
po ayal o he i m, bu lea es un esol ed he basic issue o de e minan s o i m bounda ies
(Ha , 1995). In he co po a e go e nance li e a u e, concen a ed and amily owne ship a e
seen as a solu ion o incen i e p oblems in i ms (Jensen, 1983; Jensen and Meckling, 1976).
Shlei e and Vishny (1997), s a e ha when con ac s a e incomple e and manage s possess
mo e expe ise han he sha eholde s, manage s ypically end up wi h esidual igh s o
con ol. This gi es hem eno mous la i ude o sel -in e es ed beha io and esul s in highly
ine icien ac ions. In closely held and amily i ms, he majo i y owne (o en he manage )
equen ly has mo e accu a e in o ma ion han he mino i y sha eholde s, c ea ing asymme ic
in o ma ion among di e en g oups o sha eholde s (Ha , 1988). Ha (1988) demons a es
ha i a manage has be e access o in o ma ion han ou side owne s, i may be op imal o
ans e con ol o he manage . This implies ha he mo e impo an in o ma ion asymme ies
a e he mo e common i is o ind concen a ed o amily owne ship because o he economic
incen i es o manage ial owne ship.
Agency heo y a gues ha unde condi ions o incomple e in o ma ion and unce ain y, which
is he case in mos business se ings, wo agency p oblems a ise: he ad e se selec ion and he
mo al haza d p oblem. Dealing wi h hese wo p oblems has been an impo an issue in he
co po a e go e nance li e a u e o a numbe o yea s, and he li e a u e sugges s ha
owne ship s akes seem o be he main solu ion o hese p oblems (Jensen, 1983; Jensen and
Meckling, 1976). Jensen and Meckling (1976) a gue ha one solu ion o he mo al haza d
p oblem is o g an a manage a long- e m incen i e con ac o align his in e es s wi h he
in es o s, based on some e i iable pe o mance measu es, like sha ed owne ship, s ock
op ions o h ea o dismissal. The op imal incen i e con ac is de e mined by he manage ’s
isk a e sion, he impo ance o his decisions and his abili y o pay o he cash low
owne ship up on . Since he speci ica ion o igh s gene ally is a ec ed h ough con ac ing,
indi idual beha io in o ganiza ions, including he beha io o manage s will depend on hese
con ac s (Jensen and Meckling, 1976). I can be a gued ha he e ec o alloca ing
owne ship igh s apply o all o ms o concen a ed owne ship, bo h amily and non- amily
closely held i ms, bu di e en elemen s may be emphasized in hese con ac s.

23
In line wi h agency heo y, as men ioned abo e, concen a ed o amily owne ship can sol e
he mo al haza d and ad e se selec ion p oblem. This is because wi h pe sonal owne ship, he
pe sonal incen i e o wo k ha d sol es he mo al haza d p oblem, whe eas he pe sonal
incen i e o sell ou sol es he ad e se selec ion p oblem (o choosing he igh manage ). In
addi ion, pe sonal owne ship should send a c edible signal o ex e nal in es o s, and he eby
educe he ad e se selec ion p oblem o signaling quali y o in es o s (Thomsen and
Pede sen, 2000). These mi iga ing mechanisms howe e , a e mos e icien in ounde i ms
whe e he ounde is s ill ac i e. In amily i ms wi h descendan s o he ounde , he mo al
haza d p oblem may be sol ed wi h concen a ed owne ship. The ad e se selec ion p oblem
may no be sol ed, due o he ac ha he nex gene a ion is no sel -selec ed as he
owne ship is inhe i ed. They can decide i hey wan o sell ou (Thomsen and Pede sen,
2000), howe e , selling ou may some imes c ea e a p oblem in amily i ms wi h long
adi ions o amily owne ship and does no appea a plausible op ion.
Main ain con ol and independence
Con ol is ega ded o be one o he main incen i es o concen a ed owne ship. Be le and
Means (1932, page 66) de ine con ol as ollows: “Since di ec ion o e he ac i i ies o a
co po a ion is exe cised h ough he boa d o di ec o s, we may say o p ac ical pu poses ha
con ol lies in he hands o he indi idual o g oup who has he ac ual powe o selec he
boa d o di ec o s (o i s majo i y), ei he by mobilizing he legal igh o choose hem –
con olling a majo i y o he o es di ec ly o h ough some legal de ice – o by exe ing
p essu e which in luences hei choice”.
Two main mo i a ions o la ge-block owne ship a e sha ed and p i a e bene i s o con ol
(Holde ness, 2003). The sha ed bene i s o con ol a ise om highe moni o ing and con ol
by a la ge-block sha eholde , gi ing a highe i m alue due o incen i es om his
sha eholde . I his inc ease in alue is sha ed wi h he mino i y sha eholde s, i ep esen s a
sha ed bene i o con ol, whe e all sha eholde s bene i om he e o s o he con olling
sha eholde s. The p i a e bene i s o con ol a ise om block holde s’ incen i e o use hei
o ing powe o enjoy co po a e bene i s wi hou sha ing wi h mino i y sha eholde s
(Holde ness, 2003). Co po a e go e nance implica ions o a dominan owne ex ac ing
“p i a e bene i s o con ol” a he expense o mino i y sha eholde s and i m pe o mance a e
impo an (Fila o che and Mickiewicz, 2001). Di e en mi iga ing mechanisms apply o
sol ing he ex ac ion o p i a e bene i s in closely held and amily i ms.
24
Bebchuk (1994, 1999) has de eloped a en -p o ec ion heo y, whe e i is sugges ed ha
concen a ed owne ship is he bes a angemen when he p i a e bene i s o con ol a e la ge.
Con olling sha eholde s will end o main ain a lock on con ol, due o he ac ha i als
may be seeking o cap u e hese p i a e bene i s. In spi e o he agency cos s wi h amily and
concen a ed owne ship, sha eholde s may esis a dilu ion o hei equi y s akes, because he
alue o con ol igh s is g ea e han wha he con olling sha eholde could gain by selling
he sha es o equi y in es o s (Fila o che and Mickiewicz, 2001). Families may be awa e ha
hey could inc ease he p ice o hei s ocks by selling ou , bu a e eluc an o do so (Thomsen
and Pede sen, 2000). In amily owned i ms (bo h public and non-public), he amily o en
also ac s bo h as manage s and owne s, making la ge i m-speci ic in es men s in human
capi al. This may be ano he eason o being eluc an o gi e up con ol (Maug, 1996).
Close moni o ing
I owne s ail o exe cise e ec i e con ol o e hei manage s, he manage s ha e an
oppo uni y o engage in sel -dealing ansac ions, o en e e ed o as manage ial
oppo unism. P oblems wi h asymme ic in o ma ion a e magni ied by lock-in, meaning ha
i in es o s could wi hd aw hei in es men a will his would p o ide hem wi h p o ec ion
om oppo unism on he pa o he i m’s owne s (Hansmann, 1996). Oppo unism (and he
need o moni o ing) can be e y cos ly o owne s, and he educ ion o moni o ing cos s is
said o be one o he easons o concen a ed and amily owne ship, because owne ship and
con ol a e mo e aligned and agency cos s a e educed. F om an economic s andpoin , amily
owne ship is ega ded as an e icien ins i u ion and James (1999) s a es ha amily loyal y
may o e come he incen i e p oblems and inc ease he e iciency o i ms. Ne e heless,
he e may also be oppo unism in i ms wi h combined owne ship and con ol. Owne -
manage s may choose o exchange p o i s o o he bene i s, such as cu en o e u u e
consump ion, o “on- he-job” non-pecunia y consump ion (Fama and Jensen, 1985; Demse z,
1983; James, 1999), indica ing a need o mi iga ing go e nance mechanisms also in hese
i ms.
In ma ke s wi h high ola ili y and unce ain y, concen a ed owne ship can be a be e way o
eaching “hands-on” decisions. I may lead o mo e e icien and maybe e en be e decisions.
This implies ha he noisie he en i onmen is, he g ea e he pay-o om close moni o ing
can be, gi ing an incen i e o con ol. Hence, concen a ed and amily owne ship can be
iable go e nance mechanisms in ola ile and noisy en i onmen s (Demse z and Lehn, 1985).
25
Al uism and social epu a ion
Al uism and social epu a ion a e o en used as cha ac e is ics o amily i ms (Luba kin,
Ling and Schulze, 2003; Ke s de V ies, 1996). Ke s De V ies (1996) also a gues ha amily
i ms ha e a s ong sense o social esponsibili y owa ds socie y. Social con ol may in some
cases ac as a sel -en o cing go e nance mechanism, whe e aspec s like collec i e goals and
alues, us , sha ed ision and social epu a ion a e impo an elemen s (Ouchi, 1980; Jones
e al., 1997). Membe s o amily uni s a e educa ed in he no ms o socie y, like he economic,
poli ical and social wo ld a ound hem, as well as no ms o equali y and al uism (S ephens,
1963; James, 1999). In sec ion 4, I discuss he possible go e nance e ec s o hese ac o s.
One can a gue ha al uism is one o he easons o main aining amily owne ship, in
addi ion o he ad an ages o he amily go e nance sys em (James, 1999). The e ec i eness
o a amily go e nance sys em, howe e , depends on he abili y o align he in e es s o
amily manage s ac oss gene a ions, so ha hey ha e he incen i e o maximize i m alue.
Also, he success o amily i m go e nance depends on he ho izon he p esen amily
manage s ha e on in es men decisions. I decision make s ha e a ho izon ex ending beyond
hei enu e, a i m should expe ience posi i e e ec s on hei in es men ac i i ies, because
manage s need o conside he long- e m implica ions o hei consump ion and in es men
decisions. Linking ac ions o amily manage s o o he amily membe s’ wel a e is
disciplining, as manage s a e less likely o pu sue pe sonal in e es o e amily in e es
(James, 1999; Kepne , 1983). The key o success in amily i ms lies in he s abili y o he
amily sys em (James, 1999) whe e “ he amily’s s abili y becomes a sou ce o s eng h o
he i m, bu he amily’s ins abili y becomes a sou ce o weakness” (Pollak, 1985, page 587).
The e a e also agency p oblems in amily i ms, whe e con olling owne s’ pe cep ions and
choices a e biased by hei al uism o amily membe s, he highe he al uism, he mo e
di icul i is o choose op imal ac ions o he i m. No all con olling owne s su e om his
myopic al uism, howe e , and hose who do no can enjoy he go e nance e iciencies
associa ed wi h Ouchi’s (1980) concep o clan con ol. Myopic al uism can lead o
employees’ oppo unis ic beha io , wi h hold-up and mo al haza d conduc ed by bo h amily
and non- amily employees. Unlike mo al haza d, hold-up is based on ba gaining powe a he
han in o ma ion asymme ies and amily membe s possess ba gaining powe due o amily
ies (Luba kin, Ling and Schulze, 2003). The p e alence o amily i ms should indica e la ge
go e nance ad an ages han disad an ages.
26
Po en ial Disad an ages wi h Family Owne ship
Limi ed access o capi al (ex e nal equi y o deb )
“When o ganiza ions g ow, he limi ed inancial and manage ial esou ces o a ounding
amily impose cons ain s on de elopmen . Al hough amily con ol may be a way o esol e
agency p oblems, he lack o owne suppo o he new in es men esul s in a need o access
capi al ma ke unding” (Fila oche , Lien and Piesse, 2003, page 9). Be le and Means (1932)
conclude ha he la ge he company is, he mo e dispe sed he owne ship is. They a gue ha
his is due o he need o aising new capi al in public ma ke s because when companies g ow
and he need o in es men s in o ganiza ion speci ic asse s inc eases, he need o ex e nal
capi al inc eases (Be le and Means, 1932). This implies ha amily owne ship has i s limi s in
some indus ies, c ea ing a need o o he inancial a angemen s, ei he equi y o deb
inancing (Shlei e and Vishny, 1997). Tigh con ol by en ep eneu ial amilies may also
limi he abili y o seek capi al ou side hei pe sonal ne wo k (Ca ney and Gedaljo ic, 2002).
Fi ms wi h coupled owne ship and con ol may ind i di icul o aise equi y on a o able
e ms because he a m’s-leng h mino i y in es o s un he isk ha he majo i y owne s will
use hei con ol igh s o ex ac p i a e bene i s a he mino i y in es o s’ expense (Ca ney
and Gedaljo ic, 2002; La Po a e al., 1999b).
Risk a e sion and need o di e si ica ion
Risk and di e si ica ion a e a gumen s o dispe sed owne ship. One eason is ha an
indi idual in es o ’s weal h is limi ed compa ed ela i ely o he size o some in es men s.
Ano he eason may be ha he in es o wan s o di e si y he isk by in es ing in se e al
i ms wi h small s akes in each. A hi d eason may be conce n o liquidi y, whe e a la ge
s ake may be mo e di icul o sell in he seconda y ma ke s han smalle s akes (Bech ,
Bol on and Roell, 2002). Fama and Jensen (1983) discuss special ea u es o esidual claims
in di e en o ganiza ional o ms as e icien app oaches o con olling special agency
p oblems. Di e en o ganiza ional s uc u es may wo k in di e en en i onmen s depending
on he ac i i y. Fama and Jensen (1983) de ine open co po a ions as mo e likely o su i e
when he ac i i y has bene i s o isk sha ing, bene i s o specialized managemen , a g ea
numbe o o ganiza ion-speci ic asse s o be pu chased, g ea weal h equi ed o bond
con ac ual payo and low cos o sepa a ing decision managemen and decision con ol.
These ac o s may a ou he open co po a e o m when he echnology in an ac i i y implies
economies o scale. He e, sha eholde s ha e less p o ec ion om exp op ia ion han o he
s akeholde s due o he ac ha hei in es men is “locked” (Shlei e and Vishny, 1997).
27
Asse s Speci ici y
Williamson (1985) ega ds ansac ion cos s as a unc ion o asse speci ici y, unce ain y and
equency, wi h asse speci ici y being he a ionale o a i m o exis . T ansac ions ha a e
suppo ed by in es men s in du able ansac ion speci ic asse s, hese may ha e some “lock
in” e ec s, whe e in es men s canno be edeployed o al e na i e uses wi hou a loss o
p oduc i e alue. This app oach main ains ha some p ojec s a e easy o deb inance and
ough o be inanced by deb , especially p ojec s o which physical asse speci ici y is low o
mode a e. As asse speci ici y g ows, howe e , he p e-emp i e claims o he bondholde s
agains he in es men a o d limi ed p o ec ion – because he asse s in ques ion ha e limi ed
e-deployabili y. No only does he cos o deb inancing inc ease, bu he bene i s o close
supe ision also g ow. The upsho is ha equi y inance, which a o ds mo e in usi e
o e sigh and in ol emen h ough he boa d o di ec o s (o a la ge owne ) is he p e e ed
inancial ins umen o p ojec s whe e asse speci ici y is g ea (Williamson, 1996). High
asse speci ici y may c ea e a hold-up p oblem whe e a ew la ge owne s ha e he possibili y
o exp op ia e o alloca e hese asse s in a non- a o able way o he mino i y owne s. This
elemen can be ele an in con lic s be ween amily membe s in amily i ms, especially in
con lic s among ounde amily descendan s. Dispe sed owne ship is one way o mi iga ing
con lic s in i ms wi h high asse speci ici y because no single big owne can e-alloca e o
sell he asse s on behal o he mino i y owne s, educing he isk o he indi idual owne .
Limi ed access o esou ces and compe ence
P e e (1982), s a es ha o ganiza ions a e no in e nally sel -su icien , and ha hey a e
ex e nally in luenced because hey become dependen on he en i onmen ha supplies he
di e en esou ces. The esou ce dependency heo y ocuses on wo main elemen s: The i s
is he issue o ex e nal cons ain s, whe e he o ganiza ion needs o espond o he demands o
he o ganiza ion ha con ols he c i ical esou ces. The o he elemen a gues ha manage s
a emp o manage hei ex e nal dependencies, o ensu e su i al o he o ganiza ion, and
also o acqui e mo e au onomy and eedom om ex e nal cons ain s (P e e , 1982).
Dispe sed owne ship may be one way o secu ing access o c i ical esou ces in indus ies
wi h high ba ie s o en y, whe he hese a e compe ence o capi al. The access o
compe ence om mul iple owne s ei he h ough he boa d (Goods ein e al., 1994) o h ough
o he channels, may hen con ibu e posi i ely o he i m.

28
C i ique o he use o Agency Theo y in Family Fi m Resea ch
Agency heo y deals wi h po en ial p oblems o he agency ela ionship and how di e en
ways o con ac ing and o ganizing a ec ou comes o his ela ionship (Mus akallio, 2002).
Eisenha d (1989) s a es, ha he agency heo y add esses wo p oblems. One p oblem is
when he goals o he p incipal and he agen con lic and he o he , is when he p incipal and
agen ha e di e en a i udes owa ds isk, and hus p e e di e en ac ions. The agency
heo y is he mos common heo y in co po a e go e nance esea ch, also in he analyses o
co po a e go e nance in amily i ms. Howe e , he ac ha agency heo y pe cei es human
beings as oppo unis ic a ional ac o s ac ing in a sel -in e es ed manne , has led se e al
au ho s o a gue agains his iew.
Pe ow (1990) a gues ha human beings do no inhe en ly beha e in a sel -in e es ed manne
and ha he o ganiza ional se ings ha e an e ec on he human beha io . O he s claim ha
he agency heo y does no ecognize ha social s uc u es a ec o ganiza ional beha io ,
he eby bypassing cen al issues in o ganiza ion heo y (Uzzi, 1997; G ano e e , 1985).
G ano e e (1985) also s a es ha economic heo ies o o ganiza ions ha e an unde -
socialized concep ion o human ac ion because hese heo ies igno e he impac o social
ela ions and social s uc u es. O he s ocus on he e olu ion o ne wo k go e nance a guing
ha his canno be explained by agency heo y due o di e en p incipal-agen ela ionships,
as well as due o he ac ha he o mal con ol mechanisms do no apply in he same manne
(La son, 1992; Uzzi, 1997; Jones e al., 1997). In spi e o he c i ique, one can a gue ha he
agency heo y is a powe ul heo e ical amewo k in many esea ch con ex s. Howe e , in
o de o analyse a b oade ange o go e nance p oblems in i ms, i may be alid o
supplemen he agency heo y wi h o he heo ies.
2.4 Family Owne ship in a Ne wo k and Social Capi al Theo y Pe spec i e
The concep o social capi al has become inc easingly popula in a wide ange o social
sciences, including o ganiza ion s udies, because i can explain di e en ac o s’ ela i e
success in a numbe o a enas, bo h on mac o and mic o le els. Fo his eason, social capi al
heo y has been used o s udy na ions and communi ies (Fukuyama, 1995; Pu nam, 1993),
in e - i m ne wo ks (Bake , 1990; Uzzi, 1997), alue c ea ion, economic pe o mance and
en ep eneu ship (Bake , 1990; Nahapie and Ghoshal, 1998; La son, 1992), in a- i m
ne wo ks (Tsai and Ghoshal, 1998), as well as amily ela ions (Coleman, 1988).
29
The e a e se e al de ini ions o social capi al depending on whe he he ocus is on subs ance,
sou ces o he e ec s o social capi al. The de ini ions also a y depending on whe he he
ocus is on ela ions be ween ac o s, he s uc u e o hese ela ions be ween ac o s, o bo h
(Adle and Kwon, 2002). F om his, one can a gue ha social capi al can be seen as a esou ce
ha ies ac o s oge he h ough ex e nal linkages, whe e he ac ions o indi iduals o g oups
a e acili a ed by di ec o indi ec links o o he ac o s in social ne wo ks (Bu , 1992). In his
iew, social capi al is s ongly in luenced by ne wo k heo y wi h an emphasis on social
ne wo ks and can be ele an in he s udy o ne wo ks be ween i ms (Uzzi, 1997). Ano he
way o iew he social capi al is h ough he collec i e ac o s’ in e nal cha ac e is ics wi h a
ocus on he linkages among indi iduals o g oups wi hin an o ganiza ion, and speci ically on
hose ea u es ha gi e cohesi eness and he eby acili a e he pu sui o collec i e goals
(Adle and Kwon, 2002). This in e nal iew o social capi al may be ele an in he s udy o
in a- i m ne wo ks (Tsai and Ghoshal, 1998), whe e he ela ionships be ween owne s,
manage s and he boa d can be seen as some o hese ne wo ks.
I can be di icul o dis inguish be ween he ne wo k and he social capi al heo y due o he
pe cep ion ha social capi al is embedded h ough in e nal o ex e nal ne wo ks. The cen al
p oposi ion o social capi al heo y is ha ne wo ks o ela ionships cons i u e aluable
esou ces o he conduc o social a ai s, and ha much o he social capi al is embedded
wi hin ne wo ks o mu ual acquain ance and ecogni ion (Bo dieu, 1986). Also, in pa s o
ne wo k heo y, he social dimension is cen al. Social capi al cons i u es some aspec s o he
social s uc u e and acili a es he ac ions o indi iduals wi hin he s uc u e (Coleman, 1988).
I has been a gued ha social capi al inc eases he e iciency o ac ions due o ne wo ks o
social ela ions, especially hose cha ac e ized by weak ies o s uc u al holes (G ano e e ,
1973; Bu , 1992). Al hough he social capi al akes many o ms, i cons i u es some aspec s
o he social s uc u e and acili a es he ac ions o indi iduals wi hin he s uc u e (Coleman,
1990). Nahapie and Ghoshal (1998) di ide social capi al in o h ee dimensions in hei
analysis o social capi al: 1) he s uc u al dimension desc ibing he impe sonal connec ion
be ween di e en ac o s in a social ne wo k, including ne wo k ies, ne wo k con igu a ion
and app op iable o ganiza ion, 2) he cogni i e dimension e e ing o esou ces p o iding
sha ed codes, language and na a i es, and 3) he ela ional dimension add essing he quali y
o pe sonal ela ionships h ough us , no ms, obliga ion and iden i ica ion. Bo h ne wo k and
social capi al elemen s a e closely ied oge he , and in his pape I ocus on how hese a ious
elemen s a ec go e nance s uc u es in amily i ms.
30
E en hough he ne wo k and social capi al heo y ha e been used as amewo ks in esea ch
on in e - i m go e nance, he use in co po a e go e nance esea ch is limi ed. Howe e , he e
is one s udy ha inds ha social ies be ween boa d and CEO could con ibu e o boa d
e ec i eness wi hou educing con ol o e managemen (Wes phal, 1999). Ano he s udy
shows ha social ne wo ks based on boa d in e locks a ec s a egic alliance o ma ion,
he eby enhancing us (Gula i and Wes phal, 1999). Huse (1993) combines economic and
social app oaches in a s udy o he ela ionship be ween boa d o di ec o s and managemen
by combining agency heo y wi h ela ional no ms (Macneil, 1980).
One challenge wi h using he social capi al and ne wo k heo y as heo e ical amewo ks is
ha he de ini ions o social capi al a e ague and y o cap u e oo many elemen s in he
same amewo k. In addi ion, he social capi al heo y ends o ocus on he posi i e e ec s
and pa ly igno ing he nega i e e ec s o sociabili y o indi iduals and g oups. Po es (1998)
has iden i ied ou nega i e e ec s o social capi al. Fi s ly, he access o social ne wo ks
becomes di icul o ou side s due o igh con ol om he inside s. Secondly, he e may be a
ee- iding p oblem i less diligen g oup membe s en o ce demands backed by sha ed no ms.
Thi dly, he social con ol in a g oup may educe indi idual au onomy and a ou h
consequence may be ha he downwa d le eling o no ms leads hese g oups in opposi ion o
he mains eam socie y. G ano e e (1985) a gues ha he us ollowing pe sonal
ela ionships can c ea e he possibili y o mal easance and ha he highe he us , he
g ea e he bene i om mal easance. Leana and Van Bu en (1999) s a e ha he s ong
con e gen g oups may lead o poo decisions and ha i may hampe inno a ions. In gene al,
one may a gue ha he social capi al and ne wo k li e a u e ocus mo e on he bene i s o
social capi al han he disad an ages, wi h he cos s o achie ing hese bene i s being less
emphasized. Howe e , in o de o ob ain he bene i s o social capi al and ne wo ks, a
subs an ial amoun o esou ces, bo h manage ial and indi idual ini ia i es, a e needed
(Mus akallio, 2002). Consequen ly, he cos side o es ablishing and main aining ne wo ks
p o iding social capi al should be conside ed.
In gene al one can a gue ha agency heo y s ems om inance li e a u e, wi h a con ac ual
pe spec i e on he di e en go e nance mechanisms, whe eas he ne wo k and social capi al
heo y s em om managemen and social ne wo k li e a u e, wi h g ea e emphasis on he
ela ional issues in he go e nance o amily i ms. I can also be a gued ha hese heo ies
ep esen wo di e en app oaches o he go e nance mechanisms in amily i ms.
31
3.0 FAMILY FIRM GOVERNANCE – VARIOUS GOVERNANCE MODELS
In he p e ious sec ions, I ha e discussed possible heo e ical amewo ks o analyzing
co po a e go e nance in amily i ms. In he agency heo y amewo k, amily owne ship is
o en seen as a go e nance mechanism ha aims a educing agency cos s and whe e his is
conside ed one o he easons o being amily owned. In his sec ion I ake amily owne ship
as gi en and discuss go e nance models, wi hin he heo e ical amewo k o agency, ne wo k
and social capi al heo y. I ocus on how amily i ms ope a e in di e en models, and which
go e nance p oblems he a ious models may be able o sol e in a gi en en i onmen .
3.1 The Family Fi m
In co po a e go e nance esea ch, concen a ed owne ship and block holdings ha e been
cen al issues due o he possibili y o he majo i y sha eholde s exploi ing he mino i y
sha eholde s in hese i ms. In amily i ms, he amily ends o ha e a high deg ee o con ol,
ei he h ough la ge owne ship s akes o h ough s ong in luence on decisions. This implies
ha amily i ms o en ha e he same challenges ega ding he possibili y o exploi ing
mino i y sha eholde s as non- amily i ms. In addi ion, hey ha e he e ec s o all he o he
unique cha ac e is ics o he amily i m. The amily i m is o in e es due o he p e alence
o hese i ms, bu e en mo e so due o he impo ance o amily i ms in alue c ea ion in
mos economies. One may ega d he amily i m as an ins i u ion, whe e beha io becomes
ins i u ionalized by he o ganiza ional cul u e and whe e his cul u e is an impo an ac o
de e mining he success o he amily business (Ha ey, 1999a).
Al hough he e seems o be no common desc ip ion o wha cons i u es a amily i m, he e
a e se e al elemen s ha a e unique o hese i ms compa ed o o he i ms, wi h he bonding
by amily ies as possibly being he mos cha ac e is ic (Ge sick e al., 1997). Tagui i and
Da is (1982) ha e es ablished a “ h ee-ci cle” model ocusing on he o e laps be ween
owne s, manage s and amily membe s, whe e each indi idual seems o ha e one o mo e
di e en oles in he business. In his model, hey ega d he amily i m as a amily business
sys em, and om his pe spec i e one can a gue ha he go e nance sys em needs o go e n
bo h he i m and he amily. Mus akallio (2002) has di ided he cha ac e is ics o amily
i ms in o i e main ca ego ies. These a e: 1) endu ing exchanges, 2) emo ional dimension o
he amily i m, 3) high amoun o con lic , 4) low mobili y o sha es and 5) mixed sel -
in e es ed and al uis ic beha io . In addi ion, he e is o en a s onge ocus on owne iden i y
in amily i ms compa ed o non- amily i ms.
38
Boa d s uc u e and boa d composi ion in amily i ms
Boa d size a ies, depending on he objec i es o he boa d. Big boa ds ep esen a la ge
esou ce base han small boa ds, bu he amily holds less powe (Wes head and Cowling,
1996). In amily i ms, he amily’s in e es s may domina e o e o he owne s’ in e es s.
Weal h p ese a ion becomes impo an due o he concen a ion o pe sonal and amily
weal h in owne -managed i ms (Ca ney and Gedaljo ic, 2003). The con olling amily may
wan o main ain independence and con ol, and small in e nal boa ds ensu e ha he amily’s
in e es s a e aken ca e o (Wes head and Cowling, 1996; Randøy and Down, 2002). Boa d
composi ion is o en homogenous in amily i ms, wi h some e idence ha amily i ms ha e
mo e inside di ec o s han o he i ms and ha he numbe o ou side di ec o s ends o
inc ease in second and hi d gene a ion i ms (Cowling and Wes head, 1996). In amily i ms,
he e is o en an owne -manage holding he CEO posi ion, p ese ing con ol o he i m and
i s decisions (Ca ney and Gedaljo ic, 2003; Daily and Dal on, 1992). Boa d composi ion can
be he ou come o ba gaining be ween he CEO and he es o he boa d, whe e he powe o
he CEO is c ucial o he s uc u e and independence o he boa d (Mace, 1971; Lo sch and
MacI e , 1989; Fila oche , Lien and Piesse, 2003).
Boa d p ac ices and p ocesses in amily i ms
Boa d p ac ices in amily i ms seem o be qui e simila among i ms o compa able s uc u e
and size. The e seems o be a “copy” e ec among amily i ms whe e he line o hough
migh be ha “wha wo ks o hem should wo k o us” (Løining, 2001). Boa d s uc u e
a ec s boa d p ocesses and boa d p ac ices. One ele an ques ion is how hese p ocesses
wo k in amily i ms wi h a high deg ee o inside boa d membe s e sus a high deg ee o
ou side membe s. Some amily i ms do no ha e a boa d, some ha e a small o mal boa d
consis ing o amily membe s, whe eas some i ms use he boa d as a esou ce base and ha e
la ge boa ds (Wes head and Cowling, 1996). The in e es ing ques ion is how boa ds wo k in
amily i ms wi h addi ional elemen s such as amily ies, emo ional issues, amily con lic s
and sibling i al y. In cases whe e a i m needs access o c i ical esou ces, he choice o
boa d size and boa d composi ion can be one way o o e come esou ce cons ain s. This can
be done by inc easing he numbe o di ec o s, some imes s essing an inc ease in he numbe
o ou side di ec o s; he eby a ec ing he way he boa d wo ks oge he (Zah a and Pea ce,
1989; Randøy and Down, 2002). An inc ease in ex e nal boa d membe s may weaken he
amily’s in luence, which is in some cases an ad an age and in o he s a disad an age.

39
The Rela ionship be ween Boa d and Manage s in Family Fi ms
In amily i ms owne s a e o en manage s and boa d membe s, which c ea es di e en
go e nance issues and challenges compa ed wi h in es o owned i ms. One p oblem is how
o use accu a e in o ma ion, ee o bias. Ano he is how o use he in o ma ion consis en ly
conside ing he e ec s o amily ies and al uism (Luba kin, Ling and Schulze, 2003). Boa ds
a e in some cases weak moni o s, maybe e en mo e so in amily i ms whe e i is di icul o
main ain objec i i y. Bo h objec i i y and p oximi y ha e hei cos s and bene i s. Objec i i y
may gi e less in o ma ion and ewe co ec i e ac ions, while p oximi y gi es mo e
in o ma ion and can acili a e imely co ec ion. Con e sely, i may be di icul o make ough
decisions due o close ela ional ies (Boo and Macey, 1999). In addi ion he e may be some
special ea u es in amily i ms, which gi e managemen mo e con ol o e he boa d han in
non- amily i ms. Pe ig ew (1992) poin s ou ou ac o s ha a e impo an in he
ela ionship be ween he managemen and he boa d in amily i ms: 1) The op
managemen ’s powe in he selec ion o boa d membe s, 2) he limi ed ime ou side di ec o s
ha e a ailable, 3) he managemen ’s mo e accu a e in o ma ion abou he business, and 4) he
limi ed independence o ou side di ec o s. These ac o s gi e he CEO e en mo e powe o e
amily boa ds han non- amily boa ds, making he objec i e moni o ing ole mo e di icul o
conduc . Family i m boa ds a e some imes iewed less as a go e nance mechanism and mo e
as a op-le el s a egic g oup. Family membe s also se e as ac i e moni o s o hei
manage s and he in o ma ion low be ween manage s and amily membe s se es as a
con ol mechanism (Mish a e al., 2001).
The Rela ionship be ween Owne s and Manage s in Family Fi ms
Family i ms may p o ide a unique go e nance con ex , due o he amily’s desi e o
owne ship, con ol and in ol emen in he business (Randøy and Goel, 2003). They can
u ilize s a egic bene i s o highe inside owne ship and achie e supe io pe o mance. One
a gumen o amily leade ship is ha amily ai s like us , al uism, and pa e nalism
encou age an a mosphe e o lo e and commi men owa ds he business and educes agency
cos s (James, 1999). In amily i ms, owne s and manage s o en ha e g ea in luence on i m
alue h ough he posi ion and powe hey wield wi hin he i m. Good co po a e go e nance
should enable owne s o exe cise con ol o e managemen (Eisenha d , 1989). In his espec ,
ounde amily owne ship may be a subs i u e co po a e go e nance mechanism ha can
eplace o he moni o ing mechanisms, such as di ec moni o ing by owne s o a compe i i e
ma ke o co po a e con ol (Randøy and Goel, 2003).
40
Fama and Jensen (1983) sugges ha he long- e m na u e o amily ela ionships is
ad an ageous in moni o ing and disciplining manage s, and ha amily ai s a e impo an .
On he o he hand, he d awback o amily i ms migh be ha hey ha e di icul ies in
accep ing p o essional manage s capable o esponding o new echnology and inc eased
compe i ion. The implica ion is ha he selec ion and dismissal o he CEO becomes a
signi ican challenge (Gomez-Mejia e al., 2001).
Chandle (1990) a gues ha he pe sonalized cha ac e o a amily business is mani es ed in
op managemen , whe e selec ion is on he basis o amily ies ins ead o p o essional
expe ise. Lack o manage ial capaci y may limi he abili y o compe e in e na ionally due o
a lack o moni o ing and coo dina ion capabili ies needed o manage geog aphically dis an
and dispe sed ac i i ies. Mish a e al., (2001) ask whe he amily owne ship makes inancial
sense and whe he hese i ms ha e a go e nance ad an age o e widely held i ms. They ind
a posi i e ela ionship be ween ounding amily con ol and i m alue due o a long- e m
ho izon and he po en ial o educe he mo al haza ds due o he combina ion o owne ship
and con ol. They also ind ha ou side di ec o s do no imp o e co po a e go e nance in
ounding amily con olled i ms, whe e amily alues, like us and al uism, can c ea e a
commi men o long- e m alue c ea ion. T us among amily membe s and managemen is
conside ed impo an o he amily business’ success, whe eas lack o us may be a h ea o
he iabili y o a amily i m (Ke s deV ies, 1993, 1996; Walsh 1994). One ques ion wo h
pu suing is whe he us is exogenous o success o no . I may be di icul o ind a iables
o measu ing us , consequen ly making i ha d o de e mine he e ec o us in i ms.
Gomez-Mejia e al. (2001), s a e ha amily bonds be ween p incipal and agen impac
beha io di e en om economic a ionali y. In a amily-con ac ing si ua ion, a ela ional
con ac be ween he i m and he agen (a amily membe ) in ol es a common bond and a se
o mu ual expec a ions ha a e mo e likely o be based on emo ions han a non- amily
ela ional con ac . This may include pa en -child dynamics, gene a ional en y and sibling
i al y. Manage ial en enchmen may also be a p oblem in amily i ms, whe e execu i es
hold on o hei jobs pas he poin whe e hei s ewa dship is bene icial o he i m. In hese
cases, execu i es will y o neu alize in e nal con ol mechanisms o ensu e sel -p ese a ion
and amily s a us leads o biased judgmen abou he app op ia eness o execu i e decisions.
CEO e mina ion is di icul in amily i ms and o ganiza ional consequences o CEO
dismissal a e g ea e when he eplaced CEO is a amily membe (Gomez-Mejia e al., 2001).
41
5.0 FAMILY FIRM GOVERNANCE – A RELATIONAL GOVERNANCE MODEL
Family owne ship pe se is no a solu ion o go e nance p oblems, bu in some con ex s a
ela ional go e nance model wi h emphasis on in o mal, social con ol ha egula es he
ela ionship be ween di e en s akeholde s, can be a solu ion o some o he go e nance
p oblems in hese i ms. This model ocuses on he op imal use o social capi al embedded in
social ela ionships among he owne - amily membe s and he managemen (Mus akallio,
2002). The po en ial exis s o enhancing some o he ad an ages o being a amily i m and
mi iga ing some o he disad an ages. I amily i ms a e able o eap he bene i s o long
las ing ela ionships, sha ed ision and us among amily membe s, as well as loyal y and
long adi ions, hey may expe ience ad an ages wi h his owne ship s uc u e (Ha ey,
1999a; Ouchi, 1980). Bu , owne ship in i sel also in ol es go e nance cos s such as cos s o
con olling manage s, cos s o collec i e decision-making and cos s o isk bea ing
(Hansmann, 1996). The ela i e cos s a y wi h di e en o ms o owne ship. In addi ion,
he e is a cos o main aining ne wo ks ha needs o be aken in o conside a ion (G ano e e ,
1985). One can expec ha mos amily i ms employ bo h con ac ual and ela ional modes
o go e nance, and ha hese models can bo h complemen and supplemen each o he . Table
IV illus a es how a ela ional go e nance model may esol e some go e nance p oblems in
amily i ms wi hin a con ex cha ac e ized by us and sha ed isions.
Incen i e p oblems a e o en explained by he sepa a ion o owne ship and con ol, wi h he
challenge being o ind incen i es o make he manage s ac in he in e es o he sha eholde s
(Jensen, 1983; Jensen and Meckling, 1976). In amily i ms, one o he main cha ac e is ics is
he coupling be ween di e en oles, whe e amily membe s end o hold one o mo e
posi ions in he i m, c ea ing a highe deg ee o in e ac ion be ween he a ious unc ions.
These s ong ne wo ks and ela ions ha e he po en ial o sol ing some o he incen i e
p oblems (alignmen ), manage ial oppo unism and in o ma ion asymme y (including mo al
haza d and ad e se selec ion) h ough mo e in ol emen and a highe deg ee o in o ma ion
sha ing. Howe e , o his o happen he e should be a deg ee o us , sha ed isions and
posi i e ela ions among he amily and manage s, as well as be ween he a ious amily
membe s. One may expe ience incen i e p oblems in amily i ms when he e is con lic and
lack o us and sha ed isions, especially in la ge i ms wi h many owne s. This si ua ion
gi es manage s mo e powe o e he i m. Family owne ship alone does no sol e incen i e
p oblems; i is how he amily manages o ope a e and go e n he i m ha can make a
di e ence. The possibili y hen a ises o enhancing he ad an ages o amily owne ship.
42
In amily i ms, agency p oblems a e no only a esul o sepa a ion o owne ship and con ol,
bu also o con olling sha eholde s who in some cases exp op ia e non-con olling
sha eholde s (La Po a e al., 1997; Bennedsen and Wol enzon, 2000). This can be done by
amily sha eholde s aking cash ou h ough ans e p icing o selling asse s below he ma ke
p ice o o he manage -owned businesses (Shlei e and Vishny, 1997). In coun ies wi h good
legal p o ec ion, he exp op ia ion o mino i y sha eholde s is less likely. Howe e , in
coun ies wi h weak legal p o ec ion, his exp op ia ion may ake place (La Po a e al., 1999).
In amily i ms he e is also he isk o la ge amily owne s ex ac ing p i a e bene i s, ei he
by using hei con olling igh s o pu sue p ojec s ha bene i hemsel es a he han o he
in es o s, o amily manage s en enching hemsel es and s aying in he job oo long (Shlei e
and Vishny, 1997). Some o hese agency p oblems can be sol ed i he amily i m is
cha ac e ized by us , ha mony and sha ed isions, c ea ing he possibili y o es ablishing
common p io i ies and goals o he i m and lowe ing he isk o some amily membe s
wan ing o ex ac bene i s. In addi ion, amily i ms may choose non- amily membe s om a
close ne wo k o di e en oles in he i m, which can be a ec i ying and adjus ing ac o in
some ela ionships, and educe he possibili y o exp op ia ion.
No mally al uism is ega ded as one o he posi i e e ec s o amily owne ship, whe e he
mix u e o business and non-business goals a e pe cei ed o ac as sel -en o cing go e nance
mechanisms (Ouchi, 1980; Jones e al., 1997). Howe e , in some amily i ms he con olling
owne s’ choices and pe cep ions a e biased by hei al uism owa ds o he amily membe s,
making i di icul o ake op imal ac ions o he i m. This myopic al uism can also lead o
hold-up p oblems, whe e amily membe s possess ba gaining powe due o amily ies
(Luba kin, Ling and Schulze, 2003). In amily i ms he e is also he isk o amily manage s
s aying in he job oo long, o ha hey educe i m alue due o lack o managemen
capabili ies, especially in i ms un by descendan s o he ounde (Ge sick e al., 1997). One
way o mi iga ing he nega i e e ec s o al uism is o use non- amily esou ces om close
ne wo ks in some o he oles in he amily i m, whe e he ex e nal esou ces can ac as an
adjus ing ac o in con en ious issues. T us , sha ed isions and ha mony in amily ela ions
can also mi iga e he nega i e e ec s o myopic al uism by accen ua ing a common desi e o
inc ease wel a e o all amily membe s (James, 1999; Kepne , 1983). In amily i ms wi h a
la ge numbe o owne s, he possibili y o inding a capable CEO wi hin he amily inc eases.
Wi h many smalle amily owne s, he ba gaining powe o each amily owne may be
educed, educing he hold-up p oblem in hese i ms (Luba kin, Ling and Schulze, 2003).
43
Table IV: Go e nance p oblems po en ially sol ed in a con ex cha ac e ized by
us and sha ed isions
Po en ial go e nance
Incen i e
P i a e
Myopic
Manage ial
Managemen
In o ma ion
p oblems in amily i ms:
P oblems
Bene i s
Al uism
Oppo unism
Capabili ies
Asymme y
Possible ela ional go e nance
mechanisms in amily i ms:
Family couplings and oles:
Family owne and CEO
+
+
+
Family CEO and boa d membe s
+
+
+
Family owne and on he boa d
+
+
Se e al i m oles held by amily
+
+
+
O he s om ne wo k (non- amily)
+
+
+
+
+
P e alence o us
High le el o us wi hin amily
+
+
+
+
+
Low le el o us wi hin amily
-
-
-
-
-
Sha ed isions
Sha ed isions in place
+
+
+
+
+
+
Sha ed isions no in place
-
-
-
-
-
-
Social in e ac ion
Ha mony in amily ela ions
+
+
+
+
+
High le els o con lic
-
-
-
-
-
Family ins i u ions
In o mal s uc u es / p ocesses
+
+
+
Fo mal s uc u es / p ocesses
Family size
La ge amoun o amily owne s
+
+
Small amoun o amily owne s
+
+
Fi m age
Younge i m un by ounde
+
+
+
Olde i m un by descendan s
+
Posi i e signs (+) indica e a posi i e e ec on go e nance p oblems
Nega i e signs (-) indica e a nega i e e ec on go e nance p oblems
No signs indica e ha he e is no e ec on go e nance p oblems
The e seems o be no consensus on wha ” he bes ” owne ship s uc u e is, o wha cons i u es
good o bad co po a e go e nance mechanisms. Howe e , he e a e easons o belie e ha he
op imal go e nance mechanisms depend on cul u e and indus y s uc u e wi hin a coun y,
he le el o legal p o ec ion, as well as se e al i m-speci ic ac o s. Fo his eason, he
ela ional go e nance mechanisms may enhance he ad an ages o being a amily i m in
some en i onmen s, whe eas in o he en i onmen s his may no be he case. Some o he key
elemen s ha should be in place in o de o make he op imal usage o a ela ional model a e
us , sha ed isions and ha mony in he a ious amily ela ions (no always he case).
Va ious amily ins i u ions, like amily mee ings o councils, may imp o e some o he
in e ac ions, bu he main issue in op imal amily i m go e nance is whe he he e a e
posi i e ela ionships and a mosphe e be ween he amily membe s.

44
6.0 CONCLUDING REMARKS
In some cases he amily i m can be ega ded a “social ins i u ion” in addi ion o a
go e nance mechanism. I ha e ocused on how in e - ela ions be ween di e en in e nal
co po a e go e nance mechanisms change wi h di e en owne ship s uc u es and he
uniqueness in he go e nance o amily i ms. Family i ms a e o in e es because hey
ep esen a special case o closely held i ms wi h g ea e ocus on social aspec s compa ed o
non- amily i ms wi h la ge block holdings.
The usage o go e nance model, ei he a con ac ual o a ela ional model, a ec s he way a
i m ope a es, i s s a egic choices, i s decision p ocesses and he balance o powe , and
ul ima ely i s inancial pe o mance. In amily i ms, he use o a mo e ela ional go e nance
model implies a se o di e en mechanisms o selec ing manage s and boa d membe s. This
a ec s he ela ionship be ween he owne s, manage s and boa d membe s. As discussed in
sec ion ou , he addi ional ac o s o amily ies, social ela ions and ne wo ks o en p e alen
in amily i ms can be ega ded as social capi al. I a gue ha he social capi al embedded in
hese ela ions canno easily be aded and ha i makes a di e ence in he go e nance o
amily i ms e sus non- amily i ms. Fi ms do no necessa ily exclusi ely choose ei he a
con ac ual o a ela ional go e nance model bu may emphasize some elemen s mo e han
o he s wi hin he di e en models. As a esul , he con ac ual and ela ional go e nance
models may complemen and supplemen each o he in he go e nance o i ms wi h an
inc eased ocus on he social capi al embedded in he ela ionships in amily i ms.
P e ious esea ch has o a la ge ex en been ocused on he ela ionship be ween owne ship
s uc u e and inancial pe o mance. The e is a demons able need o mo e esea ch on how
go e nance models a ec he way amily i ms ope a e and make decisions. I ha e discussed
ad an ages and disad an ages o amily owne ship and how amily i ms deal wi h a ious
elemen s in hei choice o go e nance models and mechanisms. I a gue ha he go e nance
model is a esul o he agency con ex he i m ope a es wi hin as well as he ela ionship
be ween i s go e nance mechanisms speci ically he owne ship s uc u e, he boa d, and
managemen incen i es. I a gue ha ela ional go e nance mechanisms may enhance he
ad an ages o being a amily i m in some en i onmen s i us , sha ed isions and ha mony
in he a ious amily ela ionships a e p e alen . In o de o ge a be e pic u e o co po a e
go e nance in amily i ms, i may be aluable o d aw om o he heo e ical amewo ks, in
addi ion o agency heo y, o analyse e ec s o social ela ions and ne wo ks in hese i ms.
45
REFERENCES:
Adle P.S. and S. Kwon, 2002, “Social capi al: P ospec s o a new concep ”, Academy o
Managemen Re iew, 27(1), pp. 17-40
Alchian, A.A. and H. Demse z, 1972, “P oduc ion, In o ma ion Cos s, and Economic
O ganiza ion”, Ame ican Economics Re iew 62(5), pp. 777-795
Ami , R. and Villalonga, B., 2006, “How do Family Owne ship, Con ol and Managemen
A ec Fi m Value?” Jou nal o Financial Economics 80 (2), pp. 385-417
Ande son, R.C, S.A Mansi and D.M. Reeb, 2003, “Founding amily owne ship and he
agency cos o deb , Jou nal o Financial Economics, pp. 263-285
Ande son, R.C, and D.M. Reeb, 2003, “Founding-Family Owne ship and Fi m Pe o mance:
E idence om he S&P 500”, Academy o Managemen Re iew 28(3), pp. 383-396
Bake , W.E., 1990,”Ma ke ne wo ks and co po a e beha io ”, Ame ican Jou nal o
Sociology 96(3), pp. 589-625
Bebchuck, L., 1994, “E icien and ine icien sales o co po a e con ol”, Qua e ly Jou nal
o Economics 109, pp. 957-994
Bebchuck, L., 1999, “A en -p o ec ion heo y o co po a e owne ship and con ol”,
Wo king pape 7203, Na ional Bu eau o Economic Resea ch, Camb idge, MA
Bech , M., P. Bol on and A. Roell, 2002, “Co po a e Go e nance and Con ol”, ECGI
Wo king Pape Se ies in Finance, Wo king Pape No. 02/2002
Bennedsen, M., 2002, “Why do i ms ha e boa ds”? Depa men o Economics – Copenhagen
Business School
Bennedsen, M. and D. Wol enzon, 2000, “The Balance o Powe in Closely-held Fi ms,”
Jou nal o Financial Economics 58 (1), pp. 113-139
Be le A. and G. Means, 1932, “The Mode n Co po a ion and P i a e P ope y,”
MacMillian: NY
Be and M. and A. Schoa , 2006, “The Role o Family in Family Fi ms”, Jou nal o
Economic Pe spec i es 20, pp.73-96
Boo , A.W.A. and J.R. Macey, 1999,”Objec i i y, P oximi y and Adap abili y in Co po a e
Go e nance”, Wo king Pape
Bo dieu, P., 1986, “The o ms o capi al”, J.G. Richa dson (Eds.) Handbook o heo y and
esea ch, o he sociology o educa ion: 241-258. New Yo k: G eenwood P ess
Bu ka , M, F, Panunzi and A. Shlei e , 2003, “Family Fi ms”, The Jou nal o Finance
Vol. LVIII, No. 5, pp. 2167-2201
46
Bu , R.S., 1992, “S uc u al Holes - The Social S uc u e o Compe i ion”, Camb idge and
London: Ha a d Uni e si y P ess
Ca ney, M. and E. Gedaljo ic, 2002, “The Coupling o Owne ship and Con ol and he
Alloca ion o Financial Resou ces: E idence om Hong Kong”, Jou nal o
Managemen S udies 39(1), pp.123-147
Ca ney, M. and E. Gedaljo ic, 2003, “S a egic inno a ion and adminis a i e he i age o Eas
Asian amily business g oups”, Asia Paci ic Jou nal o Managemen 20, pp. 5-26
Chandle , A.D., 1990,” Scale and Scope: The Dynamics o Indus ial Capi alism”,
Camb idge, MA: Ha a d Uni e si y P ess
Coase, R., 1937, “The Na u e o he Fi m”, Economica (4), pp. 386-405
Claessens, S., Djanko , S. and L.H.P Lang, 2000, “The Sepa a ion o Owne ship and Con ol
in Eas Asian Co po a ions”, Jou nal o Financial Economics 58, pp. 81-112
Coleman, J.S., 1988, “Social capi al and he c ea ion o human capi al”, Ame ican Jou nal o
Sociology 94: S95-S120
Coleman, J.S., 1990,” Founda ions o social heo y”, Camb idge, MA: Belknap P ess o
Ha a d Uni e si y P ess
Co be a, G. and S. Tomaselli, 1996, “Boa ds o di ec o s in I alian amily businesses”,
Family Business Re iew 9(4), pp. 403-421
Cowling, M. and P. Wes head, 1996, “Owne ship and managemen issues in i s and mul i-
gene a ion amily i ms”, Co en y: The Uni e si y o Wa wick, Cen e o Small and
Medium-Sized En e p ises, Wo king Pape No. 43
C onq is , H. and M. Nilsson, 2003, “Agency Cos s o Con olling Sha eholde s,”
Jou nal o Financial and Quan i a i e Analysis 38, pp. 695-719
Daily, C.M. and D.R. Dal on, 1992, “The ela ionship be ween go e nance s uc u e and
co po a e pe o mance in en ep eneu ial i ms”, Jou nal o Business Ven u ing 7,
pp. 375-386
Demse z, H., 1983, “The S uc u e o Owne ship and he Theo y o he Fi m”, Jou nal o Law
and Economics 26(2), pp. 375-394
Demse z, H. and K. Lehn, 1985, “The S uc u e o Co po a e Owne ship: Causes and
Consequences”, Jou nal o Poli ical Economy 93(6), pp. 1155-1177
DiMaggio, P.J. and W.W. Powell, 1983, “The i on cage e isi ed: Ins i u ional isomo phism
and collec i e a ionali y in o ganiza ional ields”, Ame ican Sociological Re iew 48,
pp. 147-160
Doe inge , P.B., and D.G. Te kla, 1995, “Business s a egy and c oss-indus y clus e s”,
Economic De elopmen Qua e ly 9, pp. 225-37
47
Donaldson, L. and J.H. Da is, 1991, “S ewa dship Theo y o Agency Theo y: CEO
Go e nance and Sha eholde Re u ns,” Aus alian Jou nal o Managemen 16,
pp. 49-65
Eisenbe g, Mel in, 1976, “The S uc u e o he Co po a ion: A Legal Analysis”,
Li le, B own and Co. Bos on, Mass.
Eisenha d KM., 1989, “Agency heo y: An assessmen and e iew”, Academy o
Managemen Re iew 14, pp. 57-74
Ekeland, A., 2002, “Co po a e go e nance, i m pe o mance and ype o owne ship”,
STEP G oup, STEP epo , ISSN 0804-8185
Faccio, M. and L.H.P. Lang, 2002, “The Ul ima e Owne ship o Wes e n Co po a ions”,
Jou nal o Financial Economics 65, pp.365-395
Fama, E.F. and M.C. Jensen, 1983, “Sepa a ion o Owne ship and Con ol,” Jou nal o Law
and Economics 26(6), pp. 301-325.
Fama, E.F. and M.C. Jensen, 1983, “Agency P oblems and Residual Claims”, Jou nal o Law
and Economics, XXVI, pp.1-29
Fama, E.F. and M.C. Jensen, 1985, “O ganiza ional o ms and in es men decisions”, Jou nal
o Financial Economics 14, pp. 101-119
Fila oche , I., Y.Lien and J.Piesse, 2003, “Co po a e Go e nance and Pe o mance in
Publicly Lis ed, Family-Con olled Fi ms: E idence om Taiwan”, Managemen
Cen e Resea ch Pape s, Resea ch Pape 018, King College London
Fila oche , I. and T. Mickiewicz, 2001, “Owne ship Concen a ion, “P i a e Bene i s and
Con ol” and Deb Financing”, Pa o he ACE-Pha e p ojec P98-1048-R “Co po a e
Go e nance, ela ional in es o s, s a egic es uc u ing and pe o mance in Hunga y
and Poland”
Fudenbe g D., D.M. K eps and E.S. Maskin, 1990, “Repea ed Games wi h Long- un and
Sho - un Playe s”, Re iew o Economic S udies 57, pp. 555-573
Fukuyama, F., 1995, T us , New Yo k
Gedaljo ic E. and D.M. Shapi o, 2002, “Owne ship S uc u e and Fi m P o i abili y in
Japan”, Academy o Managemen Jou nal 45(3), pp. 565-576
Ge sick, K.E., J.A. Da is, McCollom Hamp on, M.M. and I. Landsbe g, 1997, “Gene a ion o
gene a ion: Li e cycles o amily business”, Bos on, MA: Ha a d Business School
P ess
Goods ein, J., K. Gau am and W. Boeke , 1994, “The e ec o boa d size and di e si y on
s a egic change,” S a egic Managemen Jou nal 15, pp. 241-250
54

55
Pape Two
THE EFFECT OF INDUSTRY NETWORKS
ON FAMILY OWNERSHIP
K is in Walle ik
Copenhagen Business School
2009
Abs ac
Co po a e owne ship s uc u es a e concen a ed in mos pa s o he wo ld. O en hese i ms
a e con olled by amily, ei he he ounde o he descendan s o ounde . Economic heo ies
a ibu e concen a ed owne ship o incen i e e iciency, small-scale p oduc ion and poo
in es o p o ec ion (e.g. Demse z, 1983; La Po a e al., 1998). In his pape I ocus on an
al e na i e explana ion: owne ship s uc u es come in clus e s wi h s ong posi i e eedback
e ec s. In pa icula , I p opose ha closely held and amily i ms end o clus e in indus ies,
egions and na ions. In a clus e , he amily i m combines he lexibili y and incen i es o
pe sonal owne ship wi h economies o scale and scope. S ong pe sonal ne wo ks, us and
epu a ion help o e come capi al a ioning and hold-up p oblems, which o he wise gi e
widely held i ms a compe i i e ad an age. In s ong ne wo ks, in e locking di ec o a es,
amily ies, iendships and ade associa ions ein o ce he syne gies be ween i ms. The
go e nance mode comes o be mo e ela ional a he han ma ke based. A he same ime, he
clus e ed i ms main ain su icien au onomy and dis ance o be able o compe e and adjus
quickly o changes in he economic en i onmen . Thus clus e ing complemen s some o he
cha ac e is ics o amily i m go e nance emphasized in he amily business li e a u e. This
pape also deals wi h how “wi hin- i m” ela ions and go e nance modes may ha e an e ec
on “be ween- i m” ela ions and modes o go e nance.
Keywo ds: Indus y ne wo ks, ela ional go e nance, amily owne ship, social capi al
56
1.0 INTRODUCTION
Family owne ship is a e y common owne ship s uc u e in mos coun ies (Shlei e and
Vishny, 1986) and se e al s udies ha e in es iga ed he cha ac e is ics o his special case o
he closely held i m (Ami and Villalonga, 2006; Ande son and Reeb, 2003; Ke s de V ies,
1993, 1996; James, 1999; Luba kin, Ling and Schulze, 2003; Mish a e al., 2001; Mus akallio,
2002; Kepne , 1983). Family i m esea ch, howe e , has o a la ge ex en been conduc ed on
how amily i ms di e om o he i ms, wi h less ocus on why amily businesses di e , and
wha he consequences o hese di e ences migh be in a co po a e go e nance pe spec i e. In
he co po a e go e nance li e a u e, some s udies ocus on easons o dispe sed owne ship
(Be le and Means, 1932; Jensen and Meckling, 1976) and o he s udies ocus on easons o
concen a ed o amily owne ship (La Po a e al., 1999; Zhou, 2001), mainly using agency
heo y as he heo e ical amewo k. He e, amily owne ship is seen as he solu ion o
alignmen and incen i e p oblems in i ms. Family owne ship is explained by and ega ded as
a means o mi iga ing agency p oblems and educing agency cos s.
I has also been s a ed ha some na ions and indus ies ha e a highe equency o amily
i ms han o he s (Thomsen and Pede sen, 2000; La Po a e al., 1999). One possible
explana ion may be ha he owne ship s uc u e is also a esponse o he en i onmen in
which i ms ope a e, and ha amily owne ship is a mo e iable solu ion in some con ex s.
These con ex ual ac o s can be i m speci ic (size, age, capi al s uc u e, asse speci ici y),
indus y speci ic (capi al in ensi y, compe i ion), o na ion speci ic elemen s (public policy,
axes, legal and inancial ma ke s). La Po a e al. (1999) conclude ha he owne ship
s uc u e is a esponse o he domes ic legal en i onmen s, and ha concen a ed owne ship is
a esponse o poo in es o p o ec ion and law en o cemen in hese coun ies (La Po a e al.,
1998, 1999). Howe e , in coun ies wi h good in es o p o ec ion and law en o cemen ,
concen a ed and amily owne ship is also he mos p e alen owne ship s uc u e (Bøh en
and Ødegå d, 2001), suppo ing he idea ha he e a e o he de e minan s o amily owne ship
in addi ion o i being a esponse o he business en i onmen . I a gue ha i ms a e embedded
in a wide social and indus y con ex whe e s ong social and indus y ne wo ks can enhance
amily owne ship in some en i onmen s. Addi ional elemen s like incen i es, moni o ing, and
al uism, as well as i m, indus y and na ion speci ic ac o s mus be aken in o accoun . I use
ne wo k heo y as an addi ional amewo k in o de o cap u e o he dimensions missed by he
agency heo e ic iew. The idea is ha he e a e o he mechanisms a ec ing amily owne ship
ha oppose o concen a ed owne ship in gene al (e.g owne iden i y, adi ions and ela ions).
57
In his pape , I wan o ex end he adi ional iews o de e minan s o amily owne ship, and
in es iga e whe he he le el o amily owne ship wi hin ce ain indus ies can be explained
by a phenomenon in be ween he i m le el (mic o) and he indus y/na ion le el (mac o).
Could he e be a “clus e le el” in be ween, whe e s ong indus y ne wo ks a e ega ded as
de e minan s o amily owne ship, in addi ion o i being a solu ion o incen i e p oblems? I
combine a se o heo ies o b oaden he iew on “why amily i ms” and he possible
consequences o his owne ship s uc u e wi h ega d o modes o ope a ion. I discuss a
possible ela ionship be ween amily i ms (Ami and Villalonga, 2006; Ande son and Reeb,
2003) and social and comme cial indus y ne wo ks (Rosen eld, 1996, 1997; G ano e e ,
1985). Fo his pu pose, I de ine amily i ms as i ms wi h “ amily owne ship s akes” in he
ange o 20% o mo e, o ha he amily has in luence h ough CEO o Chai , which is in line
wi h he s onges de ini ion in Ami and Villalonga (2006).
Some indus ies a e cha ac e ized by ha ing a la ge po ion o amily i ms. In some cases
his has been he ue o gene a ions. I a gue ha o indus ies o emain cha ac e ized by
amily i ms o e ime he e should be a g ow h o new eme ging ounde amily i ms in
hese indus ies. This implies ha some o he i ms will be in he ounde phase whe e
ounde is he en ep eneu , whe eas o he i ms a e in he second o hi d gene a ion, mo e in
line wi h he adi ional de ini ion o amily i ms. I a gue ha s ong ne wo ks enhance
es ablishmen o new amily i ms indica ing ha i may be ele an o include hese i ms
in o he de ini ion o amily i ms.
I is di icul o dis inguish he cause and e ec o s ong ne wo ks and amily owne ship. One
ques ion is whe he amily i m go e nance c ea es ne wo ks o i i is he o he way a ound.
Ano he ques ion is whe he amily i ms emain in indus ial ne wo ks because hey a e
success ul, o whe he hey a e success ul due o hese s ong ne wo ks and he e o e can
emain amily owned. One can a gue ha i ms need o be es ablished in o de o en e in o
s ong in e - i m ne wo ks, bu om a ne wo k pe spec i e i can be a gued ha s ong
ne wo ks only os e he es ablishmen o amily i ms i he ne wo k is cha ac e ized by
amily i ms. I ea amily owne ship as endogenous, ocusing on how s ong social and
comme cial ne wo ks can enhance amily owne ship in some en i onmen s. I a gue ha
s ong ne wo ks and ela ions help amily i ms o e come some esou ce cons ain s making
i possible o emain and de elop as amily i ms in a long e m pe spec i e. I also a gue ha
he e ec s o ne wo ks a e s onge in amily owned i ms when compa ed o non- amily
58
closely held i ms. This is due o he special elemen s like owne iden i y, us , amily ies
(bo h social and gene ic), adi ions and long e m ela ionships, in addi ion o he ela ional
go e nance s uc u e in hese i ms.
E en hough he agency heo y is he mos p e alen heo e ical amewo k o desc ibing
owne ship s uc u e and co po a e go e nance (Jensen, 1983), o he heo ies ha e been used.
In his sec ion I discuss he elemen s in Table I as a amewo k o he pape . My main ocus
howe e , will be on ne wo k e ec s on amily owne ship in some indus ies (las column in
Table I). Se e al o he a gumen s in a ou o amily owne ship also apply o concen a ed
owne ship in gene al bu I a gue ha some o he elemen s in Table I a e e en mo e ele an
in amily owned i ms. In his pape , I mainly ocus on he posi i e elemen s in amily i ms,
al hough amily i m con lic s may be e en deepe and s onge han in non- amily i ms.
Table I: De e minan s o Family Owne ship in Di e en Theo e ical F amewo ks
Possible
De e minan s
o Family
Owne ship:
Reduce Agency P oblems
Response o En i onmen
S ong Social Ne wo ks
Key wo ds:
Reduc ion o agency cos s
Fi m speci ic ac o s:
Social capi al embedded
and imp o ed inancial
*Fi m age
in s ong ne wo ks in
pe o mance by:
*Fi m size
clus e s acili a e:
*Aligning in e es s be ween
*Capi al s uc u e
*"Thick us "
owne s and manage s
*Asse speci ici y
*Complex ansac ions
*Sol ing incen i e p oblems
Indus y speci ic ac o s:
*Access o esou ces
*Reducing moni o ing cos s
*Capi al in ensi y
*Es ablishmen new i ms
*Reducing oppo unism
*Compe i ion
*Agglome a ion bene i s
*Sha ed bene i s o con ol
*Vola ili y
*Ne wo k ex e nali ies
*Al uism
*Ba ie s o en y
*In e locking boa ds
*Social epu a ion and con ol
Na ion speci ic ac o s:
*Co-ope a ion
*Go e nance e iciencies
*Legal s uc u e
*Focus on human capi al
*Long- e m ho izon
*Accoun ing ules
*Rela ional go e nance
*Be e in es men s
*Capi al ma ke s
*T ans e o in o ma ion
*S ewa dship
*Regula ions
*Sha ed isions
Possible
Agency heo y
Resou ce dependency
Ne wo k/social capi al
heo e ical:
S ewa dship heo y
Agency heo y
Ins i u ional heo y
amewo ks:
T ansac ion cos heo y
Clus e heo y
Some
Be le & Means (1932); Fama
P e e (1982); Fila oche ,
G ano e e (1985); Po e
e e ences:
& Jensen (1983); Jensen &
Lien and Piesse (2003);
(1990), Mus akallio (2002);
Meckling (1976); Shlei e &
Ca ney & Gedaljo ic (2002);
Sco (2001); Bu (1992);
Vishny (1997); James (1999);
Shlei e & Vishny (1997);
Rosen eld (1996, 1997);
La Po a e al. (1997, 1998);
La Po a e al., (1999);
Doe inge & Te kla (1995);
Ami & Villalonga (2006);
Demse z & Lehn (1985);
Coleman (1988); Pu nam
Ande son & Reeb (2003);
Williamson (1975, 1979);
(1995); Bo dieu (1986);
Donaldson & Da is (1991)
Thomsen & Pede sen (2000)
Aguile a & Jackson (2003)
59
1.1 Family Owne ship as Mechanism o Reduce Agency P oblems
Agency heo y ocuses on economic a ionali y and educ ion o agency cos s wi h an
assumed “in-buil ” con lic be ween manage s and owne s, leading o incen i e p oblems and
exploi a ion o mino i y sha eholde s (Jensen and Meckling 1976; Shlei e and Vishny, 1997).
Agency heo y deals wi h p oblems o agency ela ionships and how di e en ways o
con ac ing and o ganizing a ec he ou comes o ha ela ionship (Mus akallio, 2002).
Eisenha d (1989), s a es ha agency heo y add esses wo p oblems ha may occu in agency
ela ionships: 1) The p oblem o con lic ing goals be ween he p incipal and he agen and 2)
he di e en a i udes owa ds isk be ween p incipal and agen ha makes hem p e e
di e en ac ions. In agency heo y, amily owne ship is pe cei ed as a solu ion o hese
agency p oblems due o alignmen be ween owne s and manage s. In gene al, agency
p oblems can be di ided in o wo ca ego ies (Ami and Villalonga, 2006; La Po a e al.,
1997), whe e agency p oblem II seems o be he mos p e alen in amily i ms.
Agency P oblem I: Con lic o in e es be ween owne s and manage s
The classic agency p oblem in i ms wi h dispe sed owne ship is sepa a ion o owne ship and
con ol, whe e alignmen o owne s and manage s is an impo an issue (Jensen and
Meckling, 1976). In hese i ms, he main conce n is exp op ia ion o unds by he manage s,
which can be seen as he classic “S ong Manage s, Weak Owne s” (Roe, 1994) case, whe e
he e is a need o incen i es o ensu e ha manage s wo k in he in e es o sha eholde s
(Shlei e and Vishny, 1997).
Agency P oblem II: Con lic o in e es be ween la ge and mino i y sha eholde s
In closely held and amily i ms, agency p oblems a e no necessa ily a esul o sepa a ion o
owne ship and con ol, bu o con olling sha eholde s no always ac ing in he in e es o
non-con olling sha eholde s wi h a po en ial exp op ia ion o mino i y sha eholde s (La Po a
e al., 1997, Shlei e and Vishny, 1997; Bennedsen and Wol enzon, 2000). Exp op ia ion o
unds can be accomplished by sha eholde s aking cash ou h ough ans e p icing, selling
asse s below ma ke p ice o o he manage -owned businesses, manage s using hei con ol
igh s o pu sue p ojec s ha bene i hem a he han in es o s, o manage s en enching
hemsel es and s aying in he job oo long (Shlei e and Vishny, 1997). Family con ol may
be ca ied ou h ough de iance be ween cash low igh s and o ing igh s, by mul iple sha e
classes, o by o he o ing ag eemen s (Ami and Villalonga, 2006). In addi ion, amily
in luence implies in luence on managemen decisions, ei he by being he manage o h ough

60
o he means (Ami and Villalonga, 2006). In some amily i ms, he e is also he isk o
con lic s be ween amily membe s, whe e mino i y sha eholde s su e because o sub-
op imal in es men s and a lowe alue o asse s (James, 1999).
The bene i s o con ol o e co po a e esou ces play, a cen al ole in mode n hinking abou
inance and co po a e go e nance. The amoun o p i a e bene i s o con ol, ha con olling
sha eholde s can ex ac om companies hey un, is cen al in he li e a u e on in es o
p o ec ion (Dyck and Zingales, 2004). Va ious coun ies ha e di e en legal ules and le els
o in es o p o ec ion, whe e common law coun ies a e judged o ha e he bes legal sys em
in his espec (La Po a e al., 1998, 1999). La Po a e al. (1999), s a e ha he exp op ia ion
o mino i y sha eholde s applies especially in coun ies wi h weak legal p o ec ion, whe e
concen a ed owne ship is mo e common.
In mos coun ies exp op ia ion o mino i y sha eholde s canno be done wi hou legal
consequences. Some o he ins i u ions ha can help cu b p i a e bene i s a e high accoun ing
s anda ds, legal p o ec ion o mino i y sha eholde s, law en o cemen , p oduc ma ke
compe i ion, a high le el o di usion o he p ess and a high a e o ax compliance (Dyck and
Zingales, 2004). S ic in es o p o ec ion and law en o cemen , wi h he likelihood o a
mone a y o epu a ion loss o a con olling pa y who is in a posi ion o ex ac p i a e
bene i s, is disciplining (Neno a, 2003). Also co po a e cha e p o isions, akeo e laws and
egula ions a e impo an o ensu e ha he con ol p emium is sha ed wi h mino i ies in he
e en o con ol ans e (Neno a, 2003). Consequen ly, he alue o con ol-block o es is
expec ed o dec ease ela i e o he s ic ness o he legal en i onmen .
Neno a (2003) has made a c oss-coun y compa ison o dual-class i ms in 18 coun ies
ocusing on he o e- alue o p i a e bene i s and inds ha he alue o con ol-block o es is
an impo an pa o i m alue and ha his a ies ac oss coun ies. This s udy inds ha he
alue o he con ol-block o es in Scandina ian and Anglo-Saxon coun ies is close o ze o,
ha con ol-block o es a e alued a mo e han a qua e o ma ke capi aliza ion in B azil,
Chile, F ance, I aly, Mexico and Sou h Ko ea, and ha Ge manic coun ies ha e alues ha
all in be ween hese le els (Neno a, 2003). Dyck and Zingales (2004) ha e made an
in e na ional compa ison o p i a e bene i s o con ol among 39 coun ies and 393
con olling block sales, inding ha p i a e bene i s a e ha d o obse e and quan i y, bu ha
he e a e wo possible me hods in measu ing p i a e bene i s o con ol:
61
1) Use p i a ely nego ia ed ans e s o con olling blocks in public i ms (Ba kley and
Holde ness, 1989), o 2) use he exis ence o mul iple sha e classes wi h di e en o ing
igh s. Dyck and Zingales (2004) ind ha No way, Uni ed Kingdom, Uni ed S a es and
Finland a e among he low p i a e bene i coun ies, wi h a block p emium as pe cen o i m
equi y o 3% o less. O he coun ies ha e a con ol p emium o 25% o equi y alue, and he
sample in he s udy shows an a e age o 14% con ol p emium. C oss coun y di e ences
also a ise because o o he indus y di e ences and some indus ies ha ing la ge p i a e
bene i s han o he s (Demse z and Lehn, 1985). Le els o p i a e bene i s ex ac ed migh be
endogenous o he size o he con olling block, whe e la ge sha eholde s ha e less o an
incen i e o dilu e mino i y sha eholde s because hey in e nalize o a g ea e deg ee he
ine iciency hey gene a e. Dyck and Zingales (2004) a gue ha i he acqui e s o he
con olling block al eady owned a la ge s ake in he i m be o ehand, hey migh be willing o
pay a p emium only because hey in e nalize a ac ion o he inc ease in he secu i y ia hei
oeholds (G ossman and Ha , 1980), which may he case o amily i ms.
Neno a (2003) s a es, ha he low alue o con ol-block o es in Scandina ian coun ies
seems su p ising conside ing he ci il o igin o law. One explana ion o his phenomenon
could be ha con olling pa ies a e law-abiding because epu a ion and social s a us ha e a
disciplining e ec on hei beha io , discou aging mino i y abuse (Agnblad e al., 2001).
Scandina ian coun ies seem o ha e s onge employees and social democ a ic p essu e
compa ed o many o he coun ies. Roe (2003) s a es ha , his p essu e may explain why
owne ship has no sepa a ed om con ol. He a gues ha social democ acy a ec s owne ship
in wo ways: 1) The concen a ed owne s ha e s onge incen i es han “Be le-Means
manage s” o a oid gi ing up oo much in sha eholde alue o social p essu es, and 2) i he
concen a ed owne is p og essi e wi h a social conscience, he poli ical au ho i ies and o e s
may p e e he incumben o e someone else who migh g ab con ol. In No way, he basic
egula o y ool o mino i y p o ec ion is he p inciple o equal p opo ional igh s o e e y
s ockholde , and no co po a e cha e can o e ule his igh (Bøh en and Ødegå d, 2001).
The e is a wide se o egula ions o p e en he un ai ans e o weal h om small o la ge
sha eholde s. A lagging sys em in o ms small in es o s when owne ship igh s a e
ans e ed o he i m’s la ge in es o s, whe e h esholds o 5%, 10%, 20%, 33%, 50%, 67%
and 90% o ou s anding cash low o o ing igh s a e o be no i ied o he i m and o Oslo
S ock Exchange. Bøh en and Ødegå d (2001) conclude ha he No wegian egula o y
amewo k p o ec s s ockholde s as a g oup, and small s ockholde s as a subg oup.
62
Se e al s udies a gue ha concen a ed owne ship is an impo an mechanism o educing
agency p oblems in i ms wi h sepa a ion be ween owne ship and con ol (Jensen and
Meckling, 1976; Shlei e and Vishny, 1997; Jensen 1983; Fama and Jensen, 1985; Demse z,
1983; James, 1999). The a ious s udies ocus on di e en ac o s, bu one main a gumen is
ha owne ship concen a ion sol es oppo unism and incen i e p oblems due o he alignmen
o in e es s be ween owne s and manage s. In owne -manage i ms James (1999) a gues ha
i he amily loyal y o e comes he incen i e p oblems, amily owne ship may also sol e he
agency p oblems ha a e a esul o con lic s o in e es be ween la ge and small sha eholde s.
Summa izing why amily owne ship can educe agency p oblems:
1) I sol es incen i e p oblems
Dealing wi h he wo p oblems o mo al haza d and ad e se selec ion has been an impo an
issue in he co po a e go e nance li e a u e o a numbe o yea s, and owne ship s akes ha e
been pe cei ed o be he main solu ion (Jensen, 1983; Jensen and Meckling, 1976). Family
owne ship is seen as sol ing incen i e p oblems, pe sonal incen i es o wo k ha d a e
assumed o sol e mo al haza d p oblem, and pe sonal incen i es o sell sha es should sol e
he ad e se selec ion p oblem.
2) I educes moni o ing cos s
Oppo unism is cos ly o mino i y owne s (Hansmann, 1996). Reduc ion o moni o ing cos s
is one eason o concen a ed owne ship because wi h aligned owne ship and con ol agency
cos s a e educed. Family owne ship is ega ded as an e icien ins i u ion, whe e amily
loyal y may o e come incen i e p oblems and inc ease e iciency o he i m (James, 1999).
Howe e , he e may also be oppo unism in owne -manage i ms and manage s can choose
o exchange p o i s o o he bene i s, like cu en o e u u e consump ion (Fama & Jensen,
1985; Demse z, 1983; James, 1999).
3) The bene i s o con ol
Con ol is ano he impo an incen i e o concen a ed owne ship. Two main mo i a ions o
la ge-block owne ship: sha ed bene i s o con ol and p i a e bene i s o con ol (Holde ness,
2003). Bebchuk (1994, 1999) sugges s ha concen a ed owne ship is good when p i a e
bene i s o con ol a e la ge. In spi e o agency cos s wi h amily owne ship, sha eholde s may
esis dilu ion o hei equi y s akes. Families may be awa e ha hey could inc ease he p ice
o hei s ocks by selling ou bu a e eluc an o do so (Fila o che and Mickiewicz, 2001).
63
4) Families make be e in es men s due o long- e m ho izon
Social epu a ion and al uism a e cha ac e is ic o amily i ms and easons o , in addi ion o
ad an ages o amily go e nance sys ems, main aining amily owne ship. The e ec i eness
o amily go e nance, howe e , depends on he abili y o align in e es s o amily manage s
ac oss gene a ions. I he decision make s ha e a ho izon ex ending beyond hei enu e, hey
ha e he incen i e o maximize i m alue h ough in es men ac i i ies (James, 1999).
Linking he ac ion o amily manage s o o he amily membe s’ wel a e is disciplining and
manage s a e less likely o pu sue pe sonal in e es o e amily in e es (James, 1999; Kepne ,
1983). I has been a gued ha social con ol and social esponsibili y ac as sel -en o cing
go e nance mechanisms wi h us , sha ed ision and social epu a ion as suppo ing ac o s
(Ke s de V ies, 1996; Ouchi, 1980).
1.2 Family Owne ship as Response o he Business En i onmen
Agency heo y mainly ocuses on incen i e and alignmen p oblems in he analyses o
owne ship. O he heo ies, like ansac ion cos o esou ce dependency heo y, hey ocus on
asse speci ici y, ansac ion cos s, as well as access o human, manage ial, and capi al
esou ces. F om hese o he pe spec i es one can ega d i m-, indus y-, and na ion-speci ic
ac o s as he main easons o di e en owne ship s uc u es in a ious indus ies (Thomsen
and Pede sen, 2000). Many o hese easons o amily owne ship also apply o o he closely
held i ms and in he ollowing sec ions I discuss how ne wo ks and owne iden i y may
di e en ia e amily i ms om o he i ms.
Fi m speci ic ac o s:
T ansac ion cos s a ec p o i abili y, owne ship and go e nance s uc u e in i ms.
Williamson (1979) s a es, ha one may expec he owne ship s uc u e ha minimizes hese
ansac ion cos s. In his app oach, in es men p ojec s a e examined in e ms o hei asse
speci ici y cha ac e is ics, whe e di e en owne s ha e di e en alues and he p essu e on
p o i maximiza ion can be la ge in i ms wi h dispe sed owne ship han in amily i ms
(Williamson, 1979, 1985). Sepa a ion and specializa ion o isk bea ing and managemen
oge he wi h alloca ion o isk (Fama and Jensen, 1983) can hen allow i ms o und la ge
i m-speci ic asse s. One would expec i ms wi h la ge in es men s in hese asse s o ha e
dispe sed owne ship s uc u e (Thomsen and Pede sen, 2000).
70
Mesqui a and Lazza ini (2008) a gue ha ela ional go e nance o ho izon al ies makes i
easie o es ablish a common agenda when i ms a e in he same indus y o ma ke segmen .
They ind suppo o he hypo heses ha ho izon al ela ional go e nance has a posi i e
e ec on sou cing o collec i e esou ces and p oduc inno a ions. They also a gue ha
ela ional go e nance in e ical ies can a enua e con ac ual haza ds occu ing in complex
buye -supplie a angemen s and a ec he e iciency o coo dina ing in e dependen
assembly sys ems among pa ies, suppo ing he hypo hesis ha e ical ela ional go e nance
has a posi i e e ec on manu ac u ing p oduc i i y. They ind ha bo h e ical and
ho izon al ela ionships can enhance collec i e e iciency.
2.2 Ins i u ional Theo y – “Isomo phism”
Ins i u ional heo y is conce ned bo h wi h o mal and in o mal s uc u es in ins i u ions and
could help explain why some en i onmen s ha e mo e amily i ms han o he s. Jeppe son
(1991) de ines ins i u ions as any social pa e n cha ac e ized by a s anda d sequence o
in e ac ions. Family i ms mee his de ini ion. Ins i u ions can also be seen as go e nance
s uc u es based on ules, no ms, unde s andings and ou ines (Ma ch and Olsen, 1989). In
addi ion, ins i u ionalism de ines go e nance by pa ne ing, coope a ion and in e change, and
can be ega ded as closely allied wi h ne wo k heo y (O’Toole, 1997). I ind ha he ne wo k
heo y is mo e applicable because i also includes social and ela ional dimensions in amily
i ms, like owne iden i y and amily ies. Sco (2001) s a es ha much o he wo k by
ins i u ional heo is s has been spen on documen ing he in luence o social and symbolic
o ces on o ganiza ional s uc u e and beha io and ha sociological ins i u ionalism
emphasizes indi idual beha io wi hin ins i u ions. He also a gues ha beha io mus be
explained on a si ua ional basis wi h each con ex being di e en (Sco , 2001).
DiMaggio and Powell (1983, 1991), on he o he hand, ask why o ganiza ions a e so simila .
They a gue ha once a se o o ganiza ions eme ges as a ield, a ional ac o s make hei own
o ganiza ions inc easingly simila as hey y o adap ; hey call his endency owa d
homogenei y “isomo phism”. They a gue ha isomo phism can be di ided in o: 1)
Compe i i e isomo phism a ising om ma ke o ces and 2) ins i u ional isomo phism a ising
om compe i ion o poli ical and o ganiza ional legi imacy (DiMaggio and Powell, 1983,
1991).

71
Acco ding o DiMaggio and Powell (1983, 1991), ins i u ional isomo phism has h ee
di e en mechanisms: 1) P essu es o con o m o bes p ac ice (coe ci e), 2) educed
unce ain y by imi a ing success ul pee s (mime ic) and 3) socializa ion o pe sonnel o iew
ce ain ypes o s uc u es as legi ima e (no ma i e). In his pe spec i e, a ious o ms o
p essu e inc ease he homogenei y o o ganiza ional s uc u es.
Aguile a and Jackson (2003) use ac o -cen e ed ins i u ionalism o explain c oss-na ional
di e si y o co po a e go e nance. They ocus on he in e play o ins i u ions and i m-le el
ac o s and how di e en con igu a ions o ins i u ions suppo di e en so s o in e ac ions
among s ake-holde s in co po a e go e nance. This s udy a gues ha in e - i m ne wo ks a e a
pa o i ms’ capi al and ha he s uc u e o in e - i m ne wo ks in luences i ms’ beha io
h ough access o c i ical esou ces and in o ma ion. Aguile a and Jackson (2003) p opose
ha in coun ies wi h a high deg ee o o e lapping ne wo ks, capi al ends o pu sue s a egic
in e es s owa ds he i m and exe cise con ol ia commi men . This s udy ega ds in e - i m
ne wo ks mo e a eason o di e en co po a e go e nance sys ems han as a possible
de e minan o a ious owne ship s uc u es.
The ollowing wo sec ions b ie ly p esen cha ac e is ics o indus y ne wo ks and clus e s as
he basis o discussing how ne wo ks may a ec amily owne ship in some indus ies. This
does no include a comple e analysis o he de elopmen o clus e s, bu mo e a e iew o
how i ms inside clus e s can gain om ne wo k ex e nali ies and agglome a ion bene i s
esul ing om s ong social and indus ial ela ions in hese ne wo ks, wi h he po en ial o
enhancing amily owne ship.
2.3 Indus y Ne wo ks and Clus e s
The e has been a deba e on how o de ine an indus y clus e , how o iden i y a clus e , and
wha ac ually d i es he de elopmen o clus e s (LeVeen, 1998). Doe inge and Te kla
(1995) de ine an indus y clus e as “geog aphical concen a ions o indus ies ha gain
pe o mance ad an ages h ough co-loca ion (Doe inge and Te kla, 1995, page 225). This
de ini ion is in line wi h agglome a ion economics (LeVeen, 1998). Po e (1990) ocuses on
he compe i i e ad an age a i m can gain by being pa o an indus y clus e whe e ela ed
and suppo ing indus ies ha e been o g ea in e es . Acco ding o Po e (1990), he
incen i e o clus e ing is a compe i i e ad an age, wi h he main ypes o clus e s being
e ical and ho izon al clus e s. Ve ical clus e s a e linked h ough buye -selle ela ionships
72
whe eas ho izon al clus e s sha e a common ma ke o skilled labo , p oduc s, echnology o
na u al esou ces (Po e , 1990; LeVeen, 1998). This de ini ion ocuses bo h on esou ces and
ela ions be ween di e en pa icipan s in he ma ke place.
Jacobs and De Man (1996) on he o he hand, ocus on quali y o i m ne wo ks and
coope a ion in addi ion o geog aphical and e ical/ho izon al ela ionships be ween sec o s.
They b ing ne wo k ex e nali ies and social ela ions in as elemen s in hei de ini ion o
clus e s. Rosen eld (1997) also includes he social and in e ac ion aspec by ocusing on
communica ion and dialogue in his de ini ion o clus e s. This de ini ion is “a geog aphically
bounded concen a ion o simila , ela ed o complemen a y businesses, wi h ac i e channels
o business ansac ions, communica ions and dialogue, ha sha e specialized in as uc u e,
labo ma ke s and se ices, and ha a e aced wi h common oppo uni ies and h ea s”
(Rosen eld, 1997, page 10). Rosen eld (1996) a gues ha an e icien social in as uc u e is
equi ed in o de o acili a e exchange o in o ma ion and ha his in o ma ion low is
impo an o he de elopmen o an e ec i e clus e . In addi ion o in o ma ion, he s a es ha
he e should be us and sha ed isions in o de o c ea e dynamic and e ec i e clus e s
(Rosen eld, 1996). Gi en his con ex , I ocus on he ne wo ks p e alen in indus ial clus e s
and how hese ne wo ks may a ec he p opo ion o amily owne ship in some indus ies.
P io o discussing hese issues, I p esen some iews on he d i ing o ces wi hin ne wo ks
and indus ial clus e s.
Mos esea che s ag ee ha i ms will clus e because hey ecei e some bene i s bu he
ac o s c ea ing hese bene i s ha e been deba ed (LeVeen, 1998). Doe inge and Te kla
(1995) claim ha , he d i ing o ces unde pinning clus e s a e posi i e ex e nali ies.
Acco ding o his iew, loca ion si es a e a esul o coincidences o may esul om cos
ad an ages om immobile ac o s. Po e (1990) ocuses on compe i ion as he d i ing o ce
behind he de elopmen o di e en clus e s whe e compe i ion be ween i al i ms o ces
hem o emain inno a i e and compe i i e. This gene a es ela ed “spin-o ” i ms and
s imula es inc eased R&D, wi h he esul ha clus e s become mu ually ein o cing sys ems.
Ve ical in eg a ion gene a es new i ms o ill a gap in he ma ke , whe eas ho izon al
clus e ing gene a es a demand o p oduc s and se ices in ela ed indus ies. This c ea es
oom o de elopmen in a clus e . T ans e o labo wi hin a clus e con ibu es o inc eased
compe i ion and s imula es inno a ion h ough exchange o knowledge (Po e , 1990).
73
In con as , Doe inge and Te kla (1995) ocus on agglome a ion bene i s ( he bene i s i ms
can ob ain when loca ed nea each o he due o economies o scale and ne wo k e ec s) as a
key d i ing o ce in he clus e . They s a e ha i ms in a clus e ha e lowe anspo a ion
and ansac ion cos s, as well as be e access o skilled labo . In addi ion, exchange o
in o ma ion, knowledge and echnology among ela ed i ms can c ea e a social in e ac ion
and in as uc u e ha enhances clus e ing p ocesses (Rosen eld, 1996, 1997). A social
in as uc u e acili a ing echnology and knowledge ans e is bene icial o all i ms bu may
be e en mo e so o smalle specialized i ms illing eme ging niches in he ma ke . On his
basis, one may a gue ha he social in as uc u e s eng hens and enhances he g ow h o
clus e s (Doe inge and Te kla, 1995; Rosen eld, 1996, 1997; LeVeen, 1998) and ha hese
ne wo k and knowledge ex e nali ies a e c ucial o he de elopmen o clus e s. The social
in as uc u e may in luence owne ship and go e nance s uc u es, gi ing posi i e o nega i e
e ec s on he u he de elopmen o a clus e . To sum up, one can di ide clus e e ec s in o:
1) Compe i ion e ec s wi hin which clus e s de elop (Po e , 1990) and 2) ne wo k e ec s
wi h a social app oach (Rosen eld, 1996, 1997).
The li e a u e seems o ag ee ha : 1) Clus e s a e dynamic (Doe inge and Te kla, 1995), ha
2) e en hough he geog aphical and spa ial p oximi y is impo an , he e is no clea de ini ion
o he app op ia e geog aphical scope o a clus e (LeVeen, 1998; Rosen eld, 1996; Jacobs
and DeMan, 1996), ha 3) he in e dependen and dynamic ela ionships c ea e clus e s, no
only indus y concen a ion (Doe inge and Te kla, 1995; Rosen eld, 1997) and, las bu no
leas , ha 4) he ole o he social in a-s uc u e is impo an in de ining indus y clus e s
(Rosen eld, 1996).
74
3.0 HOW CAN NETWORKS AFFECT FAMILY OWNERSHIP IN AN INDUSTRY?
T ansac ion cos heo y has been dominan in he ield o in e - i m go e nance esea ch, wi h
emphasis on economies o scale and ansac ion cos s (Williamson, 1975). Ouchi (1980)
a gues ha ansac ion cos heo y does no cap u e all go e nance o ms because i does no
add ess he social con ol aspec in long- e m coope a i e a angemen s and he need o add
he dimension o social mechanisms. As discussed, ne wo ks a e an impo an pa o he
de elopmen and sus ainabili y o clus e s and can be de ined as he social pa o clus e s.
This aises some pe inen ques ions. Can hese ela ions and ne wo ks also explain amily
owne ship and he sus ainabili y o amily i ms? Is i a coincidence ha some o he
indus ies ope a ing in s ong clus e s ha e a high deg ee o amily owne ship? Can we
assume hose amily i ms a e “ us ing o ganiza ions” ha ein o ce his e ec ?
3.1 Ne wo ks and Family Owne ship
G ano e e (1985) a gues ha social ela ions be ween i ms a e e y impo an when
assessing “ma ke s” e sus “hie a chy”, whe e powe in “ma ke ” ela ions and social
connec ion in i ms a e impo an elemen s. He s a es ha a s able ne wo k o ela ions
media es complex ansac ions and gene a es s anda ds o beha io be ween i ms, e lec ing
“ma ke s” ins ead o “hie a chy”. F om a ansac ion cos pe spec i e, Williamson (1975)
a gues o “ma ke ” o “hie a chy” s uc u es as al e na i es o media ing ansac ions, whe e
“ma ke s” a e cha ac e ized by compe i ion and epea ed games, and “hie a chies” ocus on
ansac ion cos s and economies o scale. Ouchi (1980), howe e , a gues o a hi d o m o
go e nance he calls he “clan” o m. This o m is based on goal cong uence by means o
di e en social mechanisms, and is pe cei ed o educe oppo unis ic beha io and lowe
ansac ion cos s be ween pa ies (Ouchi, 1980).
S ong clus e s a e cha ac e ized by in e -o ganiza ional go e nance, alling somewhe e
be ween ma ke and hie a chy con ol, and may i in o Ouchi’s (1980) “clan” concep . Ring
and Van de Ven (1992) ha e a gued ha a ansac ion cos pe spec i e on in e - i m
go e nance does no add ess he e ec s o social ela ions in epea ed ansac ions be ween
i ms, due o i s ocus on cos educ ion. Nahapie and Ghoshal (1998) analyse how esou ce
c ea ion wi hin ne wo ks can help i ms gain ad an ages, concen a ing on he in e ela ed
de elopmen o social and in ellec ual capi al as key esou ces. They ind ha he c ea ion and
sha ing o aci knowledge ep esen s such an ad an age. By ex ending hese iews o include
amily i ms as a e ile g ound o de eloping aci knowledge, one may a gue ha some o
75
he ad an ages wi h amily i m go e nance (wi hin i m ela ions) ease ansac ions be ween
i ms and enable hem o emain amily owned. I a gue ha he p e alence o amily
owne ship in indus y clus e s depends bo h on social and comme cial ne wo ks.
One example o an indus y cha ac e ized by s ong indus ial clus e s and high ac ion o
amily i ms is he wo ldwide shipping indus y. No wegian shipping has a high deg ee o
amily i ms, i has s ong comme cial and social ne wo ks, and i is ega ded o be a e y
comple e clus e (Beni o e al., 2003; Jenssen, 2003). In addi ion o he adi ional shipping
ela ed ac i i ies, including mo e han ou housand in e na ionally compe i i e i ms, he e is
also a s ong oil p oduc ion and oil se ice sec o wi h se e al ela ed indus ies in No way
(Wijnols e al., 2003). The s eng h o his clus e is o be oo ed in he la ge numbe o
shipping companies, whe e a majo i y o hese a e amily i ms and se e al o which ha e
been amily-owned o gene a ions. Re e and Jacobsen (2001) ind ha he ma i ime clus e s
ha e highe pe o mance, highe g ow h and p oduc i i y, and highe sala ies han o he
indus ies in No way. They also ind ha clus e i ms ha e highe inno a ion capaci y,
highe comme cializa ion a es, highe spin-o ac i i y and dynamism o change. Se e al
clus e -mapping s udies ha e been conduc ed wo ldwide and he Eu opean clus e -mapping
p ojec (Appendix I) iden i ies many clus e s wi h long- e m us based ela ionships and
high deg ees o collabo a ion and en ep eneu ial ac i i y (Eu opean Commission, 2002).
I is in e es ing ha amily owne ship is so p e alen in his speci ic indus y wo ldwide, in
spi e o he ac ha i is cha ac e ized bo h by high capi al in ensi y and high isk (G ani sas,
2005). These elemen s a e o en men ioned in he li e a u e as a gumen s o dispe sed
owne ship in o de o sp ead isk and as a esul o di icul ies wi h aising enough capi al
(Ca ney and Gedaljo ic, 2002). Some segmen s o he shipping ma ke a e also cha ac e ized
by high asse speci ici y, making i mo e di icul o deb inance he asse s, which could be
ano he a gumen o dispe sed owne ship. In o he segmen s o he shipping ma ke ,
howe e , he e is a high deg ee o asse s angibili y wi h low asse speci ici y, and a global
esale ma ke . This makes i easie o deb inance he ope a ions due o a highe deg ee o
colla e al and i ms can emain amily owned in spi e o high capi al in ensi y. This indus y
is also ex emely ola ile due o la ge p ice a ia ions in eigh a es and p ices o new and
second-hand ships (S op o d, 1997). Vola ile en i onmen s ha e been used as one a gumen
o amily owne ship due o gains om close moni o ing (Demse z and Lehn, 1985; Pede sen
and Thomsen, 1998, 1999). I is plausible ha his close moni o ing can be an e icien way

76
o deal wi h he unce ain y in he ma ke , leading o mo e imely ma ke decisions. Based on
his, amily owne ship can be a iable go e nance mechanism in hese en i onmen s in which
shipping i ms ope a e (Demse z and Lehn, 1985; Pede sen and Thomsen, 1998, 1999). In
addi ion, in es men s in shipping a e long- e m in es men s, and i well wi h he con en ion
ha amily i ms a e in a posi ion o make be e in es men decisions due o hei long- e m
hinking, hei long adi ions, as well as he al uism p e alen in hese i ms (James, 1999).
Many amily i ms in he ma i ime clus e ha e a long his o y in he indus y and ha e been
able o es ablish long- e m pe sonal and comme cial ela ions. The e o e, in addi ion o he
abo e-men ioned a gumen s o amily owne ship, long his o y and adi ions may po en ially
ha e esul ed in his owne ship s uc u e. In he shipping indus y, he e is a high deg ee o
in es men in o he i ms in he same indus y, co-in es men s o pa ne ships, enabling i ms
o o e come p oblems o capi al in ensi y and isk. This makes i possible o amily i ms o
ake pa in capi al in ensi e and high- isk p ojec s wi hou abso bing all he isk, hus
s eng hening he indus y ne wo ks and he chance o emain amily owned. I a gue ha
amily owne ship can be a o able in shipping due o ne wo ks, mel ing o clus e s h ough
in e locking boa ds, knowledge ans e and social ela ions. In e locks secu e access o
c i ical esou ces and compe ence h ough boa d membe s o manage ial posi ions and gi e
aluable insigh in o o he pa s o he indus y (Løining, 2001). In addi ion, he posi i e
e ec o clus e s on inno a ion and alue c ea ion may well inc ease as coope a ion and in e -
dependency inc ease. Family owne ship also seems p e alen in o he clus e s, whe e he
Cali o nian wine clus e , he No wegian u ni u e indus y, he I alian ex ile indus y, as well
as he I alian ce amique indus y, may be examples o his.
In sec ion 3.2, I p esen some p oposi ions ega ding ne wo ks and amily owne ship. One
may a gue ha amily owne ship is endogenously de e mined by exogenous changes in he
en i onmen , whe e s ong indus y and social ne wo ks a e a pa o his en i onmen .
Demse z and Lehn (1985) a gue ha manage ’s owne ship is no exogenous bu is an
endogenous a iable de e mined by di e en a iables e lec ing he business en i onmen ,
i m cha ac e is ics, di e ences in manage ial con ac ing en i onmen , and he i m’s
pe o mance. Gugle and Weigand (2003) ind ha manage ial owne ship is endogenous, in
line wi h indings in Himmelbe g e al. (1999).
77
My in e es is in he in e ac ion be ween amily owne ship and ne wo ks, wi h ocus on us
and owne iden i y (assuming no la ge con lic s) o en ound in amily i ms e sus closely
held i ms in gene al. I a gue ha s ong ne wo ks can enable i ms o de elop and emain
amily owned, i his is he goal, bu also ha new i ms can de elop and become amily i ms
due o hese ne wo ks. The s a ing poin o he analysis is an indus y ne wo k wi h a la ge
po ion o amily i ms. I assume ha hese ne wo ks u he os e he c ea ion o amily
i ms, and ha his con ibu es o main ain his owne ship s uc u e in some indus ies. The e
a e also s ong indus y clus e s cha ac e ized by dispe sed owne ship s uc u es. These
ypically a e cases whe e he i m, indus y and na ion speci ic elemen s a e s onge han he
ne wo k e ec s, o ha he ounding amily, manage s o inside s wan he i m o become
widely held o a ious easons (Helwege e al., 2007).
3.2 Indus y Ne wo ks and Family Owne ship - P oposi ions
Hansmann (1996) s a es ha he op imal owne ship s uc u e in any gi en en i onmen is he
s uc u e ha minimizes ansac ion cos s o gi en ac i i ies. This is one explana ion o why
some owne ship s uc u es a e mo e dominan han o he s in pa icula indus ies. Pede sen
and Thomsen (1998) ha e made a s udy ha ocuses on indus y dis ibu ion o di e en
s uc u es and cha ac e is ics. They ind s ong indus y e ec s due o i m size, ola ili y,
g ow h a es, capi al and R&D in ensi y. They also ind s ong na ion e ec s h ough he
egula ion o he inancial sec o , axa ion o pe sonal owne ship, and owne ship egula ion.
In be ween he mic o le el ( i ms) and he mac o le el (na ion/indus y), I a gue ha he e is a
clus e le el ha can explain ”clus e e ec s” on owne ship s uc u e. Reasons o hese
e ec s and he possibili ies hey c ea e include knowledge o people, p oduc s and ma ke s.
Assuming an unde lying d i ing o ce o emain amily owned, s ong ne wo ks can be one
way o achie ing his objec i e. Fac o s like social capi al, ela ional con ac ing, us ,
common knowledge and al uism may ease es ablishmen o con ac s be ween pa ies making
i easie o es ablish new i ms. O he ne wo k e ec s may help amily i ms o e come
esou ce cons ain s, inc ease he ma ke po en ial and business oppo uni ies, and spa k
inno a ion. Building on hese p oposi ions, I p esen some possible explana ions o why
indus y clus e s may enhance amily owne ship. The e a e challenges wi h cause and e ec
o ne wo ks and amily owne ship, bu in a ne wo k pe spec i e I a gue ha ne wo ks os e
c ea ion o amily i ms.
78
Easie o es ablish new i ms due o social and comme cial ela ions
Rosen eld (1997) s a es, ha many e ec i e clus e s a e loca ed in small in e - ela ed
indus ies. He emphasizes he ole o social in e ac ion and i m coope a ion in de e mining
he dynamic na u e o a clus e , whe e social in as uc u e is an impo an dimension in
acili a ing echnology and knowledge ans e . Loca ion speci ic ac o s may be o
impo ance o s a -up i ms when ounde s a s a business in a amilia indus y close o a
amilia labo pool o o he esou ces. E ec i e clus e s mus also include us and a sha ed
ision in o de o be dynamic (Rosen eld, 1996). Fu he mo e, implemen a ion o social
ela ionships o exchange wi h business pa ne s may educe unce ain y wi hin he gi en
business en i onmen (G ano e e , 1985) and may mi iga e isk a e sion, low a es o
in es men in business de elopmen , and esou ce sca ci y. Social ne wo ks and ela ions can
educe unce ain y ei he h ough common R&D p ojec s o o he comme cial ag eemen s and
gi e a compe i i e ad an age. Ne wo ks ease es ablishmen o new i ms and he eby
con ibu e o he g ow h o small, eme ging amily i ms in an indus y. New i ms may be in
compe i ion wi h exis ing amily i ms, bu hey also con ibu e o new amily i ms.
P oposi ion 1: Ne wo k ex e nali ies ease es ablishmen o new ounde amily i ms.
Easie access o capi al due o social ne wo ks and us
Access o capi al is impo an , especially in capi al-in ensi e indus ies whe e he e is a need
o ein es con inuously o emain compe i i e, and whe e s ong ne wo ks can ease his
access. Access o deb inancing depends o a la ge ex en on colla e al wi hin i ms, whe e
asse speci ici y is an impo an ac o . T us and s ong ela ions be ween he ounde and he
local ”bank ma ke ” may acili a e access o and educe cos o deb inancing because i
dec eases he isk a e sion on he pa o banks. T us , long- e m ela ions and social
ne wo ks may also gi e easie access o p i a e equi y ma ke s because in es o s us he
ounde . This capi al is especially impo an o small, eme ging, non-lis ed i ms. In addi ion,
en u e capi al is impo an o inancing g ow h, whe e s ong ne wo ks and us a e c i ical
ac o s. I is c ucial o i ms o main ain ex ensi e con ac s and build in ellec ual capi al
wi hin hei indus y. Ven u e capi alis s a e o en specialis s in assessing en u es and hei
ounde s. The social capi al hese ac o s b ing in is essen ial o enhancing compe i i eness
and he g ow h o i ms in he clus e (h p://encyclopedia. he eedic iona y.com).
79
Fi ms in capi al-in ensi e indus ies, ope a ing in coun ies wi h well-de eloped inancial
ma ke s, will end o ha e dispe sed owne ship. This is no always he case, because s ong
ne wo ks wi h a high deg ee o social capi al may enable amilies o emain amily owned
also in hese indus ies.
P oposi ion 2: S ong us ing ne wo ks enhance amily owne ship h ough easie access
o capi al.
Easie access o human esou ces due o social ne wo ks and us
No mally, esou ce dependency (P e e , 1982) is used as an a gumen o dispe sed
owne ship, whe e his owne ship s uc u e is assumed o gi e access o he igh ype o
human esou ces. Howe e , ano he means o secu ing esou ces is dense ne wo ks, which a e
o en ound wi hin clus e s. Acco ding o G ano e e (2005), social ne wo ks play a key ole
in mos labo ma ke s. P ospec i e employe s and employees p e e o lea n abou one
ano he om pe sonal sou ces whose in o ma ion hey us , e e ed o as social capi al (Lin,
2001). Ano he esou ce base is in e locking boa ds whe e ne wo ks a e impo an sou ces o
e e ences. This may also help he es ablishmen o s a egic alliances and pa ne ships
(Gula i and Wes phal, 1999). Løining (2001) uses lea ning, knowledge ans e , in o ma ion
and coo dina ion as key concep s when discussing e ec s o boa d in e locking. Family i ms
o en expe ience a sca ci y o human esou ces a le els o manage o boa d membe . S ong
social ne wo ks mi iga e his sca ci y due o he possibili y o ec ui men om pe sonal
ne wo ks whe e us , con idence and pe sonal e e ences a e elemen s.
One could a gue ha he gain om social ne wo ks is highe in amily i ms compa ed o
o he i ms due o amily ies, adi ion and long e m ela ions, ac o s ha con ibu e o a
highe le el o us .
P oposi ion 3: Robus ne wo k s uc u es imp o e amily i ms’ access o human esou ces.
Inc eased solidness and su i al a e
G ano e e (2005) a gues ha social s uc u e and ne wo ks ha e a powe ul impac on he
ex en and sou ce o inno a ions, he di usion o hese inno a ions, as well as he economic
ou come. Pede sen and Thomsen (1998) ind some e idence ha p o i ma gins inc ease he
scope o inside owne ship and ha concen a ed owne ship is p e alen in high ma gin
indus ies. When pu in he con ex o clus e heo y, do new i ms es ablish hemsel es in
hese indus ies, ein o cing he e ec o his owne ship s uc u e? Resea ch has no
es ablished whe he he p esence o la ge owne s imp o e i m pe o mance o no
86
ela ionships de eloped h ough yea s, e en gene a ions. Tha is why non- amily i ms may
no be able o eap he bene i s o s ong ne wo ks in he same manne .
P oposi ion 5a: Family i ms, in ela ion o non- amily i ms, can ake be e ad an age o
en ep eneu ial oppo uni ies due o manage ial e iciency in hese ne wo ks
P oposi ion 5b: Family i ms, in ela ion o non- amily i ms, can ake be e ad an age o
en ep eneu ial oppo uni ies due o “ hick us ” in hese ne wo ks
Bene i s o amily i ms in ne wo ks due o ela ional go e nance
The choice o go e nance model depends on agency con ex , coun y and business
en i onmen . Some go e nance sys ems nu u e and p o ec i m and asse speci ic
in es men s (Macey, 1998), while o he s do no . Boo and Macey (2004) ind ha ake-o e
en ep eneu s a e dynamic and in en i e, and ha ela ional in es o s a e c ucial o
in es men s in i m speci ic asse s. They ind ha I aly, wi h i s weak capi al ma ke s and
en u e capi al, has lou ished because in es o s and en ep eneu s ha e inno a ed a ound
de iciencies in i s co po a e go e nance sys em by u ilizing closely held i ms. They elimina e
agency ela ionships by using amily owne ship, p o iding s ong incen i es o manage s o
make i m speci ic human and capi al in es men s necessa y o de elop specialized skills,
knowing ha hey will no be exploi ed (Boo and Macey, 2004).
In de ini ions o clus e s, he ocus is on he quali y o i m ne wo ks, co-ope a ion, ho izon al
and e ical ela ionships, social in e ac ion wi hin he ne wo ks, as well as sha ed isions and
us (Rosen eld, 1996, 1997; Jacobs and De Man, 1996). These ea u es should enhance
compe i i eness h ough posi i e ex e nali ies, whe e amily owne ship can be one o he
ac o s ha gi e ise o hese posi i e ex e nali ies. A ne wo k o ela ionships be ween i ms
is a hi d al e na i e o he ma ke s and hie a chies in p e ious li e a u e (Coase, 1937;
Williamson, 1975). In a ne wo k pe spec i e, economic ac ions and ins i u ions a e embedded
in social s uc u es and in e ac ions (G ano e e , 1985), whe e social capi al among supplie s
and cus ome s c ea es a compe i i e ad an age and alue (Coleman, 1990). Ouchi (1980)
a gues o a “clan” o m based on goal cong uence. Family i ms may be acili a o s o social
mechanisms, wi h a educ ion in oppo unis ic beha io and lowe ansac ion cos s as esul .

87
S ong ne wo ks a e cha ac e ized by us and con idence among pa ne s, educing he cos s
o con ol and coo dina ion (La son, 1992). These ne wo ks can mi iga e some o he nega i e
elemen s in amily owne ship because hey ep esen a iable, s ong ne wo k ou side he
amily ne wo k. Engagemen in a ne wo k, including he p ospec o social epu a ion, can
also mi iga e amily con lic s, myopic al uism and manage ial en enchmen . I may also
educe he ex ac ion o p i a e bene i s and he exp op ia ion o mino i y sha eholde s. In
ac , i may be easie o ob ain capi al om his ne wo k because he sha eholde s know he
people and he business hey a e in es ing in. These ne wo ks a e o en based on compe ence
and knowledge o he indus y. The clus e ep esen s a pool o manage ial esou ces and
po en ial boa d membe s ha can sol e his p oblem o some amily i ms. In e locking
di ec o a es can be a aluable sou ce o in o ma ion and new in luences (Bu , 1992),
enhancing inno a ion and compe i i eness. This implies ha he choice o go e nance model
( he ela ionship be ween owne ship, boa d and managemen ) a ec s he way i ms deal wi h
he ne wo ks in he speci ic indus y in which hey ope a e.
Rajan and Zingales (1997, 1998) de ine i ms as “a nexus o speci ic in es men s: a
combina ion o mu ually specialized asse s and people”, and ecognize ha a i m is a
complex s uc u e ha canno be ins an aneously eplica ed. This de ini ion is consis en wi h
“ he economic essence o a i m: a ne wo k o speci ic in es men s ha canno be eplica ed
by he ma ke ” (Zingales 1997). In a discussion o go e nance s uc u e in clus e s and
indus ies, he b oade de ini ion o he i m by Rajan and Zingales (1997, 1998) i s in o
agglome a ion economics, as well as ne wo k and knowledge ex e nali ies. They ocus on
mu ually specialized pa ies belonging o he i m (wo ke s, supplie s o cus ome s),
highligh ing he impo ance o ne wo ks (Rajan and Zingales, 1997, 1998).
The s eng h o ne wo ks and ela ions also in luences he choice o go e nance models,
whe e i ms make use o a mo e “ ela ional” o a “con ac ual” go e nance model depending
on hese ac o s. A con ac ual go e nance sys em has i s basis in agency heo y. I ega ds
i ms as a nexus o con ac s (Alchian and Demse z, 1972; Jensen and Meckling, 1976) wi h
he ocus on alignmen o in e es s be ween owne s and manage s (Fama and Jensen, 1983).
This model s esses owne ship because o i s in luence on boa d composi ion and boa d ole
(Zah a and Pea ce, 1989). Key wo ds a e boa d and owne ship s uc u e, boa d moni o ing
and counsel, agency p oblems and con ol. A ela ional go e nance model ocuses on op imal
usage o he social capi al embedded in social ela ionships be ween he owne amily
88
membe s and he managemen (Mus akallio, 2002). Whe he a amily i m is success ul o no
depends on how i manages o eap he bene i s o long las ing ela ionships, sha ed ision
and us among amily membe s, as well as loyal y and long adi ions (Ha ey, 1999a;
Ouchi, 1980). Di e ences in pe o mance a e a esul o di e ences in he abili y o c ea e
and use he social and human capi al in he i m (Nahapie and Ghoshal, 1998). G ano e e
(1985) a gues ha he ela ional go e nance model can complemen he con ac ual
go e nance o amily i ms, wi h he ocus on us , sha ed ision, amily ins i u ions and
social in e ac ion.
Family i ms in s ong clus e s a e in an agency con ex whe e some go e nance p oblems
like oppo unism, incen i e p oblems, capi al and akeo e ma ke s a e aken ca e o . They
ocus on dynamic ela ions and lexibili y, whe e us wi hin he g oup is pe cei ed as
sol ing he incen i e p oblems. Boa d membe s a e ec ui ed om ne wo ks, and boa ds a e
ega ded as a esou ce base and men o ing unc ion mo e han a con olling unc ion. Clus e s
mel in o each o he h ough in e locking di ec o a es and s a egic alliances. In an agency
con ex , whe e a clus e has a s ong ne wo k o i ms and ela ional capi al in a amily
owne ship s uc u e, a ” ela ional go e nance model” may be he mos app op ia e. He e, he
social capi al is embedded in ela ionships be ween amily and managemen o be ween
amily i ms. Con e sely, a con ac ual go e nance model may apply in an agency con ex
wi h weak ne wo ks among i ms and a non- ela ional owne ship s uc u e. Vola ili y in he
indus y, p oduc compe i ion and he legal and inancial en i onmen all a ec he choice o
model, and i ms should choose a go e nance model e lec ing hei needs. I a gue ha amily
i ms use a mo e ela ional go e nance model due o s ong ne wo ks and ela ional capi al,
enhancing exis ing ad an ages o he amily owne ship s uc u e. Consequen ly, a ela ional
go e nance model can con ibu e o enhanced inno a ion and compe i i eness in i ms and
ein o ce he s eng h o ne wo ks in clus e s.
P oposi ion 6: Family i ms bene i mo e han non- amily i ms om ne wo ks when he
ela ional go e nance model is applied
89
5.0 CONCLUDING REMARKS
In his pape , I ha e ocused on an al e na i e explana ion o amily owne ship. I ha e used
ne wo k heo y o supplemen agency heo y o c ea e a b oade pic u e o possible
de e minan s o amily owne ship. I ha e p oposed ha amily i ms end o clus e in
indus ies, egions and na ions, combining lexibili y and incen i es o pe sonal owne ship
wi h economies o scale and scope. Fu he mo e, s ong pe sonal ne wo ks, us and
epu a ion help o e come capi al a ioning and hold-up p oblems, and in e locking
di ec o a es, amily ies, iendships and ade associa ions ein o ce syne gies be ween i ms.
I ha e p oposed ha s ong social and indus ial ne wo ks change he a io o amily i ms in
an indus y, because o he social capi al embedded in hese ela ions. Wi hin s ong social
and indus ial ne wo ks, I ha e a gued ha i is easie o es ablish new companies due o he
ela ional capi al. Fu he mo e, I a gue ha amily i ms ha e easie access o capi al and
human esou ces due o social ne wo ks and us , and ha hey ha e a highe a e o
inno a ion and su i al hanks o hei ne wo k ies. I main ain ha amily i ms gain mo e
om being in s ong indus ial clus e s han non- amily i ms due o he “ hick us ” he
amily ep esen s in a ious ela ions. Finally, I pos ula e ha hese bene i s a e a esul o he
owne -manage ela ions as well as he bene i s o he go e nance s uc u es in amily i ms.
In amily i ms he go e nance mode ends o be mo e ela ional a he han ma ke based. A
he same ime, he clus e ed i ms main ain su icien au onomy and dis ance o be able o
compe e and adjus quickly o changes in he economic en i onmen . Thus clus e ing
complemen s he cha ac e is ics o amily i m go e nance emphasized in he amily business
li e a u e. The No wegian shipping clus e – which ha bou s mo e han 4000 in e na ionally
compe ing i ms –is a ele an illus a ion. The No wegian ma i ime clus e is conside ed o
be e y comple e; i is cha ac e ized by a high p opo ion o amily i ms ha ha e s ong
social and indus ial in e locks. I is he e o e no coincidence ha so many o he wo ld’s
shipping i ms ha e managed o coexis and h i e in clus e s ha emain la gely o ganized
a ound closely held i ms. In o de o b oaden ou knowledge o he de e minan s o amily
owne ship, u he esea ch should empi ically es he p oposi ions pu o h in his pape ,
speci ically esea ch in o he ela ionship be ween he p opo ion o amily owne ship and he
social and indus ial ne wo ks in an indus y. One c ucial challenge in his endea o will be
he iden i ica ion o ele an p oxy a iables o us , as well as measu es o s ong social
and comme cial ne wo ks in di e en indus ies.
90
REFERENCES:
Aguile a R.V and G. Jackson, 2003, “The c oss-na ional di e si y o co po a e go e nance:
Dimensions and de e minan ”, Academy o Managemen Re iew 28(3), pp. 447-465
Agnblad, J., E. Be glo , P. Hog eld and H. S anca , 2001, “Owne ship and con ol in
Sweden: S ong owne s, weak mino i ies, and social con ol”, In: Ba ca F. and M.
Bech (Eds.), The Con ol o Co po a e Eu ope, Ox o d Uni e si y P ess, London, pp.
228-258
Alchian, A.A. and H. Demse z, 1972, “P oduc ion, In o ma ion Cos s, and Economic
O ganiza ion”, Ame ican Economics Re iew 62(5), pp. 777-795
Ami , R. and Villalonga, B., 2006, “How do Family Owne ship, Con ol and Managemen
A ec Fi m Value?” Jou nal o Financial Economics 80 (2), pp. 385-417
Ande son, R.C, S.A Mansi and D.M. Reeb, 2003, “Founding- amily owne ship he agency
cos o deb ”, Jou nal o Financial Economics 68, pp. 263-285
Ande son, R.C, and D.M. Reeb, 2003, “Founding-Family Owne ship and Fi m Pe o mance:
E idence om he S&P 500”, Academy o Managemen Re iew 28 (3), pp. 383-396
A ow, K., 1972, “Gi s and Exchanges”, Philosophy and Public A ai s 1, pp. 343-362
Bake , W.E., 1990,”Ma ke ne wo ks and co po a e beha io ”, Ame ican Jou nal o
Sociology 96(3), pp. 589-625
Ba klay, M. and C. Holde ness, 1989, “P i a e bene i s o con ol o public co po a ions”,
Jou nal o Financial Economics 25, pp. 371-395
Ba ney, J.B. 1991, “Fi m esou ces and sus ained compe i i e ad an age”, Jou nal o
Managemen 17, pp. 99-129
Bebchuck, L., 1994, “E icien and ine icien sales o co po a e con ol”, Qua e ly Jou nal
o Economics 109, pp. 957-994
Bebchuck, L., 1999, “A en -p o ec ion heo y o co po a e owne ship and con ol”,
Wo king pape 7203, Na ional Bu eau o Economic Resea ch, Camb idge, MA
Bennedsen, M. and D. Wol enzon, 2000, “The Balance o Powe in Closely-held Fi ms,”
Jou nal o Financial Economics 58 (1), pp. 113-139
Be le A. and G. Means, 1932, “The Mode n Co po a ion and P i a e P ope y,”
MacMillian: NY
Beugelsdijk S., e al., 2004,”T us and economic g ow h: a obus ness analysis”, Ox o d
Economic Pape s 56, pp. 118-134
91
Beni o, G. R.G., E. Be ge , M. de la Fo es , and J. Shum, 2003, "A Clus e Analysis o he
Ma i ime Sec o in No way", In e na ional Jou nal o T anspo Managemen 1(4),
pp. 203-215.
Black, J.A. and Boal, K.B. 1994, “S a egic esou ces: T ai s, con igu a ions and pa hs o
sus ainable compe i i e ad an age”, S a egic Managemen Jou nal 15, pp. 131-148
Boo , A.W.A and J.R. Macey, 2004, “Objec i i y, P oximi y and Adap abili y in Co po a e
Go e nance”, Fo hcoming in symposium issue o Co nell Law Re iew
Bo dieu, P., 1986, “The o ms o capi al”, J.G. Richa dson (Eds.) Handbook o heo y and
esea ch, o he sociology o educa ion, pp. 241-258, New Yo k: G eenwood P ess
Bu , R.S., 1992, “S uc u al Holes - The Social S uc u e o Compe i ion”, Camb idge and
London: Ha a d Uni e si y P ess
Bøh en, Ø. and B.A. Ødegå d, 2001, “Pa e ns o co po a e owne ship om a unique da ase ”,
No dic Jou nal o Poli ical Economy 27, pp. 55-86
Ca ney M. and E. Gedaljo ic, 2002, “The Coupling o Owne ship and Con ol and he
Alloca ion o Financial Resou ces: E idence om Hong Kong”, Jou nal o
Managemen S udies 39(1), p123, 24p, 2 cha s
Chandle , A.D., 1977, “The Visible Hand: The Manage ial Re olu ion in Ame ican
Business”, Camb idge, MA, Ha a d Uni e si y P ess
Coase, R., 1937, “The Na u e o he Fi m”, Economica (4), pp. 386-405
Coleman, J.S., 1988, “Social capi al and he c ea ion o human capi al”, Ame ican Jou nal o
Sociology 94: S95-S120
Coleman, J.S., 1990, “Founda ions o social heo y”, Camb idge, MA: Belknap P ess o
Ha a d Uni e si y P ess
Da is, G. and H. G e e, 1997, “Co po a e Eli e Ne wo ks and Go e nance Changes in he
1980’s”, Ame ican Jou nal o Sociology 103, pp. 1-37
Demse z, H., 1983, “The S uc u e o Owne ship and he Theo y o he Fi m”, Jou nal o Law
and Economics 26(2), pp. 375-394
Demse z, H. and K. Lehn, 1985, “The S uc u e o Co po a e Owne ship: Causes and
Consequences”, Jou nal o Poli ical Economy 93(6), pp. 1155-1177
DiMaggio, P.J. and W.W. Powell, 1983, “The i on cage e isi ed: Ins i u ional isomo phism
and collec i e a ionali y in o ganiza ional ields”, Ame ican Sociological Re iew 48,
pp. 147-160
DiMaggio, P.J. and W.W. Powell, 1991, “The new ins i u ionalism in o ganiza ional
analysis”, Chicago: Uni e si y o Chicago

92
Donaldson, L. and J.H. Da is, 1991, “S ewa dship Theo y o Agency Theo y: CEO
Go e nance and Sha eholde Re u ns,” Aus alian Jou nal o Managemen 16,
pp. 49-65
Doe inge , P.B., and D.G. Te kla, 1995, “Business s a egy and c oss-indus y clus e s”,
Economic De elopmen Qua e ly 9, pp. 225-37
Dyck, A. and L. Zingales, 2004, “P i a e Bene i s o Con ol: An In e na ional Compa ison”,
The Jou nal o Finance Vol. LIX (2), pp. 537-600
Eisenha d KM., 1989, “Agency heo y: An assessmen and e iew”, Academy o
Managemen Re iew 14, pp. 57-74
Emmons, W.R. and F.A. Aschmid, 2000, “Co po a e Go e nance and Globaliza ion” (a icle
in book Co po a e Go e nance and Globaliza ion by S.S. Cohen and G. Boyd, 2000),
Chel enham, UK, No hamp on, MA, USA, pp. 59-94
Eu opean Commission, 2002, “Final epo o he expe g oup on en e p ise clus e s and
Ne wo ks”, En e p ise Di ec o a e-Gene al, P omo ion o en ep eneu ship and SMEs
Eu opean Commission, 2002, “Regional Clus e s in Eu ope”, Obse a o y o Eu opean
SMEs, No.3
Fama, E.F. and M.C. Jensen, 1983, “Sepa a ion o Owne ship and Con ol,” Jou nal o Law
and Economics 26(6), pp. 301-325
Fama, E.F. and M.C. Jensen, 1983, “Agency P oblems and Residual Claims,” Jou nal o Law
and Economics, Vol. XXVI, pp.1-29
Fama, E.F. and M.C. Jensen, 1985, “O ganiza ional o ms and in es men decisions”, Jou nal
o Financial Economics 14, pp. 101-119
Fila oche , I. and T. Mickiewicz, 2001, “Owne ship Concen a ion, “P i a e Bene i s and
Con ol” and Deb Financing”, Pa o he ACE-Pha e p ojec P98-1048-R “Co po a e
Go e nance, ela ional in es o s, s a egic es uc u ing and pe o mance in Hunga y
and Poland”
Fila oche , I., Y.Lien and J.Piesse, 2003, “Co po a e Go e nance and Pe o mance in
Publicly Lis ed, Family-Con olled Fi ms: E idence om Taiwan”, he Managemen
Cen e Resea ch Pape s, Resea ch Pape 018, King College London
Fudenbe g D., D.M. K eps and E.S. Maskin, 1990, “Repea ed Games wi h Long- un and
Sho - un Playe s”, Re iew o Economic S udies 57, pp. 555-573
Fukuyama, F., 1995, T us , New Yo k
Goel, S. and T. Randøy, 2002, “Rela i e ine icacy o ex e nal capi al in managemen o
in angible asse s: E idence om No way”, S a egic Managemen Socie y Mee ing,
Pa is
93
Goods ein, J, K. Gau am and W. Boeke , 1994, “The e ec o boa d size and di e si y on
s a egic change”, S a egic Managemen Jou nal 15, pp. 241-250
G ano e e , M., 1973, “The S eng h o Weak Ties”, Ame ican Jou nal o Sociology 78(6),
pp. 1360-380
G ano e e , M., 1985, “Economic Ac ion and Social S uc u e: The P oblem o
Embeddedness”, Ame ican Jou nal o Sociology 91, pp.481-510
G ano e e , M., 2005, “The Impac o Social S uc u e on Economic Ou comes”, Jou nal o
Economic Pe spec i es 19(1), pp. 33-50
G ani sas, A., 2005, “New cap ains o indus y ca ch a wa e o consolida ion”, The He ald
T ibune
G ossman, S. and O. Ha , 1980, “Takeo e bids, he ee ide p oblem, and he heo y o he
co po a ion”, Bell Jou nal o Economics 11, pp.42-69
Gugle , K. and J. Weigand, 2003, “Is Owne ship Really Endogenous”? Applied Economics
Le e , 10(8), pp. 483-486
Gula i, R. and J.D. Wes phal, 1999,”Coope a i e o Con olling? The e ec s o CEO-Boa d
Rela ions and he Con en o In e locks on he Fo ma ion o Join Ven u es”,
Adminis a i e Science Qua e ly 44, pp. 473-506
Hansmann, H., 1996, “The Owne ship o En e p ise”, Belknap P ess o Ha a d Uni e si y
P ess, Camb idge, Massachuse s, London, England
Ha ey, J.S. J ., 1999a, “Wha can he amily con ibu e o business? Examining Con ac ual
Rela ionships”, Family Business Re iew 12(1), pp. 61-71
Helwege, J., C. Pi insky and R.M. S ul z, 2007, “Why Do Fi ms Become Widely Held? An
Analysis o he Dynamics o Co po a e Owne ship”, The Jou nal o Finance Vol.
LXII, no. 3, pp. 995-1028
Himmelbe g, C., R. Hubba d and D. Palia, 1999, “Unde s anding he de e minan s o
manage ial owne ship and he link be ween owne ship and pe o mance”, Jou nal o
Financial Economics 53, pp. 353-384
Holde ness, C.G., 2003, “A su ey o block holde s and co po a e con ol”, Fede al Rese e
Bank o New Yo k Economic Policy Re iew 9, pp. 51-63
Ing am, P. and P. Robe s, 2000, “F iendship among Compe i o s in he Sydney Ho el
Indus y”, Ame ican Jou nal o Sociology 106(2), pp. 387-423
h p://encyclopedia. he eedic iona y.com/ en u e%20capi al
Jacobs D., and A.P. DeMan, 1996, “Clus e s, Indus ial Policy and Fi m S a egy: A Menu
App oach”, Technology Analysis and S a egic Managemen 8(4), pp. 425-437
94
James, H.S. J ., 1999.”Owne as Manage , Ex ended Ho izons and he Family Fi m,”
In e na ional Jou nal o Economics o Business 6(1), pp. 41-55
Jensen, M. and W. Meckling, 1976, “Theo y o he Fi m: Manage ial Beha io , Agency Cos s
and Owne ship S uc u e,” Jou nal o Financial Economics 3, pp. 305-60.
Jensen, M., 1983, “O ganiza ion Theo y and Me hodology”, Accoun ing Re iew LVII (2),
pp. 319-339
Jensen, M., 1993, “The Mode n Indus ial Re olu ion”, Jou nal o Finance 48(3), pp. 831-88
Jenssen, J.I., 2001, “Social ne wo ks, esou ces, and en ep eneu ship”, In e na ional Jou nal
o En ep eneu ship and Inno a ion 2(2), pp. 103-109
Jenssen, J.I., 2003, “Inno a ion, Capabili ies, and Compe i i e Ad an age in No wegian
Shipping”, Ma i ime Policy & Managemen 30(2), pp. 93-106
Jeppe son, R.L., 1991, “Ins i u ions, ins i u ional e ec s and ins i u ionalism”, pp. 143-163 in
DiMaggio, P.J. and W.W. Powell (Eds.), “The new ins i u ionalism in o ganiza ional
analysis”, Chicago: Uni e si y o Chicago P ess
Jones, C., Hes e ly, WS and S.P. Bo ga i, 1997, “A gene al heo y o ne wo k go e nance:
Exchange condi ions and social mechanisms”, Academy o Managemen Re iew 22(4),
pp. 911-945
Kepne , E., 1983, “The Family and he Fi m: A Coe olu iona y Pe spec i e”, O ganiza ional
Dynamics, pp. 57-70
Ke s de V ies, M.F.R, 1993, “The dynamic o amily con olled i ms: The good and bad
news”, O ganiza ional Dynamics 21(3), pp. 59-71
Ke s de V ies, M.F.R, 1996, “Family business: Human dilemmas in he amily i m”, London:
In e na ional Thompson Business P ess.
Knack, S and P. Kee e , 1997, "Does Social Capi al Ha e an Economic Payo ? A C oss-
Coun y In es iga ion", Qua e ly Jou nal o Economics 112(4), pp. 1251-1288
La Po a, R., F. Lopez-de-Silanes, A. Shlei e and R.W. Vishny, 1997. ”Legal De e minan s
o Ex e nal Finance”, Jou nal o Finance LII (3)
La Po a, R., F. Lopez-de-Silanes A. Shlei e and R.W. Vishny, 1998,”Law and Finance,”
Jou nal o Poli ical Economy 1056(6)
La Po a, R., F. Lopez-de-Silanes and A. Shlei e , 1999. ”Co po a e owne ship a ound he
wo ld,” The Jou nal o Finance 54(2), pp. 471-517
La Po a, R., F. Lopez-de-Silanes, A. Shlei e and R.W. Vishny, 1999b, “The quali y o
go e nmen ”, Jou nal o Law, Economics and O ganiza ion 15(1), pp. 222-79
95
La son, A., 1992, “Ne wo k dyads in en ep eneu ial se ings: A s udy o he go e nance o
exchange ela ionships”, Adminis a i e Science Qua e ly 37(1), pp. 76-104
LeVeen, J., 1998, “Indus y Clus e Li e a u e Re iew”, Plan 261: U ban and Regional
De elopmen
Lin, N., 2001, “Social Capi al: A Theo y o Social S uc u e and Ac ion”, New Yo k:
Camb idge Uni e si y P ess
Luba kin, M., Y. Ling and W. Schulze, 2003 “Explaining agency p oblems in amily i ms
using beha io al economics and o ganiza ional jus ice”, p esen ed a he annual
mee ing o he Academy o Managemen , Sea le
Løining, T., 2001, ”Ne e ke s y e ? En k ali a i analyse a be ydningen a o e lappende
s y e e ”, Mak -og demok a iu edningens appo se ie, ISSN 1501-3065, Rappo
28, ap il 2001, ISBN 82-92028-30-7
Macneil, I.R., 1980, “The New Social Con ac ”, New Ha en, CT: Yale Uni e si y P ess
Ma ch, J.G. and J.P. Olsen, 1989, “Redisco e ing ins i u ions: The o ganiza ional basis o
poli ics”, NY: F ee P ess
Mesqui a, L.F and S.G. Lazza ini, 2008,”Ho izon al and e ical ela ionships in de eloping
economies: Implica ions o SMEs’ access o global ma ke s”, Academy o
Managemen Jou nal 51(2), pp. 359-380
Min zbe g H., 1983, “Powe in and a ound o ganiza ions”, P en ice-Hall: Englewood Cli s,
NJ
Mish a, C., T. Randøy and J.I. Jenssen, 2001,”The e ec o ounding amily in luence on i m
alue and co po a e go e nance: A s udy o No wegian i ms,” Jou nal o
In e na ional Financial Managemen & Accoun ing 12, pp. 235-259
Mus akallio, M.A., 2002, “Con ac ual and Rela ional Go e nance in Fi ms: E ec on
S a egic Decision-making Quali y and Fi m Pe o mance”, Doc o al Disse a ion,
Helsinki Uni e si y o Technology
Nahapie J., and S. Ghoshal, 1998, “Social capi al, in ellec ual capi al, and he o ganiza ional
ad an age”, Academy o Managemen Re iew 23(2), pp. 243-266
Neno a, T., 2003, “The alue o co po a e o ing igh s and con ol: A c oss coun y
analysis”, Jou nal o Financial Economics 68, pp. 325-351
Neubaue , F. F and A.G. Lank, 1998, “The Family Business: I s go e nance o
sus ainabili y”, New Yo k: Rou ledge
New on, K., 1997, “Social Capi al and Democ acy”, Ame ican Beha io al Scien is 40,
pp. 575-586
102
1.0 INTRODUCTION
Family owne ship has been, and s ill is, he mos p e alen owne ship s uc u e in he
shipping indus y in many coun ies. Pede sen and Thomsen (1997) compa e owne ship
pa e ns in wel e Eu opean coun ies and ind ha amily owne ship is mo e p e alen in he
shipping and e ail indus ies. G ani sas (2005) s a es ha G eek shipping adi ionally has
been a amily a ai , whe e capi al came om e ained ea nings, bank loans and p i a e
in es o s linked o he amily h ough pe sonal ela ionships. Ha la is and Theo okas (2004),
s a e ha bo h B i ish and G eek amp-shipping i ms emain i s and o emos amily i ms.
The e is also a high deg ee o amily owne ship in he No wegian shipping indus y.
Di e en shipping na ions ha e di e en legal s uc u es, company laws, accoun ing and ax
ules, bu in spi e o his, owne ship s uc u es seem o be qui e simila wi hin his speci ic
indus y, ac oss na ions. Acco ding o G ani sas (2005) “G eeks con ol abou 28 pe cen o
he wo ld's lee , making G eece by a he bigges ship-owning coun y, ollowed by Japan,
No way and he Uni ed S a es”. In hese na ions, ma i ime indus y seems o be an impo an
pa o bo h alue c ea ion and ma ke capi aliza ion. In G eece, se e al shipping companies
ha e gone public (G ani sas, 2005). In No way, ma i ime i ms ep esen app oxima ely 30%
o all publicly aded companies and many o hem ha e a high deg ee o amily owne ship.
The shipping indus y has a high deg ee o amily owne ship in spi e o he ac ha many o
he cha ac e is ics o his indus y do no i in o he gene al heo y on amily owne ship.
Some indus y a gumen s agains amily owne ship a e high isk, high capi al in ensi y and
limi ed access o capi al (Pede sen and Thomsen, 1998; Gomez-Mejia e al., 2001). Ma i ime
indus y is isky due o ola ile p ices and e y capi al in ensi e (S op o d, 1997; G ani sas,
2005). Consequen ly, a high deg ee o amily owne ship in his indus y is in con adic ion o
adi ional a gumen s agains amily owne ship. O he cha ac e is ics o he ma i ime indus y
a e in line wi h ea lie s udies on he e ec s o indus y speci ic ac o s. Shipping in es men s
a e long- e m in es men s and may i well in o he long- e m ho izon o amily i ms (James,
1999). The ma i ime indus y is a highly cyclical indus y wi h la ge a ia ions in p ices on
onnage and eigh a es (S op o d, 1997). The e may be a gain o close moni o ing in his
speci ic indus y because o he ola ili y and may, pa ly explain he p e alence o amily
owne ship. This is in line wi h Demse z and Lehn (1985) and Pede sen and Thomsen (1998),
who s a e ha amily owne ship, can be bene icial in ola ile and “noisy” en i onmen s.

103
Ma i ime indus y has been cha ac e ized as ha ing s ong ne wo ks among pa icipan s in he
indus y (Minsaas e al., 2000). These ne wo ks can be comme cial ne wo ks based on
pa ne ships, co-in es men s and co-ope a ion, o hey can be pe sonal ne wo ks and ela ions.
Ha la is and Theo okas (2004) a gue ha he s eng h and iabili y o amp-shipping i ms
a e due o ne wo ks on a local, na ional o in e na ional le el. Fu he mo e, hey s a e ha
hese ne wo ks a e based on us and a pa icula business cul u e ha was de eloped in he
ma i ime egions whence hey came, cen e ed on amily i ms in ol ed in in e na ional
business. The No wegian shipping indus y is also pe cei ed o ha e s ong pe sonal and
comme cial ne wo ks. Boa d in e locks is one way o es ablishing and main aining pe sonal
ne wo ks and may he e o e be used as a p oxy o social ne wo ks. Indus ial ne wo ks may
be ope a ed h ough in es men s in o he i ms in he same indus y o co- in es men s wi h
o he pa ne s. I a gue ha hese in es men s can be used as p oxies o comme cial ne wo ks.
Indus y a ilia ion is an impo an con ex ual ac o a ec ing owne ship, whe e elemen s like
capi al in ensi y, ola ili y and isk a e cen al elemen s. In addi ion, modes o ope a ion and
how i ms o ganize hemsel es o o e come esou ce cons ain s in a ious indus ies may
a ec i ms’ owne ship s uc u e. One in e es ing ques ion is why some i ms choose o be
amily owned and o he s choose o become widely held (Helwege e al., 2007). Ano he
in e es ing ques ion is why i di e s be ween indus ies (Demse z and Lehn, 1985). I a gue
ha indus y e ec s like he numbe o i ms in an indus y (indica ing compe i ion and/o
clus e ) and he in e locks among pa icipan s h ough in es men s and collabo a ion can be
de e minan s o amily owne ship in some indus ies. I ind suppo o some o hese ac o s.
One eason o his may be ha i ms a e able o emain amily owned in spi e o high isk,
capi al in ensi y and esou ce sca ci y as a esul o ne wo ks, bu also inhe i ed expec a ions,
loyal y and adi ions may be among he d i ing o ces o de elop and emain amily owned.
The ac ha so many shipping i ms a e amily owned wo ldwide is in e es ing. I he e o e
use his indus y as a “case” o analyse how social and comme cial ne wo ks a ec amily
owne ship. My o e all ques ion is why amily owne ship is mo e p e alen in some indus ies
han o he s; especially in he shipping and ma i ime sec o , and which elemen s ha in luence
his owne ship s uc u e. In o de o analyse his, I ask wo main esea ch ques ions:
1. Is amily owne ship de e mined by i m o indus y speci ic cha ac e is ics?
2. A e s ong social and comme cial ne wo ks de e minan s o amily owne ship?
104
2.0 THEORETIC VIEWS ON FAMILY FIRMS
Family i m esea ch o en uses agency heo y o unde s and and explain amily i ms, and i
o en gi es a e y posi i e po ai o amily i m go e nance (Luba kin, Ling and Schulze,
2003) since amily i ms a e ega ded as an e icien agency con ex and ins i u ion (James,
1999; Randøy and Goel, 2003). In ne wo k and social capi al heo y, he ocus is on he social
aspec s o he amily i m as an ins i u ion, wi h us and pe sonal ela ions as possible
de e minan o amily owne ship. By using a heo e ic lens de i ed om bo h agency and
ne wo k heo y, wi h elemen s om social capi al heo y, we may be able o expand he
unde s anding o de e minan s o amily owne ship in di e en con ex s and en i onmen s.
2.1 Family Owne ship in an Agency Theo y Pe spec i e
F om an agency heo y pe spec i e he easons o amily owne ship a e o en analyzed wi h a
ocus on mi iga ing agency cos s (Fama and Jensen, 1983), including bo h ad an ages and
disad an ages wi h his owne ship s uc u e. Ch isman e al. (2005) sugges ha one challenge
acing amily business esea ch is how o iden i y he dis inc ions o amily i ms and o
de e mine whe he hese dis inc ions s em om amily in ol emen o no . In his con ex ,
agency cos s, and especially al uism, a e cen al elemen s. In amily i m esea ch, al uism is
pe cei ed o be impo an , bu he e ec s o al uism a e no ce ain. I seems o be unclea
unde wha condi ions al uism educes agency cos s (Van den Be ghe and Ca chon, 2003)
and unde wha condi ions i may inc ease agency cos s (Schulze, Luba kin and Dino, 2003).
In he co po a e go e nance li e a u e, he exp op ia ion o sha eholde s o en e e ed o as
sel -dealing o unneling, has been cen al (Djanko e al., 2006). Speci ically, hose who
con ol a i m, ei he manage s o con olling sha eholde s, can use hei powe o di e
co po a e weal h o hemsel es, wi hou sha ing wi h o he in es o s (Shlei e and Vishny,
1997). This abili y o di e weal h has also been e med “p i a e bene i s o con ol” (Ha
1995). In addi ion o sel -dealing, ano he impo an issue is he legal in es o p o ec ion ha
shapes he abili y o inside s o exp op ia e ou side s (La Po a e al. 1997, 1998). Djanko e
al. (2006) p esen a measu e o legal p o ec ion o mino i y sha eholde s agains exp op ia ion
by co po a e inside s, wi h ocus on how easy i is o con olling sha eholde s o exp op ia e
weal h in di e en legal s uc u es (Djanko e al., 2006). La Po a e al. (1997, 1998, 1999),
s a e ha amily owne ship is a esponse o weak capi al ma ke s o poo legal p o ec ion.
Ne e heless, amily owne ship is also p e alen in coun ies wi h good in es o p o ec ion
(Bøh en and Ødegå d, 2001), which indica es addi ional de e minan s o amily owne ship.
105
Family i ms a e pe cei ed o be a low agency con ex due o lowe moni o ing cos s (Jensen
and Meckling, 1976; Fama and Jensen, 1983) and alignmen be ween owne s and manage s
(Mish a e al., 2001; Luba kin, Ling and Schulze, 2003). They unde s and he business and
make as decisions (Ande son and Reeb, 2003) and an ex ended ho izon ac oss gene a ions
gi es incen i es o maximize i m alue h ough in es men s (James, 1999). I has also been
s a ed ha hey make la ge i m speci ic in es men s in human capi al (Thomsen and
Pede sen, 2000), ha hey a e be e a dealing wi h in angible asse s (Goel and Randøy,
2002), and ha hey a e sui able in ola ile en i onmen s due o close moni o ing (Demse z
and Lehn, 1985). O he a gumen s in a ou o amily i ms a e sha eholde iden i y
(Gedaljo ic and Shapi o, 2002) and ela ions o capi al ma ke s (Ellul, Gun ay and Lel, 2006).
Disad an ages o amily owne ship a e said o be isk a e sion due o high s akes in one i m
(Daily, Dal on and Rajagopalan, 2003; Demse z and Lehn, 1985), ex ac ion o p i a e
bene i s (Fila oche and Mickiewicz, 2001; Ande son and Reeb, 2003), limi ed access o
capi al (Ca ney and Gedaljo ic, 2002) and low liquidi y o sha es (Gugle , 2001). Con olling
mino i y sha eholde s (C onquis and Nilsson, 2002; Be gs øm and Rydq is , 1990) ha e
also been ega ded as nega i e e ec s o amily owne ship, in addi ion o amily managemen
and lack o manage ial compe ence (Gomez-Mejia e al., 2001; Shlei e and Vishny, 1997), as
well as gene a ional con lic s in amily i ms (McConoughy, Ma hews and Fialko, 2001).
2.2 Family Owne ship in a Ne wo k and Social Capi al Theo y Pe spec i e
Ne wo k heo y ocuses on social epu a ion, us , knowledge and social ela ions
(G ano e e , 1985; Bu , 1992), in addi ion o epea ed games, ne wo k ex e nali ies and
agglome a ion bene i s (Doe inge and Te kla, 1995; Fudenbe g e al., 1990). I emphasizes
bo h he comme cial and he social cha ac e is ics o hese ne wo ks. By using ne wo ks in he
go e nance o i ms, ocus is also on e ical and ho izon al ela ionships wi h di e en ypes
o ies ma e ing in di e en business en i onmen s (Mesqui a and Lazza ini, 2008). Social
capi al heo y ocuses on he e ec s o esou ces embedded in ela ionships, and he e o e
he e is an inc easing use o his heo y also in amily i m esea ch (A egle e al. 2007). I
will ocus on he social capi al embedded h ough social and comme cial ne wo ks (o en
ound in clus e s), including us and no ms wi hin amily i ms, bu also be ween amily
i ms. One impo an issue is how o de ine social capi al and whe he i should be ega ded as
exogenous o no . Wi h his in mind, I discuss how he unde lying social capi al in s ong
ne wo ks may ha e an e ec on amily owne ship, and how i a ies be ween indus ies.
106
Some gene al cha ac e is ics o social capi al in ne wo ks
Pu nam de ines social capi al as “ ea u es o social o ganiza ions such as ne wo ks, no ms and
social us ha acili a e coo dina ion and coope a ion o mu ual bene i ” (Pu nam, 1995,
page 67). O he s a gue ha social capi al can be de ined as an asse embedded in social
ela ions and ne wo ks (Bo dieu, 1986; Leana and Van Bu en, 1999), whe eas Bake (1990)
and Tsai and Ghoshal (1998) ocus on in e - i m and in a- i m ne wo ks in hei discussions.
F om his, he e seems o be consensus ha social capi al includes bo h he social ne wo ks
and he esou ces ob ained h ough hese ne wo ks (Mus akallio, 2002).
In o de o bene i om he social capi al, he e should be some couplings be ween di e en
ne wo ks. Nahapie and Ghoshal (1998) s a e ha he ela ional dimension o social capi al is
an asse , c ea ing and le e aging esou ces h ough pe sonal ela ionships, us , no ms,
sanc ions, us wo hiness, obliga ions, expec a ions, iden i y and iden i ica ion. Coleman
(1988, 1990) emphasizes he impo ance o he s eng h o social ies be ween membe s in a
social ne wo k, a guing ha s ong ies gi e a highe le el o social capi al in a g oup.
G ano e e (1973), on he o he hand, a gues ha weak ies inc ease in o ma ion lows
be ween o he wise disconnec ed social g oups. Consequen ly, he ocus is also on in o ma ion
ans e be ween g oups. Bu (1992) has ex ended his iew by showing how “s uc u al
holes” can be used o c ea e in o ma ion and con ol, and c ea e a compe i i e ad an age.
Many economis s end o ocus on us when hey alk abou social capi al (Knack and
Kee e , 1997). Coleman (1988, 1990) s a es, ha social capi al is embedded in he
ela ionships be ween wo o mo e ac o s. He men ions h ee o ms o ela ionships ha
con ain social capi al: 1) obliga ions, expec a ions and us wo hiness, 2) in o ma ion
channels and 3) no ms and sanc ions (Coleman, 1990). Pu nam (1993) s esses ha “ne wo ks
and no ms” unc ion as a p e equisi e o us , and hus us appea s as an ou come o no ms
and ne wo ks. Acco ding o Ro h and Schule (2006), he de ini ion by Pu nam (1993) is a
mix be ween psychological ( us and no ms) and beha iou is ic (ne wo ks) indica o s. To
sepa a e hese concep s, New on (1997) sugges s di iding he dimensions o social capi al
in o i s componen s: us , no ms and ne wo ks. By doing so, New on (1997) a gues ha one
can a oid mul icollinea i y and a oid ha he weigh ing o he di e en indica o s becomes
unclea . In my analyses o he a ious ne wo ks, I assume ha us is an impo an
de e minan o he sus ainabili y and de elopmen o hese ne wo ks and ha his applies o
bo h he “be ween- i m ne wo ks” and he “wi hin- i m ne wo ks”.
107
Does he social capi al in amily i ms di e om o he o ganiza ions?
Social capi al heo y has been used o s udy amily ela ions (Coleman, 1988) and i has been
ega ded as a compe i i e ad an age o amily i ms (A egle, 2007). Elemen s in his heo y
i in o some o he pe cep ions o amily i ms and hei go e nance, and one may say ha
he “so ” side o amily i ms can be seen in a social capi al pe spec i e. I may explain
elemen s such as poli ics (Be and and Schoa , 2006), social ne wo ks and epu a ion
(Coleman, 1988, 1990; G ano e e , 1985; Bu 1992), us , no ms and alues (Ouchi, 1980;
Jones e al., 1997), cul u al inhe i ance (Min z, 2005), nepo ism (Be and and Schoa , 2006),
al uism (James, 1999; Kepne , 1983) and social esponsibili y (Ke s de V ies, 1993, 1996).
A egle e al. (2007) a gue ha amily i ms’ success comes om hei social capi al, which is
he combina ion o in e nal and ex e nal ela ionships. This gi es he i m a powe ul
ne wo k, which is le e aged, o en unconsciously, o bene i he business (A egle e al.,
2007). The in e nal social capi al can be a us ing ela ionship and a cul u e o con idence
be ween he execu i es and wo k o ce, o close ela ionships wi hin a g oup ha acili a es
in o ma ion ci cula ion and moni o ing (A egle e al, 2007). New on (1997) de ines “ hick
us ” as he us gene a ed by amily ne wo ks and by li ing in close-kni communi ies, and
ha his is an impo an pa o he social capi al in amily i ms. Ex e nally, social capi al can
be close ela ionships wi h supplie s o o he impo an pa icipan s in he business
en i onmen (Rosen eld, 1996, 1997). By measu ing a i m’s social capi al, we may ob ain a
clea e pic u e o i s in angible esou ce and how amily i ms manage and in es in hese
esou ces (A egle e al., 2007; Goel and Randøy; 2002; Thomsen and Pede sen, 2000).
Family i m li e a u e ocuses on us , al uism, goal cong uence, social mechanisms and kin
ne wo ks (Ouchi, 1980) wi h al uism seemingly e y cen al. Human beings do no always
ac in a pu ely sel -in e es ed manne , and social capi al can be cha ac e ized by being join ly
owned by membe s in a ne wo k. One implica ion is ha social capi al canno be aded easily
and i is di icul o ans e o o he s (Nahapie and Ghoshal, 1998). This is in line wi h
A egle e al. (2007), who a gue ha amily i ms ha e a social capi al ha non- amily i ms
canno imi a e. They also s a e ha his unique social capi al comes om he amily’s social
capi al, and ha hese i ms should manage his speci ici y p oac i ely in o de o de elop a
sus ainable compe i i e ad an age (A egle e al., 2007). Social capi al may also be a esul o
long his o y and adi ions, bo h in he amily i m and be ween amily i ms ha ha e been in
he business o a long ime. Can his social capi al be one eason o amily owne ship?

108
3.0 NETWORKS AND FAMILY OWNERSHIP - HYPOTHESES
Pas esea ch sugges s ha se e al ac o s a ec owne ship s uc u es in i ms (Demse z and
Lehn, 1985; Gugle and Weigand, 2003). These ac o s can be i m speci ic elemen s like
i m age, size, capi al s uc u e and asse speci ici y (Williamson, 1979), indus y speci ic
elemen s like capi al in ensi y, compe i ion, ola ili y and ba ie s o en y (Thomsen and
Pede sen, 2000), o na ion speci ic ac o s like legal s uc u e and accoun ing ules (La Po a
e al., 1999). Some o hese ac o s may explain amily owne ship, whe eas o he s may no .
Ne e heless, he e seems o be some o m o ag eemen ha he de e minan s o owne ship
s uc u e depend on he con ex he i m ope a es wi hin. This has he consequence ha
di e en owne ship s uc u es may be op imal in di e en en i onmen s.
The unde lying d i ing o ces o amily owne ship may be ha he amily wan s he i m o
emain amily owned o hey may wan o p ese e con ol o he i m, o a ious easons. In
o de o ob ain his objec i e, he i m needs o be compe i i e, inno a i e and inancially
sound. Va ious i ms choose di e en s a egies o emain amily owned, whe e comme cial
and social ne wo ks may be one such s a egy. F om his, I a gue ha s ong ne wo ks can be
addi ional de e minan s o amily owne ship in some indus ies because o amily ies,
adi ions and al uism, in addi ion o he dense ne wo k he amily in i sel ep esen s. These
di e en ne wo ks may wo k in an i e a i e p ocess, po en ially ein o cing each o he in he
ollowing sequence:
Fig 1: Po en ial couplings be ween ne wo ks, social capi al and amily owne ship
Ne wo ks
Social capi al
wi hin i ms
and/o
Social capi al
be ween i ms
S onge
Ne wo ks
Comme cial
ne wo ks
and/o
Social
Ne wo ks
Family
Owne ship
p
Social capi al is cap u ed om embedded esou ces in social ne wo ks, and can be conside ed
as an asse in ne wo ks (Lin, 1999; Bo dieu, 1986; Coleman, 1988). This social capi al can be
“wi hin- i m social capi al”, whe e bo h social and amily ies a e p e alen , s eng hening he
ela ions be ween he di e en pa ies. I may also be “be ween- i m social capi al”, which
s eng hens he social ela ions be ween i ms wi h he possibili y o media ing complex
ansac ions and u he enhance he ne wo ks and business oppo uni ies among he pa ies.
109
Comme cial ne wo ks may be mo i a ed by isk educ ion, enhanced business and inancial
oppo uni ies, access o new ma ke s, o hey may help i ms o e come capi al es ain s.
Social and pe sonal ne wo ks can gi e access o in o ma ion, media e complex ansac ions,
inc ease he le el o us in ela ions, o be mo i a ed by social con ol. Va ious ne wo ks can
be bene icial o all i ms. The ques ion is whe he ne wo ks gain amily i ms mo e because o
he special cha ac e is ics o amily ies (bo h social and gene ic) e sus o he social ela ions.
Lin (1999) s a es ha a p emise behind he no ion o social capi al is ha i is an in es men in
social ela ions wi h an expec ed e u n, and ha his in es men gi es access o he esou ces
embedded in he ne wo ks (Bu , 1992; Bo dieu, 1986; Lin 1982). Taking he concep o
social capi al one s ep u he e eals ha he e a e elemen s in his heo y ha co espond
wi h he li e a u e on indus ial clus e s, some imes ega ded as s ong indus ial ne wo ks.
Jacobs and DeMan (1996) ocus on he quali y o i m ne wo ks, coope a ion, ne wo k
ex e nali ies and social ela ions in clus e s. Rosen eld (1997) includes social aspec and
in e ac ion, ocusing on communica ion and dialogue in his de ini ion o clus e s. Rosen eld
(1996) also a gues ha an e icien social in as uc u e is equi ed o acili a e exchange o
in o ma ion, and ha he e should be us and sha ed ision o c ea e dynamic and e ec i e
clus e s (LeVeen, 1998). I is ou side he scope o his pape o analyse de e minan s o
clus e s, bu I ask whe he i is a coincidence ha some indus ial ne wo ks also ha e a high
deg ee o amily con olled i ms, wi h s ong posi i e eedback e ec s.
3.1 E ec s o Indus y Ne wo ks on Family Owne ship: The Hypo heses
I a gue ha s ong social and comme cial ne wo ks in clus e s enhance amily owne ship due
o a highe deg ee o social capi al embedded in hese ne wo ks. Howe e , he e is a challenge
wi h e e se causali y, whe e he ques ion is wha is he cause and wha is he e ec o amily
owne ship. Demse z and Lehn (1985) a gue ha manage ial owne ship is an endogenous
a iable de e mined by di e en a iables e lec ing i m cha ac e is ics, he business
en i onmen , di e ences in he manage ial con ac ing en i onmen , as well as pe o mance.
Also Himmelbe g e al. (1999) a gue ha bo h manage ial owne ship and pe o mance a e
endogenously de e mined by exogenous (and only pa ly obse ed) changes in he i m’s
con ac ing en i onmen . I ea owne ship as endogenously de e mined by exogenous
changes in he i m’s en i onmen . Howe e , social capi al may no be exogenous, bu a
unc ion o amily owne ship due o adi ions and long las ing ela ionships. I now p esen
h ee hypo heses on some o he unde lying mechanisms de e mining amily owne ship.
110
Po e (1990) a gues ha compe i ion in clus e s is impo an because i o ces i ms o emain
compe i i e and inno a i e, and ha e ical in eg a ion gene a es new i ms and ho izon al
clus e ing gene a es a demand o p oduc s and se ices in ela ed indus ies. In addi ion,
some indus ies a e cha ac e ized by s ong ho izon al o e ical ies among he pa icipan s
in he ma ke place (Po e , 1990), a ec ing he ela ionships and means o ope a ion in
di e en ma ke s (Mesqui a and Lazza ini, 2008). I a gue ha s ong clus e s can enhance he
es ablishmen o new ounde amily i ms in hese indus ies, bu also enable exis ing amily
i ms o de elop and emain amily owned due o compe i i eness in hei ope a ing ma ke s.
Hypo hesis 1: The e is a posi i e ela ionship be ween he numbe o i ms in an indus y and
amily owne ship due o he possibili y o inc eased ade among he i ms in a clus e
Access o capi al, isk a e sion, di e si ica ion and liquidi y a e a gumen s agains amily
owne ship, (Ca ney and Gedaljo ic, 2002; Fama and Jensen, 1983; Bech , Bol on and Roell,
2002). Howe e , s ong ho izon al and e ical indus y ne wo ks may media e complex
ansac ions (Macneil, 1980) and ease he access o new ma ke s o echnologies. Mesqui a
and Lazza ini (2008) ind ha bo h e ical and ho izon al ela ionships can enhance
collec i e e iciency h ough ei he manu ac u ing p oduc i i y, sou cing o collec i e
esou ces o p oduc inno a ions. I a gue ha by engaging in s ong indus ial ne wo ks
h ough a “comme cial in as uc u e”, amily i ms can o e come esou ce cons ain s and
inc ease compe i i eness, enabling hem o de elop and emain amily owned o e ime.
Hypo hesis 2: The e is posi i e ela ionship be ween comme cial ne wo ks in an indus y and
amily owne ship due o educed isk and be e access o capi al and business oppo uni ies
In many amily i ms, access o human esou ces is ano he c ucial ac o , whe e s ong social
and pe sonal ne wo ks can be an impo an esou ce base o secu ing access o bo h
manage ial and boa d compe ence (Løining, 2001). In hese ela ions, us , con idence and
pe sonal e e ences a e impo an ac o s and can be e e ed o as social capi al (Lin, 2001).
Løining (2001) a gues ha boa d in e locks can ease he p ocesses o lea ning, knowledge
ans e , in o ma ion sha ing and coo dina ion among i ms, and ha he e may a copy e ec
among i ms ega ding boa d membe s and how hey o ganize hemsel es. In his pape I
a gue ha a “social in as uc u e” con aining us and social ela ions can enhance amily
owne ship in some indus ies due o he access o esou ces and inc eased compe i i eness.
Hypo hesis 3: The e is posi i e ela ionship be ween social ne wo ks in an indus y and
amily owne ship due o us and inc eased access o in o ma ion and human esou ces
111
3.2 No wegian Ma i ime Indus y – Some S ylized Fac s
Many elemen s a ec business en i onmen s, and amily owne ship may be a mo e iable
s uc u e in some en i onmen s han in o he s. My da a shows a highe deg ee o amily
owne ship in i ms belonging o he indus y clus e s in he u ni u e and ma i ime indus y. I
ask whe he s ong ne wo ks can be an addi ional explana ion o amily owne ship by using
he No wegian ma i ime indus y as an illus a ion. This indus y has long adi ions, s ong
ne wo ks, and i has a high deg ee o amily owne ship. I do no ega d he social capi al in
his speci ic indus y as a coincidence, bu mo e a esul o long- e m social ela ions.
Cha ac e is ics o he Ma i ime Indus y in Gene al
The ma i ime indus y is ex emely ola ile due o la ge p ice a ia ions in eigh a es and
he p ices o new and second-hand igs and ships, whe e he second-hand alues o onnage
may a y up o 70% be ween peaks and h ows (S op o d, 1997). This indus y is sensi i e o
changes in business en i onmen s, poli ical con lic s, in e es a es, exchange a es, oil p ices,
commodi y p ices o o he ac o s a ec ing global supply and demand (S op o d, 1997).
Vola ile en i onmen s ha e been used as one a gumen o amily owne ship (Pede sen and
Thomsen, 1998). Consequen ly business en i onmen s may be one eason o amily
owne ship in his indus y wo ldwide, in con adic ion o he po olio heo y.
High isk and high capi al in ensi y also cha ac e izes his indus y (G ani sas, 2005). These
elemen s a e o en men ioned in he li e a u e as a gumen s o dispe sed owne ship, in o de
o sp ead isk and due o di icul ies wi h aising enough capi al (Ca ney and Gedaljo ic,
2002). In many segmen s o his ma ke , he e is a high deg ee o asse angibili y, making i
possible o deb inance in es men s due o colla e al (S op o d, 1997), which may enable
amilies o emain in con ol in spi e o high capi al in ensi y. As men ioned, he ma i ime
sec o is e y cyclical wi h g ea isks in some pe iods and cash es ain s may become a
p oblem o some i ms in pa s o he cycle, especially i hey a e o ced o sell in e y low
pe iods. Timing is he key o success (S op o d, 1997), whe e decisions on when o buy o sell
onnage and wha kind o eigh con ac s o en e , a e impo an . The long- e m pe spec i e
o amily i ms may imply ha hey make decisions wi hou conside ing he sho - e m
implica ions as much, because hey plan on being in he business o a long ime. Many
amilies know he business well, hey know ha ma ke s will u n and calcula e he isk o be
bea able in a long- e m pe spec i e. They may ha e hedging s a egies whe e hey do no
ob ain he maximum om a good ma ke , bu hey educe he downside o poo ma ke s.
118
4.3 Sample Cha ac e is ics – Summa y S a is ics
Table III a), b) and c) p o ide summa y s a is ics o he da a used in my analyses. This
da ase consis s o 167 i ms in he pe iod 1996-2005, gi ing 1165 i m-yea obse a ions
(n=1165). Table III a) is a summa y o means, s anda d de ia ions and maximum and
minimum alues o he mos impo an a iables in he ull sample. Table III b) compa es
means be ween amily and non- amily i ms on key a iables. Table III c) is a compa ison o
amily/non- amily i ms in shipping e sus amily/non- amily i ms in non-shipping
indus ies. Table IV is a simple co ela ion ma ix o some o he a iables in he sample.
Table III a) Summa y S a is ics o Full Sample (n=1165 i m-yea obse a ions)
Va iable
Obse a ions
Mean
S d. De .
Min
Max
Family Owne ship
1165
15.411
20.649
0
90
Founde Owne ship
1165
8.731
16.571
0
90
Descendan Owne ship
1165
6.680
15.559
0
66
Tobin’s q
1165
1.811
2.878
.052
82.816
Ma ke Capi aliza ion
1152
4116.849
17800.52
0
339385.8
Re u n on Asse s -ROA
1165
.763
18.142
-100
79.645
Re u n on Equi y -ROE
1165
5.929
40.313
-100
200
Indus ial Owne ship
1164
.532
.499
0
1
Boa d In e locks
1165
.641
.480
0
1
To al Asse (mill.NOK)
1165
6292.931
24104.58
10
288979
Fi m Age Ln
1164
3.669
.930
1.386
5.472
Deb Ra io %
1165
29.234
23.350
0
165.151
Equi y Ra io %
1165
43.606
21.445
-65.151
179.239
Deb o Equi y Ra io %
1162
.768
8.608
-187.855
192.714
Sales o Asse s Ra io %
1165
100.104
73.463
0
500
Sales (mill. NOK)
1157
5175.89
23750.09
0
393298
P o i be o e Tax %
1153
2.831
39.099
-100
200
Boa d Owne ship
1150
23.467
24.051
0
99.03
La ges 3 Owne s %
1146
47.548
20.205
4.1
100
Boa d Size
1165
6.468
1.812
3
11
Mul iple-sha e Classes
1165
.0807
.2724
0
1
Tobin’s q is a ma ke e alua ion o he i m, and in my sample he e is one i m, Op icom,
ha has a Tobin’s q o 82.82 in he yea 1999. This is due o an ex eme alua ion o he i m
his yea . Op icom has no deli e ed acco ding o expec a ions and in he end o he pe iod
hese alues a e close o a e age. In he yea s be ween 1996 and 2005 wi h he excep ion o
1999, Tobin’s q a ies be ween 0.52 and 21.57 (Op icom). I ha e unca ed e u n on asse s
and e u n on equi y o gi e a minimum o -100% and a maximum o +200%. A ew cases
had ex eme ou lie s, whe e wo examples we e i ms in he R&D phase wi h e y nega i e
p o i and no sales, and one example whe e income was booked as inancial income (an
o sho e company) and low sales. These ou lie s ga e ex eme alues (- 30.000% and
+60.000%) on some o he a iables, and a e limi ed o p o ide a mo e no mal dis ibu ion.

119
Table III b): Compa ison o Means in Family and Non- amily Fi ms
Means:
To al obs.: 1131
Family Fi ms 1)
Obse a ions: 450
Non- amily i ms 1)
Obse a ions: 681
Family Owne ship
36.513***
1.610
Founde Owne ship
19.891***
1.218
Descendan Owne ship
16.622***
.392
Tobin’s q
1.672***
1.770
Re u n on Asse s -ROA
2.235
-.106
Re u n on Equi y -ROE
5.666
6.332
Indus ial Owne ship
.560
.517
Boa d In e locks
.740***
.576
To al Asse (mill. NOK)
2866.01
8559.881
Fi m Age Ln
3.347***
3.547
Deb Ra io %
31.917***
27.639
Equi y Ra io %
46.639***
41.305
Deb /Equi y Ra io %
1.488
.280
Sales/Asse s Ra io %
86.550***
108.843
Boa d Owne ship %
33.815***
16.648
La ges 3 owne s %
48.799***
46.596
Boa d Size
5.920***
6.868
Mul iple-sha e Classes
.138***
.037
1) Based on main de ini ion o amily i ms (de ini ion 1): ei he minimum 20% owne ship, o CEO/Chai
2) Wilcoxon anksum signi icance es s due o some bina y a iables ha a e no no mally dis ibu ed
3) Signi icance le els a e ma ked i he e is a signi ican di e ence be ween Family and Non- amily.
As e isks deno e s a is ical signi icance a 1% (***) le el
Table III b), shows ha amily i ms ha e a signi ican ly highe deb and equi y a io. This
may be due o a highe deg ee o colla e al and a solid balance shee , which makes i possible
o deb inance ope a ions and s ill emain in con ol. The sales o asse s a io is signi ican ly
lowe in amily e sus non- amily i ms, gi ing signi ican ly highe capi al in ensi y in amily
i ms. This is he opposi e o wha p e ious li e a u e s a es, bu can be explained by he high
ep esen a ion o ma i ime i ms in he sample. These i ms a e e y capi al in ensi e and
ha e a high deg ee o amily owne ship (Table I). Boa d owne ship, block holdings and he
use o mul iple-sha e classes a e signi ican ly highe in amily i ms, in line wi h he
pe cep ion ha amily i ms wan o emain in con ol h ough boa d con ol and o ing
igh s. In No way, 1/3 o he o es gi e a “nega i e con ol” and enables amilies o block
impo an decisions ha equi e 2/3 majo i y, like he issuing o new sha es o change o
s a u es. The le el o o al asse s is la ge in non- amily i ms indica ing ha hese i ms a e
la ge han he amily i ms in he sample. Tobin’s q is signi ican ly highe in non- amily
i ms, which may be due o a pe cep ion ha amily i ms a e less willing o ake a isk, ha e
lowe liquidi y in sha es o ha non- amily i ms a e be e in go e ning i ms. ROA and
ROE do no u n ou signi ican ly di e en be ween amily and non- amily i ms. Indus ial
owne ship is qui e simila in amily and non- amily i ms, indica ing ha hese in es men s
a e no jus dependen on owne ship, bu also on which indus y hey belong o. Boa d
in e locks on he o he hand, a e signi ican ly highe in amily e sus non- amily i ms.
120
Table III c): Compa ing means o Shipping Family/Non- amily Fi ms and Non-shipping
Family/Non- amily Fi ms
Table III c), is a ou -way able combining owne ship and indus y by using bina y a iables
on amily i m (1=yes and 0=no) and shipping indus y (1=yes and 0=no).
SHIPPING: NON-SHIPPING:
Means
To al obs.: 1138
Family Fi ms 1)
Obse a ions: 166
Non- amily Fi ms 1)
Obse a ions: 56
Family Fi ms 1)
Obse a ions: 284
Non- amily Fi ms 1)
Obse a ions: 625
Family Owne ship
44.835***
2.220
31.649***
1.555
Founde Owne ship
13.510**
1.695
23.621***
1.175
Descendan Owne ship
31.325***
.524
8.028**
.380
Tobin’s q
1.053***
1.160
2.034***
1.824
Re u n on Asse s -ROA
4.827
-1.447
.719
.014
Re u n on Equi y -ROE
8.366
-1.109
4.088
6.998
Indus ial Owne ship
.892***
.679
.366***
.502
Boa d In e locks
.964***
.625
.609
.571
To al Asse s, mill.NOK
4124.333***
1170.008
2130.518***
9222.013
Fi m Age Ln
3.898***
3.776
3.026***
3.526
Deb Ra io %
41.071***
45.540
26.566**
26.035
Equi y Ra io %
44.500
34.674
47.888***
41.899
Deb /Equi y Ra io %
2.622***
1.279
.826***
.190
Sales/Asse s Ra io %
53.899***
81.559
105.635
111.288
Boa d Owne ship %
39.498***
42.005
30.493***
14.376
La ges 3 owne s %
53.711***
58.911
45.928
45.493
Boa d Size
5.807***
6.339
5.986***
6.915
Mul iple-sha e Classes
.247***
0
.074
.040
1) Based on main de ini ion o amily i ms (de ini ion 1): ei he minimum 20% owne ship, o CEO /Chai
2) Wilcoxon anksum signi icance es s due o some bina y a iables ha a e no no mally dis ibu ed
3) Signi icance le els a e ma ked i he e is a signi ican di e ence be ween Family and Non- amily.
As e isks deno e s a is ical signi icance a 1% (***) and 5% (**) le el
I will i s make some commen s on he di e ences be ween amily and non- amily i ms in
he shipping indus y, and he ea e make a ew commen s o he non-shipping sample.
Tobin’s q e lec s he unning sha e p ices o smalle in es o s, wi h he possibili y o
discoun s on sha es wi h la ge sha eholde s and less liquidi y. In he shipping indus y,
Tobin’s q is signi ican ly lowe in amily i ms compa ed o non- amily i ms, indica ing a
discoun on sha es in he amily i ms in his speci ic indus y. This may be a esul o a high
deg ee o amily in luence and con ol h ough he use o mul iple-sha e classes. On he o he
hand, he e is a posi i e accoun ing e ec (ROA/ROE) o amily i ms in shipping, bu his
di e ence is no signi ican . I has been s a ed ha amilies o en ha e a longe planning
ho izon and ha i could be ha hey a e able o make be e in es men decisions due o his
long- e m iew (James, 1999). One e ec o his may be ha amilies sac i ice sho - e m
p o i s o long- e m e u n. Ano he elemen may be ha his is an old indus y, wi h a
specialized in as uc u e whe e di e en pa ies ha e had ime o adjus o his ma ke , and
hence make be e s a egic decisions. A hi d elemen may be good ma ke knowledge.
121
In he shipping indus y, boa d in e locks and indus ial owne ship a e signi ican ly highe in
amily i ms compa ed wi h non- amily i ms. This may be explained by he al eady exis ing
owne ship and ne wo k s uc u e in he indus y o i may be de i ed om a need o ge ing
access o human esou ces o capi al, whe e co-in es men s o pa ne ships can be a way o
ge a ound high capi al in ensi y. Ano he explana ion could be ax incen i es, whe e limi ed
pa ne ships a e one way o educing axes. In addi ion, i may con ibu e o educed isk o i
can be a way o ge ing in con ol o he supply chain. To al asse s and capi al in ensi y a e
signi ican ly highe in amily i ms and i seems as i hese amily i ms ha e mo e asse s on
hei own books. This may be because hey ope a e in di e en segmen s o he ma ke o
hey wan o be in con ol o ope a ions by con olling he asse s. Family i ms ha e highe
equi y and deb o equi y a ios, enabling hem o deb inance hei in es men s and s ill
emain in con ol. The amily i ms in shipping ha e lowe boa d owne ship, block holdings
and boa d size han non- amily i ms, bu hey a e s ill able o emain in con ol due o use o
dual-sha e classes, which is s ill ex ensi ely in use in amily i ms in his speci ic indus y.
Di e ences be ween amily and non- amily i ms in “non-shipping indus ies” a e less
in e es ing because his “non-shipping g oup” consis s o se en e y di e en indus ies. I
only commen on some igu es whe e indus ial owne ship is he mos in e es ing di e ence.
I is now signi ican ly lowe in amily i ms, which is he opposi e o he indings in he
shipping indus y. Boa d in e locks do no u n ou signi ican ly di e en be ween he wo
g oups. Tobin’s q is now highe in amily i ms, bu i is di icul o compa e due o la ge
indus y di e ences ega ding ma ke and asse alua ion in he non-shipping g oups.
Howe e , he e a e di e ences among indus ies due o di e en asse angibili y and R&D
in ensi y. In he “non-shipping g oup”, ROA is s ill highe in amily i ms. ROE is lowe in
amily i ms compa ed wi h non- amily i ms, bu his is also di icul o compa e due o
indus y di e ences. To al asse s a e now signi ican ly highe in non- amily i ms, in line
wi h p e ious esea ch, which ocuses on elemen s like capi al in ensi y and isk (Ande son,
Mansi and Reeb, 2003). Accoun ing igu es may also be di icul o use when compa ing
di e en indus ies. Va ious indus ies may use di e en accoun ing measu es due o la ge
a ia ions in le els o u no e , ma gins o le e age (www.wikipadia.com). Re u n on asse s
and equi y is an indica ion o he e iciency in he alloca ion o esou ces and may show how
good i ms a e in con e ing in es men s o p o i . Di e en indus ies ha e di e en
measu es o his, and di e en owne s may ha e di e en goals o hese measu es. Some
owne s a e conce ned wi h sho - e m p o i s, whe eas o he s a e mo e long- e m o ien ed.
122
Table IV: Co ela ion Ma ix
Shipping
Family
Fi m
N-
Fi ms
Indus ial
Owne ship
Boa d
In e lock
To al
Asse s
Fi m
Age
Deb -
Equi y
Sales-
Asse s
Boa d
Owne ship
Dual
sha e
Class
Shipping
1.000
Family Fi m
0.341***
1.000
N-Fi ms
0.335***
0.257***
1.000
Indus ial Owne ship
0.305***
0.032
0.144***
1.000
Boa d In e lock
0.246***
0.153***
0.083***
0.277***
1.000
To al Asse s
-0.060**
-0.120***
0.082***
0.158***
-0.066**
1.000
Fi m Age
0.171***
-0.088***
0.035
0.266***
-0.021
0.131***
1.000
Deb -Equi y
0.086***
0.066**
0.051
0.008
0.043
0.001
0.031
1.000
Sales-Asse s
-0.266***
-0.143***
-0.194***
-0.131***
-0.077***
-0.066**
-0.025
-0.083***
1.000
Boa d Owne ship
0.340***
0.343***
0.052
0.090***
-0.026
-0.153***
-0.011
0.096***
-0.113***
1.000
Dual-sha e Classes
0.189***
0.173***
0.233***
0.215***
0.090***
0.082***
0.186***
0.018
-0.130***
-0.003
1.000
As e isks deno e s a is ical signi icance a he 1% (***) o 5% (**) le el.
Table IV p o ides a co ela ion ma ix o some o he key a iables. Shipping, amily i ms,
indus ial owne ship and boa d in e locks a e o main in e es in he analyses o a possible
ela ionship be ween amily owne ship and s ong ne wo ks in di e en indus ies. The e is a
s ong co ela ion be ween shipping and amily i ms, numbe o i ms in he indus y,
indus ial owne ship and boa d in e locks. This is in line wi h indings in Table I and Table II,
and he summa y s a is ics in Table III c). Shipping is also posi i ely co ela ed wi h i m age,
he deb o equi y a io, boa d owne ship and dual-sha e classes. This indica es an indus y
wi h many i ms in he same indus y and a high deg ee o comme cial and social ne wo ks.
Shipping has a s ong nega i e co ela ion wi h sales o asse s and o al asse s.
By analyzing co ela ions be ween amily i ms and he o he a iables, I ind ha he e is a
nega i e co ela ion be ween amily i ms and o al asse s, i m age and sales o asse a io.
This may imply ha capi al in ensi y in gene al does no sui amily i ms, in line wi h
p e ious esea ch. Family i ms and N- i ms (numbe o i ms) a e signi ican ly posi i ely
co ela ed, indica ing ha amily i ms emain in indus ies con aining many i ms in he same
indus y. Family i ms a e also posi i ely co ela ed wi h con olling mechanisms like boa d
owne ship and dual-sha e classes, also in line wi h p e ious esea ch (C onquis and Nilsson,
2003), in addi ion o he boa d in e locks a iable. The e is a signi ican and posi i e
co ela ion be ween N- i ms, indus ial owne ship and boa d in e locks, wi h he excep ion o
capi al in ensi y measu ed by sales o asse s, being nega i e. I will now u n o he eg ession
analyses o see whe he I ind suppo o s a ing ha indus y con ex and comme cial and
social ne wo ks a e impo an de e minan s o amily owne ship in some indus ies, and ha
his may con ibu e o a be e unde s anding o he con ex ual ac o s in amily i m esea ch.
123
5.0 EMPIRICAL FINDINGS
The analysis so a shows a highe deg ee o amily owne ship, boa d in e locks and indus ial
owne ship in ma i ime i ms compa ed wi h o he indus ies (Table II and III c). This sec ion
discusses possible easons o he high deg ee o amily owne ship in his speci ic indus y. I
ask whe he amily owne ship is de e mined by i m o indus y speci ic cha ac e is ics, o i
i also could be explained by s ong social and comme cial ne wo ks. These ques ions indica e
ha I am mo e in e es ed in he “be ween- i m” e ec s han he “wi hin- i m” e ec s. I ocus
on he long lines and ega d amily owne ship as he o iginal o m o he i m, also assuming
ha his does no change conside ably o e ime. Taking his in o accoun , my main ocus will
be on he c oss-sec ional analyses as o dina y leas squa e and logis ic eg ession models.
Himmelbe g e al. (1999) a gue ha ixed e ec es ima o s should be used when examining
he ela ionship be ween manage ial owne ship and i m pe o mance. Howe e , a key
assump ion o jus i ying he use o he panel da a app oach is ha manage ial e o is a
andom a iable dependen on yea - o-yea changes in manage ial owne ship (Zhou, 2001).
Fu he mo e, Zhou (2001) shows ha manage ial owne ship is subs an ially di e en ac oss
i ms, bu ha i changes slowly om yea o yea wi hin a i m, indica ing ha when he
be ween- i m a ia ion is subs an ial and he wi hin- i m a ia ion is small, c oss-sec ional
a ia ion is emo ed by i m ixed e ec s. In my sample, he a ia ions in amily owne ship
ac oss i ms a e la ge han he yea - o-yea a ia ions wi hin i ms, in line wi h Zhou (2001).
My sample shows a yea ly a e age educ ion in amily owne ship o 1% ( om amily o non-
amily) wi h a 5% educ ion o he whole pe iod 1996-2005. Du ing his 10-yea pe iod, 22
i ms change s a us om amily o non- amily and one i m changes s a us om non- amily o
amily i m. (Appendix III shows changes in he i s 50 i ms in my sample). Due o he ac
ha he e a e some yea - o-yea changes in amily owne ship in gene al (Appendix III), I un
a ixed e ec panel da a model o he whole sample. In his s udy, my main in e es is he
“be ween- i m” e ec s and o his eason, I ind ha he panel da a model does no gi e he
whole pic u e. The e a e subs an ial di e ences be ween indus ies ega ding changes in
amily owne ship, and he ma i ime i ms show a consis en amily owne ship s uc u e o e
he sample pe iod. A e age a ia ions in amily owne ship in his indus y a e -0.5%, which is
smalle han he a e age changes o he whole sample. In he u he analyses o ne wo ks
and amily owne ship, I will ocus on c oss sec ional OLS and logis ic eg ession models.

124
5.1 Models
This da ase con ains 167 No wegian lis ed i ms in he pe iod om 1996 o 2005, wi h an
a e age o 7.5 yea s, p esen ing 1165 i m-yea obse a ions. I will apply di e en eg ession
equa ions whe e he main di e ences a e whe he he dependen a iables a e con inuous o
bina y. All eg ession models include a obus es clus e ed by i m in o de o con ol o
se ial co ela ion and he e oskedas ici y. I i s es ima e a model including all indus ies by
using a obus o dina y leas squa es (OLS), clus e ed by i ms, and I include he same model
wi h a ixed e ec panel da a model. I hen un a obus OLS- eg ession model, sepa a ing he
di e en indus ies. Finally, I un a obus logis ic eg ession model, wi h di e en de ini ions
o amily i ms. I un he analyses on he shipping indus y wi hou including o sho e. The
eason o excluding o sho e i ms is ha he e a e wo la ge s a e-owned oil companies in
his g oup. In addi ion, he o sho e indus y is ai ly young and has no had he oppo uni y o
build he same s ong ne wo ks h ough se e al gene a ions o amily owne ship.
The OLS and panel da a models (and Tobi ) a e based on con inuous dependen a iables
(pe cen age amily owne ship). To make a clea de ini ion o amily i ms, I add dummy
a iables o ou de ini ions o amily i ms, using a logis ic eg ession model o analyzing
hese e ec s. In my logis ic eg ession models, he bina y dependen a iable is based on a
leas 20% amily owne ship o CEO/Chai (s onges de ini ion in Ami and Villalonga,
2006). I un he models wi h dummy a iables on amily, ounde o descendan owne ship as
well as on amily in luence, wi h one being yes and ze o no. Indus ial owne ship is used as a
p oxy o comme cial ne wo ks and boa d in e locks as a p oxy o social ne wo ks.
The eg ession equa ions used a e: (see Appendix I o he de ini ion o he a iables used)
1) OLS and panel da a eg essions on amily owne ship in % (Table V)
Family Owne ship = (Numbe o i ms) + (Social and indus ial ne wo k a iables) +
(Con ol a iables) + (Yea dummy Va iables)
2) OLS eg ession on amily owne ship in % di ided by indus y (Table VI a) and VI b))
Family Owne ship = (Indus y) + (Social and indus ial ne wo k a iables) + (Con ol
a iables) + (Yea dummy a iables) + (In e ac ion e ec s)
3) Logis ic eg essions on amily i ms and amily in luence (Table VII)
Family Fi m = (Indus y) + (Social and indus ial ne wo k a iables) + (Con ol
a iables) + (Yea dummy a iables) + (In e ac ion e ec s)
125
5.2 OLS and Panel Da a Reg essions on Family Owne ship - All Indus y G oups
In he OLS eg essions, I un a obus es clus e ed by i m in o de o con ol o se ial
co ela ion and he e oskedas ici y. I ha e 1165 i m-yea obse a ions on 167 i ms ha I
clus e by i m, and ge 166 g oups. In hese eg essions, I use amily owne ship in gene al as
my dependen a iable and I analyse gene a ional e ec s by di iding in o ounde and
descendan amily owne ship. In he ixed e ec panel da a model, I use he same de ini ions
o amily owne ship and I es o he same independen a iables as in he OLS eg essions.
Table V is a c oss-sec ional and ixed e ec panel da a eg ession on amily owne ship in
gene al, wi h no es ic ions on owne ship le el, ocusing on he main e ec s o he
independen a iables. Table V does no dis inguish be ween di e en indus ies, bu ocuses
on indus y e ec s in gene al, whe e he numbe o i ms in each indus y is one de e minan .
The a iable N- i ms is a p oxy o he s eng h o an indus y in he sample bu may also
e lec he compe i ion in a ious indus ies. Indus ial owne ship and boa d in e locks in he
same indus y a e included as independen a iables, measu ing he s eng h o ne wo ks.
In his OLS eg ession I ind ha he numbe o i ms, N- i ms, in an indus y has a posi i e
e ec on amily owne ship, bu i only has a signi ican e ec on descendan owne ship.
Fu he mo e, boa d in e locks ha e a signi ican and posi i e e ec on descendan owne ship.
This may indica e ha i i ms su i e he i s s a -up phase wi h s ong compe i ion, hey
gain om being in an indus y wi h many pa icipan s. The e a e la ge a ia ions be ween
di e en indus ies depending on whe he hey ope a e in a global, local o na ional ma ke ,
which may imply ha indus ies ope a ing in a global ma ke a e less ulne able o local
compe i ion. To al asse s and sales o asse s ( he capi al needed o a gi en olume o sales)
show a nega i e e ec on amily owne ship. This is in acco dance wi h Ca ney and
Gedaljo ic (2002), who s a e ha capi al in ensi y and limi ed access o capi al a e alid
a gumen s agains amily owne ship. My indings a e in line wi h his on a gene al basis,
looking a all indus ies oge he . Ne e heless, he e a e a ia ions be ween he di e en
indus ies which will be discussed la e .
As ea lie men ioned, amily owne ship ends o be ai ly s able (see Appendix III) and
“be ween- i m” e ec s a e mo e in e es ing han “wi hin- i m” e ec s, indica ing ha ime-
se ies a e less in e es ing in he analyses o he indus y e ec s on amily owne ship. I
he e o e mainly ocus on c oss-sec ional analyses, bu I ha e included a panel da a model
126
because he e a e some a ia ions in amily owne ship when looking a he whole sample.
Table V also includes a ixed e ec panel da a model o amily, ounde and descendan
owne ship (explaining li le o descendan owne ship), using he same independen a iables
as in he OLS- eg ession. In he ixed e ec panel da a model, he e a e 165 g oups wi h an
a e age 6.9 yea s pe i m, gi ing 1143 i m-yea obse a ions. The andom e ec panel da a
model was ejec ed by unning he Hausman es , wi h he excep ion o ounde owne ship.
The ixed e ec panel da a model shows s onge indus y e ec s han he c oss-sec ional
OLS- eg ession model. The numbe o i ms in he same indus y now has a highly signi ican
posi i e e ec bo h on amily and ounde owne ship bu is o no signi icance o descendan
owne ship. Indus ial owne ship now shows a signi ican posi i e e ec a he 5% le el on
amily owne ship and a he 10% le el on descendan owne ship, bu no e ec on ounde
owne ship. This may indica e ha in es men s in o he i ms in he same indus y make i
possible o emain amily owned ac oss gene a ions. Howe e , he e may be an endogenei y
p oblem in his ela ionship. The ques ion is whe he amily i ms in es mo e in o he i ms
due o a s onge balance shee and s onge ne wo ks, o i hey a e able o emain amily
owned due o hese in es men s, hence educing isk and o e coming capi al es ain s. Fo
shipping he las elemen may be ele an due o he speci ic indus y cha ac e is ics. I will
discuss he po en ial p oblems wi h e e se causali y and endogenei y la e in he pape .
I pa ly ind suppo o he hypo hesis ha he numbe o i ms in an indus y has a posi i e
e ec on amily owne ship. Howe e , i is di icul o sepa a e he e ec s o indus y and he
i m speci ic ac o s in his ela ionship. One can a gue ha many i ms in an indus y
inc ease he ade be ween i ms in he same indus y as a esul o bo h ho izon al and
e ical ela ions. Some i ms a e compe i o s bu hey may also be complemen a y and
he e o e gain om inc eased ade among hemsel es, hence, ounde s can gain om he
exis ence o hese ade ela ions. The ques ion is whe he hese ela ions in an indus y enable
i ms o emain amily owned compa ed wi h selling ou hei s akes and become widely held.
Table V p esen s eg essions wi h N- i ms as one a iable, including se e al indus y g oups
wi h la ge in e nal di e ences. As can be seen om he co ela ion ma ix in Table IV, he e
is a s ong co ela ion be ween N- i ms and he shipping indus y. In he ollowing sec ion, I
spli hese N- i ms in o eigh indus y g oups (see Table I). I ocus on shipping and how he
indus y s uc u e (compe i ion/clus e ) in his speci ic indus y a ec s amily owne ship.
127
Table V: OLS Reg essions on Family, Founde and Descendan Owne ship in %
(N-Fi ms ep esen ing he numbe o i ms in all indus ies)
This able epo s he esul s o he eg essions on amily owne ship, including all indus ies, he
ne wo k a iables and he con ol a iables. Family owne ship is owne ship in pe cen o amily,
ounde o descendan . Ne wo k a iables a e he numbe o i ms in each indus y (N- i ms measu e
o s eng h o clus e ), indus ial owne ship in same indus y g oup (bina y) and boa d in e locks in he
same indus y. Con ol a iables a e i m age (log), i m size measu ed by o al asse s, deb o equi y
and equi y a io e lec ing inancing s uc u e and sales o asse s a io measu ing capi al in ensi y. Yea
dummy is a bina y a iable wi h one o each yea o sample pe iod (1996-2005) and is no epo ed.
The columns 1, 2 and 3 show esul s om he OLS- eg ession model and he columns 4, 5 and 6
epo he ixed e ec panel da a model. I epo he un-s anda dized coe icien s wi h - alues in
pa en heses. As e isks deno e s a is ical signi icance a he 1% (***), 5% (**) o 10% (*) le el.
Dependen Va iables:
O dina y Leas Squa es Model Fixed E ec Panel Da a Model
Family Founde Descendan Family Founde Descendan
Owne ship Owne ship Owne ship Owne ship Owne ship Owne ship
(1) (2) (3) (4) (5) (6)
Independen
Va iables:
N- i ms 0.25* 0.06 0.19*** 0.24*** 0.25*** -0.01
(1.96) (0.55) (2.88) (3.28) (3.28) (-0.13)
Indus ial owne ship 1.27 0.31 0.96 6.68** 3.75 2.93*
(0.37) (0.14) (0.38) (2.16) (1.19) (1.81)
Boa d In e lock 5.00 -1.92 6.92*** 1.66 3.88 -2.22*
(1.60) (-0.84) (3.60) (0.68) (1.55) (-1.73)
To al Asse s -0.00*** -0.00*** -0.00*** 0.00 0.00 -5.85e06
(-3.91) (-3.05) (-3.08) (1.07) (1.22) (-0.32)
Fi m Age Ln 0.52 -5.01*** 5.53*** -8.36*** -8.74*** 0.38
(0.39) (-5.43) (5.09) (-7.37) (-7.55) (0.64)
Sales/Asse s -0.48** -0.15 -0.03*** -0.01 -0.01* 0.00
(-2.06) (-0.78) (-2.78) (-1.15) (-1.67) (1.05)
Equi y a io 0.06 -0.04 0.10* -0.00 -0.00 -0.00
(0.87) (-0.89) (1.75) (-0.23) (-0.20) (-0.04)
Deb /Equi y 0.08 0.04 0.05 0.03 0.03 0.01
(1.46) (1.03) (0.78) (1.51) (1.08) (0.78)
Fi m yea s 1143 1143 1143 1143 1143 1143
R-squa ed 0.12 0.15 0.31
F-s a is ics 3.20*** 4.17*** 2.61***
Wi hin-R-sq 0.17 0.18 0.02
Hausman Chi-sq 34.29*** 14.65 26.68**
134
6.0 DISCUSSION AND CONCLUSION
My main objec i e o his pape is o analyse he e ec s o indus y and indus y ne wo ks on
amily owne ship. Di e en con ex ual elemen s a ec i ms and hei owne ship s uc u e,
and I es how i m and indus y speci ic elemen s as well as di e en ne wo ks a ec amily
owne ship, especially in he shipping indus y. My indus y and i m speci ic a iables a e in
line wi h ea lie esea ch, using agency heo y as he heo e ical amewo k. In addi ion, I use
he ne wo k and social capi al heo y, whe e I de ine some p oxy a iables o clus e s and
social and comme cial ne wo ks. I use he numbe o i ms in an indus y as a p oxy o
compe i ion and clus e s, indus ial owne ship as a p oxy o comme cial ne wo ks, and boa d
in e locks as a p oxy o social ne wo ks. By using hese a iables, I ind ha he numbe o
i ms in an indus y has a posi i e e ec on amily owne ship. I also ind ha bo h social and
comme cial ne wo ks ha e a signi ican and posi i e e ec on amily owne ship, whe e social
ne wo ks a e mos signi ican in some cases and comme cial ne wo ks in o he s. Impo an
issues in hese ela ions seem o be con ol and in ol emen in i ms in he same indus y.
Indus y a ilia ion is commonly used as a con ol a iable in empi ical pape s on owne ship
and i m pe o mance, bu no ha o en as a de e minan o di e en owne ship s uc u es.
Pede sen and Thomsen (1998) analyse he ela ionship be ween indus y and co po a e
owne ship s uc u e and ind ha he indus y e ec is s onge o some owne ship ca ego ies
han o he s. They ind ha shipping has a high deg ee o amily and majo i y owne ship and
s a e ha his may be due o angibili y o asse s and deg ee o colla e al. Demse z and Lehn
(1985) a gue ha he s uc u e o co po a e owne ship a ies in ways ha a e consis en wi h
alue maximizing and s a e ha he noisie he en i onmen is, he g ea e he pay-o o
moni o ing; hence some indus ies ha e mo e concen a ed and amily owne ship.
Pede sen and Thomsen (1998) also ind e idence ha indus y a ilia ion has a signi ican
e ec on owne ship s uc u e a e con olling o na ional di e ences. By using one na ional
con ex , I am able o analyse di e ences in owne ship s uc u e be ween indus ies in he
same legal s uc u e. I he e o e ocus mo e on he c oss-sec ional analyses. These c oss-
sec ion analyses show a s ong indus y e ec on amily owne ship in he shipping indus y.
O he indus ies ( om Table I) a y be ween ha ing a posi i e o nega i e e ec on amily
owne ship, bu none o hem a e consis en ly signi ican ly posi i e, as he case is in shipping.
I un he same analyses wi h o he indus ies as in e ac ion a iables (no epo ed), bu no
o he indus y has he same e ec o ne wo ks on amily owne ship as he shipping indus y.

135
Shipping i ms ha e long adi ions in No way. Many o hese i ms ha e oo s going back
decades in his o y, wi h s ong social and indus y ne wo ks due o se e al gene a ions in he
indus y. A he same ime i is a highly compe i i e global p oduc ma ke , equi ing he igh
long- e m s a egic decisions, whe e many shipping i ms ha e pu sued a di e si ica ion
s a egy in o o he segmen s, like he o sho e ma ke (O sho e & Shipping, n .1, 2006). In
his pape I ind suppo o he hypo heses ha he e is a posi i e ela ionship be ween he
numbe o i ms in an indus y and amily owne ship. I also ind a posi i e e ec o indus y
ne wo ks on amily owne ship in shipping, bu whe he he e ec is s onge om he social
o comme cial ne wo ks depends on he in es men le el and ype o boa d in e locks. Is i so
ha amily owne ship is a mo e iable owne ship s uc u e in his speci ic indus y and ha
owne s and manage s make social and comme cial a angemen s o emain amily owned? I
his is he case, why is i impo an o emain amily owned and no become widely held?
T adi ionally, ship owne s ha e been ega ded as comme cially o ien ed business people, and
al uism has no been used as a common cha ac e is ic on his indus y. Ne e heless, old
adi ions and his o y, s ong pe sonal and amily ne wo ks wi h an “inhe i ed expec a ion”
and obliga ion o s ewa d he i m could be mo i es o emaining amily owned, in addi ion
o inancial easons. Families a e ied oge he h ough “gene ic ies” and one could expec
hese bonds o inc ease he le el o us in hese ela ionships, wi h a posi i e e ec on amily
owne ship in some cases. On he o he hand, con lic s in amily i ms may be mo e e en
emo ional and des uc i e o he i m due o hese s ong ies. This has been de ined ou side
he scope o his pape . The use o mul iple sha e classes is signi ican ly highe in amily
i ms in he shipping indus y (Table III c) indica ing ha amilies wan o emain in con ol,
wi h he possible e ec o educed liquidi y o he sha es. I a gue ha amily owne ship is
possible due o social and comme cial a angemen s in ne wo ks in spi e o high isk and
capi al in ensi y in shipping, assuming an unde lying d i e o emain amily owned.
A weakness o his s udy is he dange o unning in o an endogenei y p oblem. I s ong
ne wo ks a e one eason o amily owne ship, will his enhance ne wo ks and de elopmen s
o clus e s, o is i he o he way a ound – ha clus e s enhance amily owne ship h ough
indus y ne wo ks? These ques ions a e in e es ing a eas o u he esea ch, as well as a
c oss-coun y s udy o s ong indus y ne wo ks in o he indus ies and legal s uc u es. In
o de o con ol o endogenei y and e e se causali y, one should y o es ablish ele an
ins umen al a iables making i possible o un a 2SLS- eg ession model.
136
REFERENCES:
Ami , R. and Villalonga, B., 2006 “How do Family Owne ship, Con ol and Managemen
a ec Fi m Value?” Jou nal o Financial Economics 80 (2), pp. 385-417
Ande son, R.C, S.A Mansi and D.M. Reeb, 2003, “Founding amily owne ship and he
agency cos o deb ”, Jou nal o Financial Economics 68, pp. 263-285
Ande son, R.C, and D.M. Reeb, 2003, “Founding-Family Owne ship and Fi m Pe o mance:
E idence om he S&P 500”, Academy o Managemen Re iew 28 (3), pp. 383-396
Annual Repo 2005, No ges Rede i o bund
A egle, J., Hi , M.A., Si mon, D.G. and Ve y, P., 2007, “The De elopmen o
O ganiza ional Social Capi al: A ibu es o Family Fi ms”, Jou nal o Managemen
S udies Vol. 44 (1), pp.73-95
Bake , W.E., 1990,”Ma ke ne wo ks and co po a e beha io ”, Ame ican Jou nal o
Sociology 96(3): pp. 589-625
Bech , M., P. Bol on and A. Roell, 2002, “Co po a e Go e nance and Con ol”, ECGI
Wo king Pape Se ies in Finance, Wo king Pape No. 02/2002
Beni o, G. R.G., E. Be ge , M. de la Fo es , and J. Shum, 2003"A Clus e Analysis o he
Ma i ime Sec o in No way", In e na ional Jou nal o T anspo Managemen 1(4),
pp. 203-215.
Be gs øm C. and K. Rydq is , 1990,”The De e minan s o Co po a e Owne ship: An
Empi ical S udy on Swedish da a”, Jou nal o banking and Finance 14, pp. 237-253
Be gs øm C. and K. Rydq is , 1990,”Owne ship o Equi y in Dual Class Fi ms” Jou nal o
Banking and Finance 14, pp. 254-269
Be and M. and A. Schoa , 2006, “The Role o Family in Family Fi ms”, The Jou nal o
Economic Pe spec i es 20, pp.73-96
Bo dieu, P., 1986, “The o ms o capi al”, J.G. Richa dson (Eds.) Handbook o heo y and
esea ch, o he sociology o educa ion: 241-258. New Yo k: G eenwood P ess
Bu , R., 1992, “S uc u al Holes”, Camb idge, MA: Ha a d Uni e si y P ess
Bøh en, Ø. and B.A. Ødegå d, 2001, “Pa e ns o co po a e owne ship om a unique da ase ”,
No dic Jou nal o Poli ical Economy 27, pp. 55-86
Bøh en, Ø. and B.A. Ødegå d, 2006, Go e nance and pe o mance e isi ed, in In e na ional
Co po a e Go e nance a e Sa banes-Oxley, Ed. Paul Ali and G eg G egou iu, Wiley
Ca ney M. and E. Gedaljo ic, 2002, “The Coupling o Owne ship and Con ol and he
Alloca ion o Financial Resou ces: E idence om Hong Kong”, Jou nal o
Managemen S udies 39(1), pp.123, 24p, 2 cha s
137
Ch isman, J.J., Chua, J.H. and P. Sha ma, 2005, “T ends and Di ec ions in he De elopmen
o a S a egic Managemen Theo y o he Family Fi m”, En ep eneu ship Theo y and
P ac ice Vol. 29 (5), pp. 555-576
Coleman, J.S., 1988, “Social Capi al and he c ea ion o human capi al”, Ame ican Jou nal o
Sociology 94, S95-S120
Coleman, J.S., 1990, “Founda ions o social heo y”, Camb idge, MA: Belknap P ess o
Ha a d Uni e si y P ess
C onq is , H. and M. Nilsson, 2003, “Agency Cos s o Con olling Sha eholde s,”
Jou nal o Financial and Quan i a i e Analysis 38, pp. 695-719
Daily, C.M., D.R. Dal on and X. Rajagopalan, 2003a), “Go e nance h ough owne ship:
cen u ies o p ac ice, decades o esea ch”, Academy o Managemen Jou nal 46(2),
pp. 151-158
Demse z, H. and K. Lehn, 1985, “The S uc u e o Co po a e Owne ship: Causes and
Consequences,” Jou nal o Poli ical Economy 93 (6), pp. 1155-1177.
Djanko , S., LaPo a, R., Lopez-de-Silanes, F. and A. Shlei e , 2006,”The Law and
Economics o Sel -Dealing”, Wo king Pape
Doe inge , P.B., and D.G. Te kla, 1995, “Business s a egy and c oss-indus y clus e s”,
Economic De elopmen Qua e ly 9, pp. 225-37
Ellul, A., L. Gun ay and U. Lel, 2006, “Ex e nal Go e nance and Deb Agency Cos s o
Family Fi ms”, Wo king Pape Se ies
Fama, E.F. and M.C. Jensen, 1983, “Sepa a ion o Owne ship and Con ol,” Jou nal o Law
and Economics 26 (6), pp. 301-325.
Fama, E.F. and M.C. Jensen, 1983, “Agency P oblems and Residual Claims,” Jou nal o Law
and Economics Vol. XXVI, pp.1-29
Fila oche , I. and T. Mickiewicz, 2001, “Owne ship Concen a ion, P i a e Bene i s and
Con ol and Deb Financing”, Pa o he ACE-Pha e p ojec P98-1048-R “Co po a e
Go e nance, ela ional in es o s, s a egic es uc u ing and pe o mance in Hunga y
and Poland”
Fudenbe g D., D.M. K eps and E.S. Maskin, 1990, “Repea ed Games wi h Long- un and
Sho - un Playe s”, Re iew o Economic S udies 57, pp. 555-573
Gedaljo ic E. and D.M. Shapi o, 2002, “Owne ship S uc u e and Fi m P o i abili y in
Japan”, Academy o Managemen Jou nal 45(3), pp. 565, 11p
Goel, S. and T. Randøy, 2002, “Rela i e Ine icacy o Ex e nal Capi al in Managemen o
In angible Asse s: E idence om No way”, Wo king pape
138
Gomez-Mejia, L., M. Nunez-Nickel and I. Gu ie ez, 2001, “The ole o amily ies in agency
con ac s“, Academy o Managemen Jou nal 44, pp. 81-95
G ani sas, A., 2005, “New cap ains o indus y ca ch a wa e o consolida ion”, In e na ional
He ald T ibune
G ano e e , M., 1973, “The S eng h o Weak Ties”, Ame ican Jou nal o Sociology 78(6),
pp. 1360-380
G ano e e , M., 1985, “Economic Ac ion and Social S uc u e: The P oblem o
Embeddedness”, Ame ican Jou nal o Sociology 91, pp. 481-510
Gugle , K., 2001, “Co po a e Go e nance and Economic Pe o mance”, Ox o d
Uni e si y P ess
Gugle , K. and J. Weigand, 2003, “Is Owne ship Really Endogenous?”
Applied Economics Le e s Vol. 10, No. 8, pp. 483-486
Ha la is G. and J. Theo okas, 2004, “Eu opean Family Fi ms in In e na ional Business:
B i ish and G eek T amp-Shipping Fi ms”, Business His o y 46(2), pp. 219-255 (37)
Ha , O., 1995, “Fi ms, Con ac s, and Financial S uc u e”, Cla endon P ess, Ox o d
Ha ey, W.J., 2006, “S ena - A G oup Flee His o y”, Wo ld Ship Socie y L d
Helwege, J., C. Pi insky and R.M. S ulz, 2007, “Why Do Fi ms Become Widely Held? An
Analysis o he Dynamics o Co po a e Owne ship”, The Jou nal o Finance
Vol. LXII, No. 3, pp. 995-1028
Himmelbe g, C., R. Hubba d and D. Palia, 1999, “Unde s anding he de e minan s o
manage ial owne ship and he link be ween owne ship and pe o mance”,
Jou nal o Financial Economics 53, pp. 353-384
Jacobsen E.W, A. Mo ensen, M. Vikesland and A.W. Cappelen, 2004, A ac ing Winne s –
The compe i i eness o i e Eu opean ma i ime indus ies, BI No wegian School o
Managemen
Jacobs D., and A.P. DeMan, 1996, “Clus e s, Indus ial Policy and Fi m S a egy: A Manu
app oach”, Technology Analysis and S a egic Managemen 8(4), pp. 425-437
James, H.S. J ., 1999.”Owne as Manage , Ex ended Ho izons and he Family Fi m,”
In e na ional Jou nal o Economics o Business 6(1), pp. 41-55.
Jensen M. and W. Meckling, 1976, “Theo y o he Fi m: Manage ial Beha io , Agency Cos s
and Owne ship S uc u e,” Jou nal o Financial Economics 3, pp. 305-60.
Jones, C., Hes e ly, W.S. and S.P. Bo ga i, 1997, “A gene al heo y o ne wo k go e nance:
Exchange condi ions and social mechanisms”, Academy o Managemen Re iew
22(4), pp. 911-945
139
Kepne , E., 1983, “The Family and he Fi m: A Coe olu iona y Pe spec i e”,
O ganiza ional Dynamics, pp. 57-70.
Ke s de V ies, M.F.R, 1993, “The dynamic o amily con olled i ms: The good and bad
news”, O ganiza ional Dynamics 21(3), pp. 59-71
Ke s de V ies, M.F.R, 1996, “Family Business: Human dilemmas in he amily i m”,
London: In e na ional Thompson Business P ess
Knack, S and P. Kee e , 1997, "Does Social Capi al Ha e an Economic Payo ? A C oss-
Coun y In es iga ion", Qua e ly Jou nal o Economics 112(4), pp. 1251-1288
La Po a, R., F. Lopez-de-Silanes, A. Shlei e and R.W. Vishny, 1997. ”Legal De e minan s
o Ex e nal Finance”, The Jou nal o Finance, VOL. LII (3)
La Po a, R., F. Lopez-de-Silanes, A. Shlei e and R.W. Vishny, 1998. ”Law and Finance,”
Jou nal o Poli ical Economy 1056(6)
La Po a, R., F. Lopez-de-Silanes, and A. Shlei e , 1999,”Co po a e Owne ship a ound he
Wo ld”, The Jou nal o Finance 54(2), pp. 471-517
Leana, C.R., and H.J. Van Bu en III, 1999, “O ganiza ional social capi al and employmen
p ac ices”, Academy o Managemen Re iew 24(3), pp. 538-555
LeVeen, J., 1998, “Indus y Clus e Li e a u e Re iew”, Plan 261: U ban and Regional
De elopmen Ma ch 1998
Lin, N., 1982, “Social Resou ces and Ins umen al Ac ions”, Social S uc u e and Ne wo k
Analysis, pp.131-45, CA: Sage
Lin, N., 1999, “Building a Ne wo k Theo y o Social Capi al”, Connec ions 22(1), pp. 28-51
Lin, N., 2001, “Social Capi al: A Theo y o Social S uc u e and Ac ion”, New Yo k:
Camb idge Uni e si y P ess
Luba kin, M., Y. Ling and W. Schulze, 2003 “Explaining agency p oblems in amily i ms
using beha io al economics and o ganiza ional jus ice”, p esen ed a he annual
mee ing o he Academy o Managemen , Sea le
Løining, T., 2001,”Ne e ke s y e ? En k ali a i analyse a be ydningen a o e lappende
s y e e ”, Mak -og demok a iu edningens appo se ie, ISSN 1501-3065, Rappo
28, ap il 2001, ISBN 82-92028-30-7
McConoughy, D.L., C.H., Ma hews and A.S. Fialko, 2001, “Founding Family Con olled
Fi ms: Pe o mance, Risk and Value”, Jou nal o small business managemen , 39(1),
AB/INFORM Global, pp. 31-49
Macneil, I.R., 1980, “The New Social Con ac ”, New Ha en, CT: Yale Uni e si y P ess

140
Mesqui a, L.F and S.G. Lazza ini, 2008,”Ho izon al and e ical ela ionships in de eloping
economies: Implica ions o SMEs’ access o global ma ke s”, Academy o
Managemen Jou nal, 51(2), pp. 359-380
Minsaas, A., P.C. Om ed , S. Sødal and T. We geland, 2000,”F em idig u ikling i
skips a en og skips a ens ma kede ”, SNF-p osjek n . 1045
Min z, S.M, 2005, “Co po a e Go e nance in an In e na ional Con ex : Legal Sys ems,
Financing pa e ns and Cul u al a iables“, Blackwell Publishing 13(5),
pp. 582-597
Mish a, C., T. Randøy and J.I. Jenssen, 2001,”The e ec o ounding amily in luence on i m
Value and co po a e go e nance: A s udy o No wegian i ms,” Jou nal o
In e na ional Financial Managemen & Accoun ing 12, pp. 235-259
Mus akallio, M.A., 2002, “Con ac ual and Rela ional Go e nance in Fi ms: E ec on
S a egic Decision-making Quali y and Fi m Pe o mance”, Doc o al Disse a ion,
Helsinki Uni e si y o Technology
Nahapie J., and S. Ghoshal, 1998, “Social capi al, in ellec ual capi al, and he o ganiza ional
Ad an age”, Academy o Managemen Re iew 23(2), pp. 243-266
Neno a, T., 2003, “The alue o co po a e o ing igh s and con ol: A c oss coun y
analysis”, Jou nal o Financial Economics 68, pp. 325-351
New on, K., 1997, “Social Capi al and Democ acy”, Ame ican Beha io al Scien is 40,
pp.575-586
O sho e & Shipping, n .1, 2006
Ouchi, W.G, 1980. “Ma ke s, Bu eauc acies, and Clans”, Adminis a i e Science Qua e ly
25(1), pp. 129-141
Pede sen, T. and S. Thomsen, 1997, “Eu opean Pa e ns o Co po a e Owne ship: A Twel e-
Coun y S udy”, Jou nal o In e na ional Business S udies 28(4), pp. 759-778
Pede sen, T. and S. Thomsen, 1998, “Indus y and Owne ship s uc u e”, In e na ional
Re iew o Law and Economics 18(4), pp. 385-402
Po e , M., 1990, “The Compe i i e Ad an age o Na ions”, New Yo k: Basic Books
Po e , M., 2000, Clus e Map
Pu nam, R.D., 1993, “Making Democ acy Wo k: Ci ic T adi ions in Mode n I aly”, P ince on
Pu nam, R.D., 1995, “Bowling alone: Ame ica’s declining social capi al”,
Jou nal o democ acy 6(1), pp. 65-78
141
Randøy, T., and S. Goel, 2003 “Owne ship s uc u e, ounde leade ship and pe o mance in
No wegian SME’s: Implica ions o inancing en ep eneu ial oppo uni ies,”
Jou nal o Business Ven u ing 18, pp. 619-637
Rosen eld, S.A., 1996, O e achie e s, Business Clus e s ha Wo k: P ospec s o Regional
De elopmen . Chapel Hill, NC: Regional Technology S a egies
Rosen eld, S.A., 1997, “B inging Business Clus e s in o he Mains eam o Economic
De elopmen ”, Eu opean Planning S udies 5(1), pp. 3-23
Ro h, F. and D. Shule , 2006, “T us and Economic G ow h: A Panel Analysis”,
Wo king pape
Shlei e , A. and R. Vishny, 1997, “A Su ey o Co po a e Go e nance,” Jou nal o Finance
52, pp. 737-783
Schulze W.S., Luba kin, M.H. and R.N. Dino, 2003,”Towa d a heo y o agency and al uism
in amily i ms”, Jou nal o Business Ven u ing 18(4), pp. 473-490
S ena Bulk, Supplemen o A a s idningen Næ ingsli n . 3, 2007
S op o d, M., 1997, “Ma i ime Economics”, Rou ledge
Thomsen, S. and T. Pede sen, 2000, “Owne ship S uc u e and Economic Pe o mance in he
La ges Eu opean Companies”, S a egic Managemen Jou nal 21, pp. 689-705
Tsai W. And S. Ghoshal, 1998,”Social capi al and alue c ea ion: The ole o in a i m
ne wo ks”, Academy o Managemen Jou nal 41(4), pp. 464-476
Van den Be ghe, L.A.A. and S. Ca chon, 2003, “Agency Rela ions wi hin he Family
Business Sys em: an explo a o y app oach”, Co po a e Go e nance: An In e na ional
Re iew 11(3), pp. 171-179
Wes phal, J.D., 1999,”Collabo a ion in he boa d oom: Beha iou al and pe o mance
consequences o CEO-boa d social ies”, Academy o Managemen Jou nal 42(1),
7-24
Williamson, O., 1979, “T ansac ion Cos Economics: The Go e nance Cos o Con ac ual
Rela ions”, Jou nal o Law and Economics 22, pp. 233-261
www.ww-g oup.com
www.wikipedia.com
Zhou, X., 2001, “Unde s anding he de e minan s o manage ial owne ship and he link
be ween owne ship and pe o mance: commen ”, Jou nal o Financial Economics 62,
pp. 559-571
142
Appendix I
Va iable de ini ions
Va iable Desc ip ion
1. Family owne ship Family owne ship in pe cen o o al sha es in all sha e classes
2. Founde owne ship Founde owne ship in pe cen o o al sha es in all sha e classes
3. Descendan owne ship Descendan owne ship in pe cen o o al sha es in all sha e classes
4. Family i m Founding amily owns mo e han 20%, a amily membe is CEO o a
amily membe is Chai o he boa d. This is he main de ini ion wi h
yes=1 o his de ini ion o amily i m and no=0 o his de ini ion
5. Founde Family Fi m Founde owns mo e han 20%, o a amily membe is CEO o Chai .
Bina y yes=1 and no=0 o his de ini ion.
6. Descendan Family i m Descendan owne ship is 20%, o descendan is CEO o Chai
Bina y yes=1 and no=0 o his de ini ion.
7. Founde Responsible o s a up and de elopmen o i m. Sou ces a e annual
epo s, VISMA Bizweb da abase and Web sea ches.
8. Fi m age Numbe o yea s since he ounding o he oldes i m. I me ged, he
ounding o o e aking i m as ounding yea (sou ces as o ounde )
9. Mul iple-sha e classes Mul iple-sha e classes as bina y a iable wi h no=0 and yes=1.
10. Indus y Bina y dummy a iable wi h eigh indus y g oups, wi h yes=1 o
speci ic indus y and no=0 o his indus y.
11. Re u n on Asse s P o i be o e ax as a a io o o al asse s in pe cen .
12. Re u n on Equi y P o i be o e ax as a a io o o al equi y in pe cen .
13. Ma ke capi aliza ion Numbe o sha es mul iplied wi h yea -end closing a e
14. To al Asse s Book alue o o al asse s in balance shee
15. P o i be o e Tax % P o i be o e ax as a a io o o al sales
16. Deb - a io % In e es bea ing deb as a a io o o al asse s
17. Equi y- a io % Equi y as a a io o o al asse s
18. Deb o Equi y a io Measu e inance s uc u e - ela ionship be ween Deb & Equi y
19. Sales o Asse s % Measu e capi al in ensi y - ela ionship be ween Sales & Balance shee
20. Boa d Owne ship Numbe o sha es owned by boa d membe s (measu e o in luence)
21. La ges h ee owne s in % Measu e owne ship concen a ion
22. Boa d Size Numbe o boa d membe s
23. Indus ial Owne ship Di e en le els o in es men in sha es in o he i ms in same indus y
(p oxy o comme cial ne wo ks)
24. Boa d In e locks Va ious le els o boa d in e lock, as one o se e al boa d membe s o
same chai in wo i ms in same indus y (p oxy o social ne wo ks)
25. N-Fi ms Numbe o i ms in di e en indus ies (compe i ion and/o clus e )
143
Appendix II
This clus e map is an illus a ion o he No wegian Ma i ime Clus e (Po e , 2000), whe e
shipping i ms a e ega ded he co e o he clus e .
Sou ce: Michael E. Po e , 2000