Affiliate Directors and Perceived Risk Bearing in Publicly Traded, Family–Controlled Firms: The Case of Diversification

Carla D. Jones, Marianna Makri and Luis R. Gomez–Mejia

Entrepreneurship Theory and Practice, 2008, vol. 32, issue 6, 1007-1026

Abstract: The present study examines the influence exerted by affiliate directors in the diversification decisions of family–controlled, publicly traded firms. Using a relational view based on the development of social capital, we argue that affiliate directors play a different role in boards of family firms vis–à –vis nonfamily firms. Specifically, we develop a set of hypotheses proposing that affiliate directors stimulate family firms to pursue diversification strategies by sharing their knowledge and experience with family executives, and hence reducing the perceived risk that may be associated with growth strategies. Affiliates can play this advisory role without reducing the control of family owners, and this facilitates the firm's willingness to adopt growth–oriented strategies. Namely, affiliates who are business experts or support specialists would tend to encourage diversification. These effects are supported empirically.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1111/j.1540-6520.2008.00269.x (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:32:y:2008:i:6:p:1007-1026

DOI: 10.1111/j.1540-6520.2008.00269.x

Access Statistics for this article

More articles in Entrepreneurship Theory and Practice
Bibliographic data for series maintained by SAGE Publications ().