Poorly performing family firms more likely to improve governance

Singapore

IT IS common for people to associate family firms with poor governance, with many believing that controlling families like to have maximum discretion and minimum transparency. Yet, we also know that family owners care deeply about their reputation and would avoid anything that harms it, including bad governance practices. This debate on whether family firms are heroes or villains of corporate governance has been a long-running one.

But the time has come to look at things from a different perspective. There is considerable variety among family firms - some have very good governance practices, while others lag behind. We should not discredit or praise all family firms as if they were a single entity, but instead find out what types of family firms have better governance, and why.