Essence taxonomy of Brazilian family businesses and conceptual implications for governance strategy

Abstract

This study advances the discussion on the governance of family businesses in emerging markets by exploring a taxonomy based on the F-PEC model in order to improve the essence concept, as an antecedent of governance strategy. This may enable the entity to adapt during its lifetime. Our survey covered unlisted private Brazilian family businesses, from which we obtained a final sample of 107 firms. We applied multivariate data analysis procedures, including exploratory factor and confirmatory factor analyses, cluster analysis, and discriminant analysis. Four types of family businesses emerged: family control with low homogeneous values, dedicated family control with strong values, family business after founder time with strong values, and family involved in control and management with employees’ supportive values. This paper fills some of the knowledge gaps by developing a taxonomy based on family business essence as well as on an emerging market. It also offers a family business taxonomy for when there is no stock market influence. The conclusions provide a contribution to governance by identifying one profile that deviates far from the concept of essence and three others that are adherent due to different combinations of power, experience, and culture elements. The family business particularities identified in the different clusters involve different implications for governance in terms of individuals, structure, activities, and rules.