For Better or for Worse: The Influence of Non-Family Blockholders and Directors on Strategic Change

Abstract

Drawing on the impact of a major economy-wide shock we investigate the influence of non-family blockholders and non-family directors on strategic change in family firms. To date, research has focused primarily on strategic change in family firms during stable economic conditions or when it has been induced by firm-specific or industry- specific factors. Using a sample of 203 French listed firms caught up in the 2008 – 2009 financial crisis, we found that (1) non-family blockholders’ relative voting power and (2) non-family directors’ board representation positively affect strategic change in family firm’s response to crisis. This study contributes to the literature by attending to strategic change in non-munificent environments post- shock; it adds to work on multiple blockholder structures in family firms by highlighting how differential voting rights facilitates strategic change; and finally, it extends research on the role of non-family directors by examining their effects in disruptive contexts of economy wide-shocks.