Organizational Change under Institutional Logics: Family Control of Corporate Boards in Taiwan

Abstract

We examine how family ownership affects the changing composition of board members in Taiwan. We suggest that the association between family ownership and board composition should be understood in the institutional context in which a firm is situated. We find not only that family-owned firms embedded in the local capital market exhibit greater family presence on the board but also that this effect becomes weaker for those exposed to foreign capital markets. The strong association between family ownership and board control is maintained when the firm is embedded in a local logic of governance but significantly weakens when the firm or its affiliated group is exposed to a global logic of governance. Our research suggests that organizational change in corporate governance practices is contingent upon the institutional logics in which a firm’s governance and control mechanisms are situated.