Family- versus Lone-Founder-Controlled Public Corporations: Social Identity Theory and Boards of Directors

2015 
We distinguish between “family companies,” involving multiple family members as owners and/or managers, and “lone-founder companies,” involving only the founder and no other family members. We apply social identity theory and organizational identification to elucidate the differences between these two types of firms, and how their differing organizational identities reflect unique desires for control and influence. We then consider how these differences are reflected in a firm's board structure (i.e., directorship interlocks, director experiences, and director tenures). Specifically, we predict that family firms are more likely to interlock with other family firms, select directors with more experience in family firms, and keep directors on their boards longer. Correspondingly, we posit that family firms are less likely to interlock with lone-founder firms or to select directors with experience in lone-founder-controlled firms. Lone-founder firms follow a similar pattern. We also consider the consequences...
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