Effects of Board Composition of Family Firms Within Inter-Firm Networks

This chapter examines how the board composition of a family firm, which is a part of a inter-firm network, can improve that firm’s capacity to create net value. With this aim, we established a panel of 431 sampled companies belonging to inter-firm networks. All of our hypotheses refered to the concept of net value creation. We measured innovation in the firm as a proxy for the creation of net value. We found that the firm that modifies the composition of its board of directors, to take into account partners’ needs for greater protection and to gain better access to critical resources controlled by partners, creates a higher net value. In particular, outside members and interlocking directorship of a firm’s board have a positive and statistically significant impact on the capacity to create value of the individual firm in a network.