The Significance of Family Governance: Towards the Development of a Draft Family Governance Code

Abstract

When families operate businesses, a common objective is to foster the growth of the family business and, consequently, ensure the enduring prosperity of the family itself. Given that the family frequently constitutes a primary stakeholder in a family business, family governance undeniably exerts a significant influence on the corporate governance of the enterprise. Furthermore, as generational transitions unfold within the family, the dynamics among family members shift, altering the relationship between the family and the family business, which in turn impacts governance structures. This paper posits that family governance, alongside corporate governance, becomes crucial for the family to remain a positive influence as a stakeholder in the family business. To this end, it organizes and examines key considerations for conceptualizing family governance, including the illustrative presentation of principles and guidelines that can be referenced for effective implementation of such governance.