Title

Strategic planning and flexibility: Governance control mechanisms in family and non-family firms

Date of this Version

6-28-2011

Document Type

Conference Paper

Publication Details

Citation only.

Dibrell, C., Craig, J., & Neubaum, D. O. (2011). Strategic planning and flexibility: Governance control mechanisms in family and non-family firms. Paper presented at the 11th Annual IFERA World Family Business Research conference, Sicily, Italy.

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2011 HERDC submission. FoR code: 150304, 150303

© Copyright Clay Dibrell, Justin Craig & Donald O. Neubaum, 2011

Abstract

We examine governance systems within the contexts of family and non-family owned firms. Specifically, we suggest that while a formal governance mechanism (i.e., formal strategic planning) is positively associated with financial performance in both family and non-family firms, the relative benefit of such a formal governance structure is greater for non-family firms. We posit that strategic flexibility can also be used as a governance mechanism, but the value of this informal governance mechanism is greater for family firms. In a study of 354 firms using moderated regression analysis, we discovered the relative benefit of formal and informal governance mechanisms in family- and non-family-owned firms. In the case of family firms, strategic flexibility moderated the strategic planning to firm financial performance relationship. In non-family firms, we found direct relationships from strategic planning and strategic flexibility to firm performance, but we did not find an interaction effect between strategic planning and strategic flexibility to firm financial performance. This project contributes by demonstrating the individual and combined roles of strategic planning and strategic flexibility as formal and informal governance mechanisms and their usage in family and non-family firms.

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This document has been peer reviewed.