The Family Business in a Global Context : The Rationale behind Corporate Governance Structures in Subsidiaries Abroad

Abstract: Background: Family Businesses represent the highest proportion of businesses in the world (Lin, 2012). Globalisation offers new business opportunities for growth and in-ternational diversification. Generally the internationalisation of family businesses is a well-studied field in family business research (Kontinen & Ojala, 2009). Still, there are certain shortcomings when it comes to the specific area of corporate governance adapta-tion in family firms that open subsidiaries (Calabro & Mussolino, 2011). Hence, this paper analyses the proceedings of family firms that internationalise through a subsidi-ary. From a methodological standpoint, existing studies concerned with family business internationalisation focus on quantitative research approaches. The results of these in-clude some limitations, since they cannot account for questions such as how and why family firms proceed during diversification (Kontinen & Ojala, 2009). Purpose: The purpose of this study is to investigate the rationale behind corporate gov-ernance structures in family businesses, focusing on the special case of internationalisa-tion through a subsidiary. Frame of Reference: A summary of recent research regarding the three main issues family businesses, internationalisation, and corporate governance will be given in the frame of reference. This theoretical background will serve as the basis for a solid analy-sis of our empirical data. Method: A qualitative approach with an extensive literature review and a case study based on in-depth interviews with employees of the company Väderstad-Verken AB was chosen in order to fulfil the purpose. Conclusion: The rationale behind corporate governance structures when setting up a subsidiary abroad is driven by the ambition to preserve a family firms’ stewardship ori-ented culture and its informal structures. The result of this is better collaboration, which serves the mission of the business.