Family Firms: Some New Governance Perspectives

Family ownership is the dominant form of business ownership around the world. The economic and social progress of economies, individuals and communities depend on prosperity generated by family businesses. 

Many studies argue that the persistence of family firms around the world is explained by the level of protection that national legal systems offer shareholders. The main hypothesis is that countries with higher level of protection will experience the development of more efficient and sophisticated capital markets. As a result, companies will tend to depend more on capital markets to finance their operations and raise equity, the number of listed companies will increase and the number of family firms in those countries will decline. The sustained persistence of families as majority owners of companies around the world does not confirm this hypothesis. There may be other factors explaining family firms’ persistence. Over the past few years, corporate purpose has generated a great interest among companies, investors and regulators. Many family business have a purpose explicitly or implicitly defined by its founder. Corporate purpose may have an important role in family businesses. It may foster longer-term horizons for strategic decisions and investment, may promote certain values and a deeper engagement with local communities. May purpose be a differentiating factor for family companies?

IESE and ECGI organized the 2026 Corporate Governance Conference at IESE, Madrid Campus, on March 16th 2026, with the collaboration of the Social Trends Institute and Instituto de la Empresa Familiar. Its goal was to explore some relevant issues on family firms’ governance, including the role of corporate purpose in family firms and its impact on their performance. In particular, the conference examined the significance of corporate purpose for family business and the specific mechanisms through which purpose can have a positive impact on the firm’s performance. Some questions deserved a deep analysis and debate in the Conference: How does corporate purpose contribute to family businesses, their activities and performance? How can purpose become a governance mechanism? To what extent does purpose promote innovation in family businesses and a concern for human, social and environmental as well as financial prosperity? What role do family offices play in the adoption and implementation of corporate purpose? How should the ownership and governance of family businesses evolve as they grow and pass through multiple generations? 

The Conference was designed around five major themes: 

• The relevance of corporate purpose for family business
• Family offices, corporate purpose and the governance of family business
• Enterprise foundations and the evolution of ownership in family business
• Innovation in family business in the presence of disruptive technologies
• Social and environmental impact of family business

There is an emerging pattern in this stream of research. Family business with a clear purpose that helps define an effective corporate governance model show some defining characteristics that can drive superior performance. Some of those include: family firms have longer-term horizons which fosters innovation and capital spending; family firms’ purpose shows a commitment that mitigates agency problems; purpose helps align views and preferences of managers, workers, shareholders and other investors, and third parties; and a clear purpose and good governance align boards of directors and senior managers, facilitate the CEO succession process and highlights the roles of meritocracy in internal promotions.

Some research presented also shows some potential threats to family firms’ longevity, including the lack of meritocracy or controlling shareholders that abuse of their power and harm the interests of smaller shareholders. Nevertheless, the balance of the available evidence seems to be favorable to family firms, in particular, when they organize governance in an effective way and have a professional management team that leads the business. Moreover, in a world defined by pervasive uncertainty and disruptive forces (technology, societal polarization or geopolitical conflicts), family firms offer a long-term horizon and a commitment to the company that nurtures  stability in the business world and society at large.

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Jordi Canals is Professor of Strategic Management and Economics and the IESE Foundation Chair of Corporate Governance at IESE Business School.

This blog is based on a discussion held at the 2026 IESE-ECGI Corporate Governance Conference Family Firms: Purpose, Economic Performance and Social Impact. Visit the event page to explore more conference-related blogs.

The ECGI does not, consistent with its constitutional purpose, have a view or opinion. If you wish to respond to this article, you can submit a blog article or 'letter to the editor' by clicking here.