Board Composition and Family Firms’ Profitability. Do Generational Stage and Performance Level Matter?

International Journal of Economic Behavior, vol. 10, n. 1, 2020, 3-13 This article examines the relationship between board composition and family firms’ performance. Namely, by adopting the theoretical framework of socio-emotional wealth and analyzing a sample of Italian medium-sized family firms, we investigate how the presence of non-family directors affects their financial performance, considering the generational stage as a moderating variable. Findings suggest that a higher presence of non-family directors has a less positive effect on first-generation family firms than in later generations of family firms. Furthermore, by adopting a quantile regression, results show that this effect is more striking in low-performing family businesses than in high. Keywords : Family Businesses; Board of directors; Firm performance; Non-family directors; Corporate governance; Generational stage; First-generation family firms; Quantile regression