Effect Of Corporate Governance On Sustainability Of Family Owned Businesses: A Case Of Listed Family Owned Firms In Kenya

Abstract

In as much as family businesses make up more than two thirds of all businesses in the world, their sustainability has been questioned since most of the family-owned businesses do not live to see their third generation. This could be attributed to the fact that family-owned businesses are fundamentally distinct from public firms, especially in issues pertinent to corporate governance. When a business is family owned, it is likely to have concentrated control and less stringent corporate governance procedures. This study therefore sought to investigate the effect of corporate governance on the sustainability of Kenyan family owned businesses. The objectives of the study were to establish the effects of ownership structure on the sustainability of family owned enterprises, to determine the effects of board composition on the sustainability of family owned enterprises, and to assess the effects of board functioning on the sustainability of family owned enterprises in Kenya. This study used a sample of listed family owned businesses since such firms have overcome all early stage challenges and have gone ahead to get listed although their founding families still hold a substantial stake in them. The study adopted a descriptive research design and the target population was senior level managers of the fourteen firms. Five managers from each of the firms resulted in a sample of seventy respondents. The study used primary data for empirical analysis. All the independent variables yielded a positive and significant relationship with the dependent variable, confirming a causal relationship between sustainability and the regressors.