Family involvement in the Board of Directors: Implications for Board Effectiveness

Board effectiveness hinges on both functional attributes—such as size, independence, activity and CEO duality—and interpersonal dynamics like cohesion and trust. In family business, the structural and dynamic perspectives of the board become intricately linked to family heterogeneity, shaped by the different levels of family involvement in boardrooms. This study examines the effect of family involvement on board effectiveness within 385 Italian listed family firms (2014–2018), employing a fixed-effect panel regression. Findings reveal a U-shaped relationship, where moderate family involvement disrupts cohesion, but higher family or non-family directors’ prevalence enhances effectiveness. By integrating socio-emotional wealth and upper echelon theories, this research advances family business and governance literature, offering practical insights for corporate boards.