Impacts of coporate governance mechanisms on management of a Capixaba Family business group

Name: TALITA CASAGRANDE LACHINI

Publication date: 20/05/2015
Advisor:

Name	Role
ANNOR DA SILVA JUNIOR	Advisor *

Examining board:

Name	Role
ALFREDO RODRIGUES LEITE DA SILVA	External Examiner *
ANNOR DA SILVA JUNIOR	Advisor *
GABRIEL MOREIRA CAMPOS	Internal Examiner *

Summary: This study aims to understand how corporate governance mechanisms interfere in running a
small family business. For this, it was adopted Hart’s perspective (1995), which discusses
corporate governance, and Leone’s (2005) for family businesses. To achieve this goal it was
adopted, in relation to the conduct of research, a qualitative approach through the case study
method. The triangulation was used as data collection instrument by means of desk research,
systematic observation and semi-structured interviews. The data analysis was performed
through content analysis. As theoretical contribution, this study extends the Model Four
Circles through the Context and Values System with the introduction of formal and informal
owners, generating the Model of Five Circles. The presence of corporate governance was
identified through the differentiation and the establishment of eleven governance mechanisms
factors that led to changes in the control of the company in the succession process,
professionalization and fund-raising. The found mechanisms were designated as: “holding
company”; “fraternal respect”; “personal projects”; “management fees of family managers”;
“absence of remuneration of non-family managers”; “professional advice”; “accountability”;
“protection of the family business”; “alignment of interests in the management”; “duties and
responsibilities”; and “attention to the interests of stakeholders”. Such mechanisms have no
chronological order, since the fraternal respect and personal projects existed before the
creation of the family business. As for control there is the accountability mechanism which
enabled a link between the family and the enterprise; it allowed clarity, transparency, equality
of all the brothers, reducing the information asymmetry; it facilitated an open and honest
communication between all owners, conveying a sense of security and predictability; it helped
to eliminate and/or minimize conflicts between the owners (formal and informal). As for the
succession, the mechanisms of protection the family business, the professional advice and the
fraternal respect are enabling the planning of the succession process in the company;
facilitated communication among family members, reduced the information asymmetry;
carried out the maintenance and administration of movable properties of the business family.
As for the professional training, the mechanisms protecting the business family and fraternal
respect enabled the participation of all members to decide on the professionalization of the
company. Regarding fund-raising, the duties and responsibilities mechanisms and attention to
the interests of stakeholders allowed the company throughout its life cycle to seek financial
resources without difficulty, generating higher investment, growth and job creation.

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