The peer effect

What role can local peers play in the corporate governance of a family business?

Good corporate governance in a family business is particularly important to prevent a detrimental effect of family control on stakeholders and society at large. A recent study by Mario Daniele Amore focuses on local peers as an unexplored factor that shapes the governance arrangements of family firms. According to the research, peer effects are driven by the desire to imitate leading local firms as well as by social interactions within the local community. Through an investigation on family firms in Italy from 2000 to 2012, Amore documents that peer effects become smaller for geographically more distant peers. He states that companies operating in local areas with a denser network of non-family directors are more likely to appoint directors from outside the controlling family. 

Title: Peer Effects In Family Firm Governance 

Source: Social Science Research Network