Leadership and Governance Decisions in Family Business Performance: An Application of Fuzzy Sets Logic

Leadership, governance and performance in family businesses are broadly studied, but results are contradictory. There is a need for deeper understanding of these relationships since emotional and behavioral aspects are complex in these types businesses. Questions on the how and the why of board functioning and ownership, and their influences on performance are scarce, given lack of data or a focus on quantitative data. To find a balance between qualitative and quantitative methods, we explore fuzzy sets logic as a methodology to expand knowledge in family businesses and present an application to build a representation of entrepreneurial performance results based on board of directors’ composition and CEO’s ownership, using case studies. Results indicate that the methodology offers alternative explanations to governance, leadership and performance dimensions in these businesses. Using fuzzy sets logic, we find that entrepreneurial performance is higher when outsiders’ membership in boards of directors and CEO ownership are both high as well.