Family involvement in the board and the top management team: the moderation effects on EO-performance relationship

none4siRecent meta-analysis confirms that Entrepreneurial Orientation (EO) is a substantial predictor of firm performance (Rauch et al. 2009). Yet the relationship between EO and the performance is more complex than a simple direct relationship (Lumpkin and Dess, 1996) and there is still a lack of knowledge about which factors moderate this causal linkage. The purpose of this paper is to investigate the degree to which governance structures in SMEs moderate the effectiveness of EO on firm performance. Specifically, we study the family/non-family composition of both board and top management teams. Our random sample is drawn from 1,160 Italian manufacturing SMEs compiled by the Center for Social and Economic Studies of Chamber of commerce, 94 CEO responded to a survey sent to 590 of these SMEs to collect data related to EO and governance characteristics. Financial performance data was taken from AIDA Bureau van Dijk's database. A hierarchical linear regression analysis was used to test our hypothesis. Our main results demonstrate that when there is a Family only Board composition then EO has a negative and slight impact, when there is a non-family-only board then EO has a strong and positive influence on firm performance. Moreover, we find that if TMT is dominated by family, then high EO has a negative impact on firm performance, while if the TMT is non-family, then the impact is really strong. Future research is required to investigate which family/non family board behaviour and characteristics enable firms to effectively translate EO into firm performance.mixed-Migliori S., Monaco Eleonora, Consorti A., Steffens P.-Migliori S., Monaco Eleonora, Consorti A., Steffens P