Corporate Governance of IT in Spanish Family Owned Enterprises

Corporate Governance of IT in Spanish Family Owned Enterprises

Alberto J. Arroyo (ALAMCIA S. L, Spain)
DOI: 10.4018/978-1-4666-1764-3.ch021
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Abstract

IT Corporate governance is the information technology-governing discipline of corporate governance.. Governing IT is not a simple discipline: researchers and practitioners have developed frameworks, best practices, etc. The standard ISO/IEC 38.500 sets the principles and activities to be carried in the organization to implement corporate governance of IT. Family-owned enterprises introduce a specific particularity regarding governance: the family. This paper presents an analysis of corporate governance of IT in family owned enterprises, considering this singularity, from the Spanish perspective. Also, it introduces two examples of implementation in family owned enterprises
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Corporate Governance And Family Owned Enterprises

Corporate governance has its origins on the Agenda problems (AECAE, 2007), that is, the separation between ownership and management, and the need that the ownership has to control the management. Mechanisms such as internal controlling and auditing, the different committees and the existence of independent directors are to be implemented on the companies to try to cover the gap of the Agenda problems.

In family owned enterprises, as said before, a third factor comes to reality: the family. Family does not only own the company, but also is involved in the management, and separating management from the family is a thought task. Real situations, in which family members (siblings, in-laws and other relatives) are located at different positions in organizations, are normal in this type of companies. And this is a simple situation, in which first and second generation (founders and his/her sons/daughters) is only considered.

But there are family owned enterprises in which not only first and second generations are involved on the company, but also the third generation, spouses and also other family members (cousins, uncles, etc.) The more complex is the family, the more issues can be found on that type of companies. Other factors needed to be considered. For instance, the condition of being a family member is sometimes assumed by some people to take decisions affecting the operating and the strategy of the company. And these decisions are taken isolated, and with the only justification of being family members. Moreover, the conflicts between family members can take to the situations in which decisions taken by the top management are not only questioned but also prevented from being implemented by other family members.

Thus, it is not a problem of management or ownership; it is also a problem of governance. Ownership, management and family are intertwined and it is important to define mechanisms to separate clearly the three dimensions.

Figure 1.

The three dimensions of family owned enterprises

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