Identifying the Barriers to Effective Corporate Governance in Family-Owned Businesses: A Qualitative Exploration
Keywords:
Corporate governance, Family-owned businesses, Iran, Qualitative research, Organizational barriers, Succession planning, Informal decision-makingAbstract
This study aims to identify and explore the key barriers that hinder the implementation of effective corporate governance practices in family-owned businesses in Iran. A qualitative, phenomenological research design was adopted to capture the lived experiences of individuals directly involved in the governance of family-owned businesses. Data were collected through semi-structured interviews with 23 participants, including business owners, board members, and senior managers from family firms in Tehran. Participants were selected using purposive sampling, and data collection continued until theoretical saturation was achieved. All interviews were transcribed and analyzed using thematic analysis, supported by NVivo software for coding and organization. The analytical process followed Braun and Clarke’s six-phase framework to identify recurring patterns and key thematic structures. The analysis revealed three overarching themes: (1) familial dynamics and power tensions, (2) structural and procedural weaknesses, and (3) external and contextual constraints. Key subthemes included lack of role clarity, succession ambiguity, emotional decision-making, resistance to professionalization, absence of formal governance structures, weak accountability mechanisms, and regulatory incompatibility. These barriers were found to be deeply interrelated, with internal family dynamics reinforcing structural deficiencies and being further constrained by external institutional limitations. Participant narratives highlighted how emotional entanglement, informal practices, and cultural norms significantly compromised governance effectiveness. The study underscores the complexity of governance challenges in family-owned businesses, particularly within the Iranian context. Effective reform requires a multi-level strategy that addresses familial behaviors, institutional gaps, and cultural attitudes toward formal governance. The findings offer practical insights for family business leaders, policymakers, and advisors seeking to professionalize governance in FOBs across similar emerging market contexts.
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