Family firm governance and the “logic of the market”: The role of culture

Institutional theory suggests that family firms, especially those that are listed, are forced to conform to the “logic of the market” in order to enhance their legitimacy in front of stakeholders. However, prior research has considered market logic as unique, omitting to consider that for the purposes of defining the logic of market, the cultural context is critical. In particular, we argue that not only family logic, but stakeholders’ expectations and market logic change depending on the cultural context. We thus propose that consideration of the cross-cultural differences in business logics would lead to refine and advance our understanding of the determinants of listed family firms´ governance arrangements. We argue and show that in long-term oriented societies an intense involvement of the family in the governance of listed firms is not considered as negatively as past research has assumed.