How family firms use governance mechanisms to mitigate the risks of ecosystems: A case study from healthcare

This study aims to increase our understanding of how family firms, acting as ecosystem orchestrators, mitigate perceived relational and performance risk in ecosystems via the use of governance mechanisms. We use the ecosystem governance literature to understand whether family firms' characteristics lead to a unique governance approach in an ecosystem setting. Our findings and theoretical implications are threefold; (1) formal and informal governance mechanisms act as complements to mitigate relational and performance risks; (2) the choice of governance mechanisms differs for relational and performance risk; (3) changes in perceived risk over time result in shifts in the relative dominance of formal/informal governance mechanisms.

Plain English Summary This study analyzes how family firms, acting as ecosystem orchestrators, mitigate perceived relational and performance risk via the use of governance mechanisms. Using data from a Belgian family firm that initiated an ecosystem in healthcare, the study shows that in a family firm-led ecosystem, formal and informal governance mechanisms act as complements to deal with relational and performance risk. We show that to deal with relational/performance risk, different combinations of governance mechanisms should be used. When ecosystem members perceive changes over time in perceived risk, the ecosystem orchestrator should change the balance between formal/informal governance mechanisms. Our study suggests that family firm orchestrators benefit from stimulating the active participation of ecosystem members. Family firm orchestrators might want to consider changing needs of a growing ecosystem, as, in larger ecosystems, frequent communication between the orchestrator and members can be more difficult. We argue that family firm orchestrators should remain mindful of the balance between formal and informal governance mechanisms.