This article analyzes, using various econometric techniques, how family ownership, family control, and the presence of a second significant shareholder affect firm performance. The authors studied a panel of 118 nonfinancial Spanish companies (711 observations) from 2002 to 2008. Once endogeneity issues were considered, it was found that family ownership did not influence profitability. What seems to matter is family control. This study also reveals the importance of taking into account unobservable heterogeneity and endogeneity issues when analyzing firm performance and provides an interesting future avenue of research: the role played by other large shareholders in family firms.

Purpose: The purpose of this paper is to present a review of the literature on two lines of research, corporate governance and innovation, explaining how different internal corporate governance mechanisms may be determinants of business innovation. Design/methodology/approach: It explores the theoretical background and the empirical evidence regarding the influence of both ownership structure and the board of directors on company innovation. Then, conclusions are drawn and possible future research lines are presented. Findings: No consensus was observed regarding the relation between corporate governance and innovation, with both positive and negative arguments being found, and with empirical evidence not always pointing in the same direction. Thus, new studies trying to clarify this relationship are needed. Originality/value: Over recent years, interest has grown in the influence of governance mechanisms on innovation decisions taken by the management. Innovation efforts and results depend on factors that are influenced by corporate governance, such as ownership structure or the functioning of the board of directors. Thus, the paper shows an updated state of the art in this field proposing future lines for empirical research.