Perceptions of governance risks in Maltese family-owned businesses

Abstract

Family businesses have been operating for a significant period of time and continue to form a central part of the global economy. This study observes the perceptions of governance risks in Maltese family owned businesses, particularly focusing on limited liability companies operating in the manufacturing industry. Governance practices in family firms often remain informal and dependent on family dynamics. Thus, these governance risks expose family firms to risks that affect both the daily operations and longterm sustainability. This study adopted a mixed methodology approach. A questionnaire-based survey was distributed to the Maltese manufacturing family-owned firms, provided quantitative analysis on governance practice and awareness of risks. In parallel, semi-structured interviews with regulators, advisors, auditors and representatives from national institutions provided a rich qualitative data. The integration of the survey and interview data, through a triangulation discussion, ensures that the findings reflect both internal and external viewpoints. The results highlight strategic policy risk as the most concern risk. Many firms adopt an operational mindset, focusing on immediate problems rather than a long-term strategy. Succession planning is often avoided until crises emerge, creating instability and intergenerational conflict. Other mentioned risks include nepotism, lack of accountability, resistance to change, and limited use of external oversight. The findings suggest that stronger governance structures such as family constitutions, advisory boards, and external directors can reduce conflict and improve decision-making. However, cultural attitudes and limited resources remain major barriers. Moreover, outreach programmes, education, and financial incentives are needed to support these family firms. This study shows that addressing governance risks proactively is essential for resilience, succession, and long-term growth. Strengthening governance in family businesses is not only a matter of compliance, but a key step for ensuring survival and continuity of the business.