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This article presents an explanatory model for transfer of family businesses to following generations. Our research using 10 case studies shows that transfer of family businesses is a lifelong, continuous process, in which the family must address and foster the soft elements of the transfer process: enterpreneurship, freedom, values, outside experience, upbringing, and education. Furthermore, a business family can develop into a family dynasty only when it embraces sound governance as a fundamental principle; that is, the individual family member belongs to the family, which belongs to the business.

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It is assumed that over the generations family businesses inevitably face greater family complexity. The increasing family complexity can have repercussions for the family and the business. To counteract these negative effects of an increase in family complexity, it has been recommended that business families utilize conventional family and corporate governance methods. Pruning the family tree is an alternative method of handling family complexity. However, this alternative way has been largely ignored in research. This article explores the research question: Why and how do business families prune the family tree, thus simplifying the ownership, governance, and/or management structures of the family business? The research findings indicate that introducing simplicity by pruning can be a worthwhile path to family harmony and business performance and that there is no contradiction between pruning the family tree and governance of the family and the business.

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