The courage to choose! Primogeniture and leadership succession in family firms

Abstract

Research Summary: Building on a unique data set with information on the nuclear structure of entrepreneurial families, we integrate leadership succession into a socioemotional wealth (SEW) logic to test the antecedents and consequences of primogeniture vis-à-vis second-or subsequent-born selection in family firm succession. Our findings suggest that appointing a family firstborn sibling is more likely when there is a high degree of SEW endowment and the family firm has pre-succession performance below aspiration levels. Next, we find that appointing a second-or subsequent-born sibling has a positive and significant effect on post-succession firm profitability, particularly when the firm is in its second generation or later. Managerial Summary: What drives succession choices in family firms? What are the performance implications of each succession choice? These are questions of vital relevance for every business owner. Focusing on the pool of potential family heirs at the time of succession, our study adds to the debate on the drivers of succession choices by suggesting that having a family intensive governance structure fosters primogeniture as the main succession logic, even when the family firm is experiencing lower profitability. Our study informs business owners on the implications of different succession policies, suggesting that family firms that have the courage to disregard primogeniture and choose more wisely the family successor are also the ones experiencing higher post-succession performance. K E Y W O R D Sbirth order, family firms, primogeniture, socioemotional wealth, succession

Innovation in Family Firms: A Systematic Literature Review and Guidance for Future Research

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The role of human capital on family firm innovativeness: the strategic leadership role of family board members

“…Indeed, because of their strong socioemotional ties to their firms, founders prioritize maintaining control of their firm. They therefore attempt to influence ownership, management and governance of their firm, mainly by using younger generations (Berrone et al 2012;Calabrò et al 2018;Gómez-Mejía et al 2007;Cesinger et al 2016). In turn, familiness, i.e., "resources and capabilities related to family involvement and interactions" (Chrisman et al 2004) create advantages as well as disadvantages for FFs (Habbershon and Williams 1999).…”

It Depends on the Size: How Firm Strategic Emphasis on Digital Transformation Predicts Market Capitalization

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