The evolution of the trust relationship between the family and its external advisors throughout generations: A family business perspective

Abstract

This study delves into the evolving dynamics of the trust relationship between the family and its external advisors across generations in family firms, a crucial, yet underexplored topic in the family firm literature. Anchored in the resource‐based view, family firms leverage external advisors to compensate for internal resource deficits. Employing a qualitative multiple case study approach, our research unveils the nuanced evolution of trust between the family and these external advisors across generations. The findings reveal a distinctive trust evolution, transitioning from interpersonal trust in the first generation to a more sophisticated reliance on the advisor's competencies and trust in the processes of the advisor's firm in subsequent generations. This transformation in the trust relationship is marked by a shift from emotionally charged relationships to more business‐oriented relationships, openness becoming less self‐evident but more calculated, neutrality assuming importance where it was initially absent, and competence being subjected to critical assessment rather than presumed. With this, our study makes a notable contribution to the family firm literature by providing a dynamic perspective on the trust relationship between the family and its external advisors. It also addresses whether family firm decision makers prioritize interpersonal trust in the advisor over trust in competencies or the system, providing valuable insights for practitioners and scholars alike. Overall, this study enriches our understanding of the sustained and evolving nature of trust as a critical resource for competitive advantage in family firms.