Many family business owners want their offspring to continue the family business after they have retired. However, they may lack willing successors. Drawing on resource-based logic, this paper proposes parental business strategies which enhance the attractiveness of continuation by offspring. These strategies include investment in intangible capital, which is less valuable if offspring sell the firm, and high levels of parental effort. As a by-product, these strategies enhance the financial performance and longevity of those family firms which adopt them, and might help explain the global prevalence of family firms as an organizational form.
Bibliographical noteI am grateful to Jay Barney, Jess Chua, Bill Hesterly, Gurupdesh Pandher, Pierre Morrissette, Bill Schulze, Todd Zenger, and other seminar participants at Texas Christian University, the University of Utah, Ivey and the University of Windsor for helpful comments and suggestions. I am especially grateful to special issue editor Jim Chrisman for constructive comments which have greatly improved earlier versions of the paper. The usual disclaimer applies.
- COMPETITIVE ADVANTAGE
- BUSINESS SUCCESSION
- PARENTAL ALTRUISM