Family firms, boards and company survival

A concern of family firms is to ensure survival across generations as a family firm. But survival also relates to whether the firm goes bankrupt or not. We know that succession presents major challenges for family firms and that many do not make it beyond the first and second generations. We also know that family firms are more risk averse than non-family firms, a reflection of the desire to see the business handed on to the next generation. However, until we carried out our study there was little systematic evidence on whether family firms are more likely to survive than non-family firms and the factors that drive such differences.

As the boards of family firms play a central role in deciding upon strategy and differ from boards in non-family firms, our focus was on examine the role of board composition. More than any other group, the board has ultimate control of the direction of the firm to ensure its survival as a viable business. Our research uses the population of private firms in the UK and is the largest study to date on this topic. Read more

Invitation to ACE Research Seminar

Wednesday 27 March 2013  –  4:15 pm to 5:45 pm  at the QUT Gardens Point Campus 

Presented by Karl Wennberg, Associate Professor, Stockholm School of Economics and the Ratio Institute, Sweden.

THE GEOGRAPHY OF INDEPENDENT AND FAMILY START-UPS

This paper integrates insights from regional science and organizational ecology to the entrepreneurship field by constructing a theoretical framework that explains how the regional bed impacts the emergence of family and non-family businesses in differential ways. Using a rich multi-level data set, we investigate how characteristics of the economic milieu of regions influence firm births. We find that economic factors such as regional wealth and number of children born strongly affect the number of non-family start-ups while the number of family start-ups is more strongly tied to the level of small businesses and the political regulatory regime within the municipality. These findings indicate that family start-ups are more susceptible to the local non-economic context than non-family start-ups. Our research provides support for the notion that “the geographic context” is an important yet undertheorized area for research on new venture emergence and research on family business.

Karl Wennberg is associate professor at Stockholm School of Economics and the Ratio Institute in Sweden. He is the author of over 20 scholarly articles and 2 books in entrepreneurship, regional development, and organization theory. In 2013 he is a visiting researcher at Griffith University.

To book your place at this event and to find out more about the location of this seminar please contact Karen Taylor k3.taylor@qut.edu.au

Family business succession: When death takes a hand

The series of ACE research vignettes is aimed at sharing current and interesting research findings from our team of international Entrepreneurship researchers.  In this vignette, Dr. Mervyn Morris considers the impact on family business operations due to the sudden and unexpected death of a key family member.

Family business dominates the economic activity of the majority of countries. Often family businesses are conceived of in terms of generations, from start-ups to families able to trace their beginnings back for centuries. One issue which is common across time and space is the question of succession: that is who will succeed the current family members occupying managerial roles?

There is much known about succession and family business. Key findings are:

  • More than 50 percent of family businesses all agree succession is important, yet do virtually nothing about it
  • the lack of successors can reslt in the business being removed from the control or ownership of the family
  • Those who are succeeded are often the greatest barrier to successful succession plans
  • Succession processes can cause considerable conflict within families with more than one generation involved in the running of the business
  • The emotional links between and among families can be both a competitive advantage and a source of extensive conflict

The purpose of this research was to examine the impact on business operations due to the sudden and unexpected death of a key family member. The model of succession in family business is well enough known.   Read more