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Effects of sibling competition on family firm succession: A game theory approach

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  • Jayantilal, Shital
  • Jorge, Sílvia Ferreira
  • Palacios, Tomás M. Bañegil

Abstract

Strong interconnections between family and business which are innate to family firms can prove to be the source of conflict. Of all conflicts, those between family members and especially between siblings erode the family’s harmony and can risk the firm’s continuity. The passing of the family firm’s control from the founders to the next generation is a critical stage for the family firm and can be a catalyst for conflict. This article extends the use of game theory in family firm succession to explicitly include the noneconomic factors related to the family dimension, focusing on the emotional cost of conflict resulting from sibling competition. The results show that this cost is fundamental in terms of successor selection. The article shows that the collaborative family outcome, which results from family members cooperating and acting as a unit, is better in promoting firm intergenerational succession and ensuring that the founder’s preferred child is appointed successor.

Suggested Citation

  • Jayantilal, Shital & Jorge, Sílvia Ferreira & Palacios, Tomás M. Bañegil, 2016. "Effects of sibling competition on family firm succession: A game theory approach," Journal of Family Business Strategy, Elsevier, vol. 7(4), pages 260-268.
    • Handle: RePEc:eee:fambus:v:7:y:2016:i:4:p:260-268
    DOI: 10.1016/j.jfbs.2016.10.001
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    References listed on IDEAS

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    Cited by:

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    4. Cristina Bettinelli & Marco Mismetti & Alfredo De Massis & Barbara Del Bosco, 2022. "A Review of Conflict and Cohesion in Social Relationships in Family Firms," Entrepreneurship Theory and Practice, , vol. 46(3), pages 539-577, May.
    5. Jiong Wu & Feifei Wang & Xing Xu, 2021. "The influence of management team continuation on inefficient investment after family firms inheritance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 156-169, January.
    6. Burton, Nicholas & Vu, Mai Chi & Cruz, Allan Discua, 2022. "Our social legacy will go on: Understanding outcomes of family SME succession through engaged Buddhism," Journal of Business Research, Elsevier, vol. 143(C), pages 105-118.
    7. Schell, Sabrina & de Groote, Julia K. & Moog, Petra & Hack, Andreas, 2020. "Successor selection in family business—A signaling game," Journal of Family Business Strategy, Elsevier, vol. 11(3).

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