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A sequential choice model of family business succession

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  • Timothy Mathews
  • Tim Blumentritt

Abstract

Management succession is a critical process, especially in family-owned businesses. Current models of management succession focus on elements such as personal development of potential successors and decision-making processes by incumbents and governance bodies, but do not account for interactions among actors. This paper addresses this weakness using a game-theoretic approach applied to the setting of family businesses. We model a tournament-style game in which two siblings pursue the CEO position of a family business. In the course of our analysis, we consider a variety of factors, such as the predispositions of the founder to choose one sibling over the other, the value placed on winning the top job by each sibling, the cost for the siblings of pursuing the job, and the possibility of “first-mover advantages.” We close the paper by discussing implications of our work for both family businesses and corporations. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Timothy Mathews & Tim Blumentritt, 2015. "A sequential choice model of family business succession," Small Business Economics, Springer, vol. 45(1), pages 15-37, June.
    • Handle: RePEc:kap:sbusec:v:45:y:2015:i:1:p:15-37
    DOI: 10.1007/s11187-015-9628-2
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    Cited by:

    1. 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.
    2. Parimal Merchant & Arya Kumar & Debasis Mallik, 2018. "Factors Influencing Family Business Continuity in Indian Small and Medium Enterprises (SMEs)," Journal of Family and Economic Issues, Springer, vol. 39(2), pages 177-190, June.
    3. Eduardo L. Giménez & José Antonio Novo, 2020. "A Theory of Succession in Family Firms," Journal of Family and Economic Issues, Springer, vol. 41(1), pages 96-120, March.
    4. Umans, Ine & Lybaert, Nadine & Steijvers, Tensie & Voordeckers, Wim, 2021. "The influence of transgenerational succession intentions on the succession planning process: The moderating role of high-quality relationships," Journal of Family Business Strategy, Elsevier, vol. 12(2).
    5. Jenny Kragl & Alberto Palermo & Guoqian Xi & Joern Block, 2023. "Hiring family or non-family managers when non-economic (sustainability) goals matter? A multitask agency model," Small Business Economics, Springer, vol. 61(2), pages 675-700, August.
    6. Ine Umans & Nadine Lybaert & Tensie Steijvers & Wim Voordeckers, 2020. "Succession planning in family firms: family governance practices, board of directors, and emotions," Small Business Economics, Springer, vol. 54(1), pages 189-207, January.
    7. Boris Rumanko & Zuzana Lušňáková & Monika Moravanská & Mária Šajbidorová, 2021. "Succession as a Risk Process in the Survival of a Family Business—Case of Slovakia," JRFM, MDPI, vol. 14(10), pages 1-20, September.
    8. Hair, Joseph F. & Astrachan, Claudia Binz & Moisescu, Ovidiu I. & Radomir, Lăcrămioara & Sarstedt, Marko & Vaithilingam, Santha & Ringle, Christian M., 2021. "Executing and interpreting applications of PLS-SEM: Updates for family business researchers," Journal of Family Business Strategy, Elsevier, vol. 12(3).

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    More about this item

    Keywords

    Applied game theory; Family business; Management succession; M50; D20; C70; L26;
    All these keywords.

    JEL classification:

    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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