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Must Love Kill the Family Firm? Some Exploratory Evidence

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  • Vikas Mehrotra
  • Randall Morck
  • Jungwook Shim
  • Yupana Wiwattanakantang

Abstract

Family firms depend on a succession of capable heirs to stay afloat. If talent and IQ are inherited, this problem is mitigated. If, however, progeny talent and IQ display mean reversion (or worse), family firms are eventually doomed. Since family firms persist, solutions to this succession problem must exist. We submit that marriage can transfuse outside talent and reinvigorate family firms. This implies that changes to the institution of marriage—notably, a decline in arranged marriages in favor of marriages for “love†—bode ill for the survival of family firms. Consistent with this, the predominance of family firms correlates strongly across countries with plausible proxies for arranged marriage norms.

Suggested Citation

  • Vikas Mehrotra & Randall Morck & Jungwook Shim & Yupana Wiwattanakantang, 2011. "Must Love Kill the Family Firm? Some Exploratory Evidence," Entrepreneurship Theory and Practice, , vol. 35(6), pages 1121-1148, November.
    • Handle: RePEc:sae:entthe:v:35:y:2011:i:6:p:1121-1148
    DOI: 10.1111/j.1540-6520.2011.00494.x
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    7. Mehrotra, Vikas & Morck, Randall & Shim, Jungwook & Wiwattanakantang, Yupana, 2013. "Adoptive expectations: Rising sons in Japanese family firms," Journal of Financial Economics, Elsevier, vol. 108(3), pages 840-854.
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    10. Luis Alfonso Dau & Randall Morck & Bernard Yin Yeung, 2021. "Business groups and the study of international business: A Coasean synthesis and extension," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(2), pages 161-211, March.
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    17. M. Carmen Díaz-Fernández & M. Rosario González-Rodríguez & Marek Pawlak & Biagio Simonetti, 2019. "Family firm’s management composition: the role played by family members’ age in TMT and supervisor levels," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(5), pages 2421-2438, September.
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    19. Joseph Lampel & Ajay Bhalla & Kavil Ramachandran, 2017. "Family values and inter-institutional governance of strategic decision making in Indian family firms," Asia Pacific Journal of Management, Springer, vol. 34(4), pages 901-930, December.

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