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Ownership and management issues in first generation and multi-generation family firms

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  • Paul Westhead
  • Carole Howorth
  • Marc Cowling

Abstract

A matched sample methodology was utilized to detect ownership and management differences between first generation and multi-generation independent unquoted family companies in the UK. Chief Executive Officers (CEOs) in first generation and multi-generation companies were generally drawn from the family owning the company. Both types of companies also had small management teams. Several statistically significant differences were detected. CEOs served longer apprenticeships in multi-generation rather than first generation companies. Multi-generation rather than first generation companies were more likely to employ managers drawn from the family owning the company. In other respects, multi-generation companies generally appeared to be better managed than first generation companies. Multi-generation companies had larger boards of directors. Moreover, a larger proportion of multi-generation rather than first generation companies employed a non-executive director. Owners of both types of family companies, but particularly the owners of first generation companies may be ‘control averse’. Many first generation companies (and some multi-generation companies) associated with a shallower managerial pool had failed to address this potential managerial and strategic weakness by selective use of ‘outside’ managerial expertise. Implications for practitioners and researchers are discussed.

Suggested Citation

  • Paul Westhead & Carole Howorth & Marc Cowling, 2002. "Ownership and management issues in first generation and multi-generation family firms," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 14(3), pages 247-269, July.
  • Handle: RePEc:taf:entreg:v:14:y:2002:i:3:p:247-269
    DOI: 10.1080/08985620110112088
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    File URL: http://hdl.handle.net/10.1080/08985620110112088
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    Citations

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    Cited by:

    1. Yannick Bammens & Wim Voordeckers & Anita Gils, 2008. "Boards of directors in family firms: a generational perspective," Small Business Economics, Springer, vol. 31(2), pages 163-180, August.
    2. Discua Cruz, Allan & Hamilton, Eleanor & Jack, Sarah L., 2012. "Understanding entrepreneurial cultures in family businesses: A study of family entrepreneurial teams in Honduras," Journal of Family Business Strategy, Elsevier, vol. 3(3), pages 147-161.
    3. Ralph Palliam & Hanas A. Cader & Charles Chiemeke, 2011. "Succession Issues among Family Entrepreneursin Countries of the Gulf," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 2(2), pages 25-34, May.
    4. Mussolino, Donata & Calabrò, Andrea, 2014. "Paternalistic leadership in family firms: Types and implications for intergenerational succession," Journal of Family Business Strategy, Elsevier, vol. 5(2), pages 197-210.
    5. Eddleston, Kimberly A. & Kellermanns, Franz W., 2007. "Destructive and productive family relationships: A stewardship theory perspective," Journal of Business Venturing, Elsevier, vol. 22(4), pages 545-565, July.
    6. Hauck, Jana & Prügl, Reinhard, 2015. "Innovation activities during intra-family leadership succession in family firms: An empirical study from a socioemotional wealth perspective," Journal of Family Business Strategy, Elsevier, vol. 6(2), pages 104-118.

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