Strategic Divestments in Family Firms: Role of Family Structure and Community Culture


  • An earlier version of this article won the 2003 Best Unpublished Research Paper Award from the Family Firm Institute.

Pramodita Sharma at, and to S. Manikutty at


Timely acquisition and divestment of resources is essential for sustaining the competitive advantage and longevity of family firms. A combination of past successes, emotional attachments, and path dependencies can lead to extensive inertia toward divestment in these firms. This article develops a framework to understand the influence of community culture and family structure on divestment decisions in family firms. Propositions on the varying levels of inertia to divest—depending on the values held by the owning family and the culture prevailing in their community—are developed. Research and practical implications are discussed.