Examining the Impact of Inherited Succession Identity on Family Firm Performance

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Abstract

The vast majority of research on family firm performance following intergenerational succession draws on either agency or stewardship theory, resulting in conflicting findings and conclusions. In this study, we depart from the mainstream by focusing on how inherited successor identity and its combined influence with successors’ broader socioeconomic context exert impact on intergenerational post-succession performance. Drawing on social embeddedness perspective, we hypothesize that a non-first-son-based succession identity disproportionately better positions successors to take advantage of the informational exchange relationships and entrepreneurial opportunities, particularly when succession identity interacts with independent outside board members, as well as large blocks of outside shareholders, while simultaneously avoiding the pressures and constraints associated with “family tradition” aspects of the family business system. Data collected from a sample of Korean family firms showed support for this moderation hypothesis. These results suggest the need for more theoretically grounded research on the inherited identity of successors to help draw a more realistic and balanced picture of social dynamics in family firm performance.

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