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Keywords: family business, entrepreneurship, succession, entrepreneurial process ... synthesis of the empirical literature on ownership successions, we show that there is ample need in the feel .... We used the list of 30 management journals.
WHAT DO WE KNOW ON FIRM SUCCESSION AND THE ENTREPRENEURIAL PROCESS? A SYNTHESIS OF THE LITERATURE Massimo Baù University of Udine via Tomadini, 30a – I-33100 Udine, Italy [email protected] Karin Hellerstedt Jönköping International Business School PO Box 1026, SE-551 11, Jönköping, Sweden [email protected] Mattias Nordqvist Jönköping International Business School PO Box 1026, SE-551 11, Jönköping, Sweden [email protected] Karl Wennberg Imperial College of London South Kensington Campus, SW7 2AZ London, UK [email protected]

ABSTRACT Viewing succession as an act of both entrepreneurial exit and entry this paper contributes to research what that seeks to integrate entrepreneurship and family business research. Using a cluster analysis and a deep literature review of previous succession research, we identify four important themes for understanding succession from an entrepreneurial perspective, and three areas that are particularly interesting for future research. First, the need for an empirical approach that takes an explicit multi-level perspective. Second, most research focuses on leadership transition while there are reasons to examine ownership transition in its own right, and third, a necessity to generalize empirical evidence and test more explicit theoretical hypotheses. Keywords: family business, entrepreneurship, succession, entrepreneurial process

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INTRODUCTION Research on entrepreneurship and family business has come a long way to explain how and why individuals choose to start and grow their own firms. However, there is limited research and knowledge about how and why individuals leave their firms to the care of others and what impact this has on economic outcomes for individual entrepreneurs, enterprising families, or the economy in which they are embedded (DeTienne, 2010; Ronstadt, 1986). DeTienne (2010) argues that the entrepreneurial process does not end with new venture creation but rather that entrepreneurial exits are also core to the entrepreneurship process. Owner-manager entrepreneurs that exit from entrepreneurship can decide to (i) sell their firm to an external party (Wennberg, Wiklund, DeTienne, & Cardon, 2009), (ii) hand over the business to family members and/or relatives such as siblings, children and grandchildren (Sharma, Chrisman, & Chua, 2003b), or (iii) decide (or be forced) to close down their business (Shepherd, Wiklund, & Haynie, 2009). The first two options are, besides being related to entrepreneurial exit, also related to entrepreneurial entry. This means that entrepreneurial entry could involve the actual taking over of an established business, i.e. taking over firms that individuals decide to make an exit from. Relatively little attention has been devoted to individuals’ choices to take over an existing business as opposed to starting a business from scratch (Nordqvist & Melin, 2009; Parker & van Praag, 2006). Nonetheless, the study of intergenerational survival of established businesses entails exit as well as entry decisions. We seek several contributions to the literature. Viewing ownership transition and succession as an act of entrepreneurial exit (of previous owner) and entry (of new owner (cf. DeTienne, 2010), we contribute to the growing interest of entrepreneurial processes in private family businesses (e.g. Aldrich & Cliff, 2003; Kellermanns & Eddleston, 2006; Naldi, Nordqvist, Sjoberg, & Wiklund, 2007; Zahra, Hayton, & Salvato, 2004). With our comprehensive synthesis of the empirical literature on ownership successions, we show that there is ample need in the feel for research to integrate theoretical models of entrepreneurship and family business. Specifically, process models dependent on individual entrepreneurs and their family members, the human capital and skills of individual family members, as well as the characteristics of the firms they own and operate. To cast light on how these factors affect processes of exit and intergenerational transfer of ownership we note, in particular, that there is a need for data that takes a multilevel approach and follow individuals, firms, and families over extended periods of time. The paper is organized as follows. In the next two sections we describe guiding theoretical assumptions and the methodology. Then, we present a section that discusses the main themes 2

and limitations identified in the past research. This way we are able to identify relevant and exciting opportunities for future research. We close with a brief conclusion. GUIDING THEORETICAL ASSUMPTIONS This paper is based on key facets of entrepreneurship and family business research. Research in entrepreneurship has constructed a line of theories addressing the firm-individual interface (Davidsson, 2004; Sarasvathy, 2004; Shane, 2003). Following these conceptual pillars, we view entrepreneurship as a process by which firms are created by individuals or teams, some of these firms purposefully grown into larger enterprises, and where eventually the founder(s) exit the firm (DeTienne, 2010). In this framework, entrepreneurship is viewed as individuals pursuing entrepreneurial opportunities, often through the creation of new ventures (Carter, Gartner, Shaver, & Gatewood, 2003). While much theoretical work exists on entrepreneurial entry and growth, research focusing on entrepreneurial exit and the possibility of re-entry is limited (Stam, Thurik, & van der Zwan, 2007; Wennberg et al., 2009), and furthermore, work on the difference between founders that initiate their own firm compared to those that take over existing firms is sparse. On this topic, family business research has much to contribute to general entrepreneurship research in that takeovers of firms can be a frequent path towards entrepreneurship for non-family members as well (cf. Parker & van Praag, 2006). The conceptual pillars employed in research are important in that they also associated with the methods used. Our literature review reveals that the diverging paths towards firm ownership has not yet been addressed in the empirical literature, in part we believe, because of the lack of research designs following both individuals and firms over long periods of time. Most empirical studies of entrepreneurship and family business are still limited to cross-sectional studies (Cornelius, Landstrom, & Persson, 2006) and existing process studies often focus exclusively on a single level of analysis (Davidsson & Wiklund, 2001) which inhibits opportunities for research to understand how factors present at one level of analysis (the individual, the family, or the new firm) affects entrepreneurial processes such as firm creation, growth, and exit. This limits the ability of current research to reveal the multi-level and often lengthy processes that leads to the transfer of ownership, demise, or exit of family firms. Hence, also in methodological terms, family business research offers ideas for entrepreneurship research since the multi-level aspects of transition and succession has been a core theme in family business research since at least three decades (Le Breton-Miller, Miller, & Steier, 2004). Empirical work in this tradition has been conducted on both large (e.g. (e.g.Gersick, 1997) and small and medium-sized family firms (e.g.Sharma, Chrisman, & Chua, 2003a). Most scholars in this area agree that succession is the most central strategic 3

decision and process that a private business has to deal with to secure its survival and growth over the long term. Ownership transition within the family often means that formal ownership as well as day-to-day management is transferred to the next generation, sometimes in a formal decision but often through gradual transfer. For well performing firms, selling the firm on the public market or keeping it in the family but appointing outside management is an alternative (Bennedsen, Nielsen, Pérez-González, & Wolfenzon, 2007). For small firms and/or for firms with low profitability, an equally common alternative might be to simply close down the firms when the head of the household/main manager reaches retirement (Wennberg et al., 2009). Thus, transfer of ownership can be carried out in at least three modal ways: (1) during the lifetime of the older generation, that is, transfer of shares to the younger generation of an owner-family, (2) through inheritance, or (3) sell all or some of the shares to outsiders, that is, persons that are not members of the owner-family (Ljungström, 2009). In the family business literature it is common to discuss the succession challenge using the three-circle model of ownership, family, and the firm as point of departure. This model holds that there is an overlap between ownership, the family as a social unit, and the firm as the focal economic entity (Gersick, 1997; Le Breton-Miller et al., 2004; Ward, 1987). An important part in the relationship between private owners and their firm is how relationships between family members within the ownership group affect decisions about the firm’s future (Aldrich & Cliff, 2003; Sharma, 2004; Stewart, 2003). The character and quality of the relationships between the owners and their family members are pivotal since they are likely to affect the extent to which important intangible resources such as knowledge and networks are transferred during a succession (Cabrera-Suarez, De Saa-Perez, & Garcia-Almeida, 2001; Steier, 2001). Concluding, the lens we use in identifying and reviewing previous published research on ownership transition and succession is thus based on assumptions and conceptual considerations that are central in the entrepreneurship and family business literature. From entrepreneurship research we use the foundational concepts of the firm-individual interface and the view of entrepreneurship as a process with distinct phases that each has differential demands on the firm and its founders. From family business research we use the concepts of ownership, family, and the firm as a conceptual framework guiding the identification of internal forces shaping the distinct demands during the phases of the entrepreneurial processes. We believe this integration offers fertile ground for showing how empirical studies of ownership transition and succession can be synthesized to identify pressing research gaps, and how theories, concepts, and methods common in entrepreneurship research may benefit research in family business and vice versa. In the next section we describe how we designed

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and carried out the comprehensive literature review that we will draw upon to identify important new avenues of research. METHODOLOGY Given the abundant and rather eclectic literature on ownership transition and succession we decided to follow a comprehensive and strictly systematic process in order for other researchers to easily follow our procedures and use our findings for their own purpose, regardless of their theoretical inclinations. We used the list of 30 management journals selected by Debicki and colleagues (2009) considering previous literature reviews on entrepreneurship (MacMillan, 1993; Shane, 1997) and family business (Chrisman, Chua, Kellermanns, Matherne III, & Debicki, 2008). We examined all the articles published since the first issue of each of these 30 journals, using the publishers’ electronic archive in a three phase examination: First, we searched for any of the keywords: succession, successor, predecessor, transition in titles, keywords and abstracts, sorting out 1104 papers that matched these criterions. Second, we read all abstracts obtained, identifying which of those focused on succession in private businesses and family firms, narrowing the sample to 172 papers. We downloaded and carefully read all these papers, organizing a table of contents noting the research design, sampling techniques, sample characteristics, analytical methods, and national context investigated. We excluded all papers having a more practice-oriented focus on succession such as interviews, books reviews and teaching cases. This further narrowed our sample to a final of 130 papers published during the past 35 years. The largest number of articles includes empirical research (72.3%). We observed an equal distribution between qualitative (52%) and quantitative studies (48%). Table 1 presents the journals and number of articles included in the review. -----------------------------Insert Table 1 about here -----------------------------Third, we categorized all 130 articles according to three main dimensions of the studies: level of analysis, phase of succession and the family- or firm- members involved, considering 17 dummy variables presented in Table 2. The level of analysis was classified according to Handler and Kram’s (1988) framework outlining four levels in succession research: individual, interpersonal/group, organizational and environmental. Based on these variables presented we classified the 121 articles, excluding the review articles, by using a hierarchical cluster analysis. Clustering methods generally group objects by their similarity on all variables considered simultaneously (Bailey, 1975). Each object, in our case each paper must 5

be in one and in only one group. Indeed, cluster analysis meets the typological requirements of exhaustiveness and mutual exclusiveness. Bayley (1975) remembers us that it is also possible to use a theory as a source of variables. We chose as cluster method the average linkage between groups considering the Jaccard similarity measure for binary data. In order to better understand the characteristics of the different group, we decided to move more in deep in the largest clusters reducing the distance considered. -----------------------------Insert Table 2 about here -----------------------------The cluster analysis have identified studies with a focus mainly environmental, then it has been recognize the organizational perspective in contrast with a individual or interpersonal dimension, clearly distinguishing between the different phases. Finally this technique has highlighted a small group of multidimensional studies. In order to simplify the presentation of our findings and make a more clear classification of the paper, functional to a literature review, we decide to maintain the content that we obtain from the cluster analysis, using a more linear classification, recognizing four main groups of papers: 1) environmental studies; 2) organizational studies; 3) individual/interpersonal studies; 3.1) pre-succession; 3.2) planning succession; 3.3) managing succession; 3.4) post succession; 4) multilevel studies. A summary is presented in the Appendix. Below we discuss what the focus of current research has been and the main research questions focused on in each of the four main groups identified. DISCUSSION Throughout the review there have been a number of observations made on what characterizes current literature on firm succession. Many of these observations can be grouped into three main areas; namely, the topic of succession (leadership or ownership transition), the methods and research designs employed and the context in which succession takes place. The latter two also relate to the multi-level nature of firm succession. In the remaining parts of this discussion we elaborate further on these three aspects and on a few other central themes that we have identified as especially important through the literature review. In each of these gaps we suggest one or two research questions that the extant work on firm successions has not been able to resolve. In doing so, we show that there are still vital gaps in our knowledge on this issue to be filled, and unique opportunities exists for the further cross-fertilization of theories, concepts, and methods between entrepreneurship and family business research to address these questions. 6

Succession as Leadership and/or Ownership transitions In our review it has become clear that a vast majority of the studies focus on leadership succession and only 18 percent address ownership transition. Furthermore, a clear distinction between leadership and ownership succession is largely lacking. As a consequence, there is a need to distinguish between leadership and ownership succession, both empirically and theoretically. Brockhaus (2004) has partially underlined the duality between ownership and leadership succession, taking in consideration the necessity to adequately understand the perspectives of different stakeholders. Following those priorities, the author has distinguished two levels of analysis; the industry strategic and the family business. Other categories that could be considered concern the selection of successors, the development of successors, and relationship issues. Dyer and Handler (1994) have explored the connections between entrepreneurship and family business, identifying the involvement of family members in ownership and management succession as a main point that intersects family and entrepreneurial dynamics. They assume that “the problem of both ownership and management succession has largely been the domain of research on family-owned businesses, for family dynamics come to the forefront during succession” (Dyer & Handler, 1994: 76). In our analysis we have identified only few theoretical contributions that take this perspective (Churchill & Hatten, 1997; Gersick, Lansberg, Desjardins, & Dunn, 1999; Handler, 1994). Generally, the problem of succession is discussed at the leadership level and the problem of ownership succession is mainly investigated within the legal domain (Bjuggren & Sund, 2001, 2002; Howorth, Westhead, & Wright, 2004; McCollom, 1992), or with a focus on fiscal considerations (Bjuggren & Sund, 2005; Thomas, 2002). The ownership and management duality has been discussed by Barry (1989) who suggests a nuanced view on the duality with several different combinations of ownership and leadership worthy of attention when facing a transition. Those two levels are always present in family firms, but they also constitute an interesting theme to debate in the managerial literature concerning small and medium sized enterprises. Dyer and Handler (1994) argue that “the role of the family becomes very significant in the life of the entrepreneur and the business once the process of succession begins” (Dyer & Handler, 1994: 78). The co-existence of these two kinds of succession is a topic that requires more attention in order to better understand the complexity of the succession process in a multilevel perspective. That moves us to put our first research question: RQ1: How do family composition and structure influence firm growth and type of ownership transition? Methods and Research Designs 7

The succession literature has been argued to be fragmented as it deals with many different topics (Le Breton-Miller et al., 2004). Besides being diverse in terms of topics investigated and theoretical perspectives adopted, we also find that the field is fragmented in terms of empirical settings as well as analytical and methodological approaches. Most importantly, we recognize a lack of longitudinal studies. This is surprising given that succession inherently is a process unfolding over time, and often extended periods of time. In addition, few studies are based on representative samples and statistical techniques that consider the multi-level nature of the succession process are under-utilized. The literature review reveals that this phenomenon involves factors at individual, group (family), firm, regional and national levels. The lack of empirical research that takes a multilevel approach on succession is therefore a notable problem in the existing literature. The succession literature primarily consists of empirical studies. Less than 30% of the 130 articles that we have considered assume a theoretical approach. Moreover, the theoretical research has contributed with 16 theoretical models that have not been empirically tested. This means that there is great opportunity to bridge the current conceptual research on firm succession with the empirical research. Empirical studies are equally distributed between quantitative and qualitative methods. Many of the most significant qualitative contributions rely on case study research. Frequently, they have also considered several levels of analysis and allowed for a longitudinal perspective. This perspective needs to be further incorporated in empirical quantitative analyses. We do, however, acknowledge that it brings about difficulties in terms of data collection and resource requirements. The main quality gap in the current quantitative approach relates to sampling techniques. Even if there are many contributions that have used a significant number of cases, few articles have presented a representative sampling technique. Typically, researchers rely on convenience samples such as specific business sectors or members of certain associations. More than 40% of the quantitative studies have presented only descriptive statistics. The rest of the studies have used mainly regression analysis and analysis of variance. Two studies have relied on structural equation modeling. We still need more sophisticated approaches to explain the problem of succession, moving to a meso level of analysis in order to generalize assumptions and intuitions from the theoretical and qualitative literature. As noted, our review of the accumulated body of research indicates a general need for studies on succession that integrate the entrepreneurship and family business perspectives. Taking advantage of recent empirical and methodological advances in the entrepreneurship field will also serve to develop more advanced models of family business and transfer/succession of ownership. Specifically, longitudinal studies would enable researchers to study the businesses and the individuals involved prior to, during, and after a potential ownership succession has 8

taken place. Such data where individuals, families and firms are followed over time would also allow for panel data techniques investigating differences across observations as well as differences over time (Wennberg, 2005). This would facilitate research efforts to statistically control for some of the heterogeneity that usually plagues studies of entrepreneurship (Davidsson, 2007). Empirical links between individuals, families and firms are frequently called for but still extremely rare within entrepreneurship (Davidsson & Wiklund, 2001) and family business research (Sharma, 2004). This kind of empirical research on succession therefore has a major potential to contribute to the wider fields of entrepreneurship and family business. The Entrepreneurial Context The lion’s share of entrepreneurship research assumes that firms are started through the act of founding by one individual or a group of individuals. The fact that entrepreneurship also may be about taking over and renewing existing and established businesses is largely neglected by current entrepreneurship research (Nordqvist & Melin, 2009; Parker & van Praag, 2006). While research in economics, sociology, and management highlight the importance of context or demand factors on entrepreneurial behavior, empirical evidence remains scarce (Thornton, 1999). “Entrepreneurial context” might be thought of as consisting of economic, demographic or institutional factors. An example of economic factors that may have a critical influence on firm succession is the recent financial crisis experienced by many countries. The financial crisis could cause difficulties for individuals interested in borrowing money for acquiring a firm. As a consequence, limited access to capital may hinder or post-pone the succession process for many firms. In terms of demographic aspects, it is likely that regions with an aging population may be more successful in the transition process if outsiders are considered. The institutional setting could also have a major impact on firm and individual behavior. For example, high taxes for ownership transfers may cause families to favor a sale to outsiders or a pure firm liquidation rather than trans-generational succession (Henrekson, 2005). If the institutional setting lowers the incentives to transfer the ownership of the business to a family member, it may have severe effects on national economic development. Likewise, if there are no developed markets for firm transfers, there may be a loss of economic value. These are all examples of important and potentially influential contextual factors. These could partly be controlled for by making cross context comparisons. Our literature review indicates that a vast majority of all studies, published in major journal articles that focus on firm succession consists of single-region or single-industry studies. Only two studies make a cross-country comparison. Not only are studies heavily characterized by being based on single regions, they are also rarely considering the economic, demographic or institutional context of the study. The scarcity of research on entrepreneurial context is 9

probably mostly attributed to lack of data and the demands on time, skills and resources on research designs following individuals and firms over time, comparing such effects across space such as industries, regions, countries or other institutional settings. To discern such fine-grained patterns, research should strive for multi-level research designs that can follow these individuals, their families, and their firms over time. In addition to each study being based on a certain region, the field at large is dominated by studies of a few regions. The succession literature has mainly been developed in the Englishspeaking countries. 50% of the studies consider firms located in the United States, 10% in Canada and 10% in Great Britain. Only 10% of the studies analyze firms in Continental Europe and 10% in Asian countries. Less than 10% make international comparisons. Consequently, there is a necessity to go more in depth in the analysis of European and Asian firms, where small and medium sized enterprises play a preeminent role in the national economies. In addition, there is an opportunity to discuss the relation between leadership and ownership succession using a multilevel perspective taking country specificities into consideration. Country specific attributes could relate to systems of corporate governance of different countries (Tylecote & Visintin, 2008), different firm demographics (Motwani, Levenburg, Schwarz, & Blankson, 2006), institutional factors, and cultural aspects of the countries under examination (Chau, 1991; Kuratko, Hornsby, & Montagno, 1993). RQ2: What contextual or institutional characteristics affect the variation across regions and industries in ownership transfers? RQ3: How do contextual or institutional characteristics affect the probability of successful intergenerational transfers? The effects of firm transitions on firm level outcomes Some recent studies have investigated the impact of family vs. non-family succession for the firm’s future development. That is, how the firm is affected by someone from the family takes over the business, compared to whether an outsider steps in. Recent evidence holds that firms taken over by outsiders generally perform better than firms that remain within the family (Bennedsen et al., 2007; Cucculelli & Micucci, 2008). However, several methodological challenges remain for researchers seeking to isolate the impact of family vs. outsider succession. For example, Block and colleagues (2010) argues that due to the strong correlation between family ownership and family management in most family firms, gaussian statistics relying on significance testing might be inappropriate research methods. Hence, there is a clear need for more knowledge on the performance effects of succession processes. Several interesting puzzles remain unsolved. For example, since family firms are often argued to have a long-term view on firm development (James, 1999; Tagiuri & Davis, 1992), this cold also have implications for the research designs used to investigate performance effects of 10

firm successions. If firm performance is measured too close to the succession point, such a long term view may not be taken into consideration. Another puzzle to solve is what specific skills, resources and relations (or lack thereof) that makes family successors less apt managers than outsiders. Research has yet to go beyond the insider/outsider view of succession as to investigate what human, social or other capital resources that are important for successors, outsiders as well as insiders. Hence, two important gaps in the literature on firm succession therefore are: RQ4: How do different types of succession outcomes (e.g. if a family member or a non-family member takes over the ownership) influence firm performance? RQ5: What are the skills, resources and relations, that successful successors bring to the firm? The effects of firm ownership transitions on meso and macro level economic development A growing body of work at the intersection of economics, geography and entrepreneurship research has investigated how micro-level economic action leads to meso- and macro level economic change (Carree & Thurik, 2003; Van Praag & Versloot, 2007). This research has grown in tandem with policy makers in many countries striving to stimulate entrepreneurship by encouraging the creation of new firms. However, recent international studies indicate that entrepreneurship in new firms might have crowding out effects (Van Praag & Versloot, 2007). Specifically, the stream of research by Audretsch, Fritsch and colleagues suggest that the real potential benefits of new firms for economic development do not appear until new firms have reached a certain level of growth and maturity (Audretsch & Fritsch, 2002; Fritsch, 1997; Fritsch & Mueller, 2007). Since most new firms grow quite slowly and there are high failure rates among these firms (Wiklund, Davidsson, & Delmar, 2003), the potential of many private firms being closed rather than undergoing a successful ownership transfer is alarming from a public policy view. Considering the lack of existing studies that address these aspects, there is a strong need for more research to unearth how and under what conditions firms might be transferred to new ownership rather than merely being closed. Moreover, the aggregate turnover in firm ownership rates might be larger than what is widely known. DeTienne (2010) showed that a conservative estimate of the transfer of wealth by trade of U.S. privately held companies for the first six months of 2006 amounted to $100 billion dollars. Despite the obvious societal and economic ramifications of such large-scale changes among owner-manager entrepreneurs, little is known regarding how such firm ownership transfers impact economic development (Mason & Harrison, 2006). The lack of existing research in this area means, that the wider economic consequences of ownership transitions and succession in privately held firms still are unclear. While our review shows 11

that several studies have addressed the specific mechanisms of ownership transitions and succession in privately-held firms, our review also indicates that scant interest has been given to the wider societal outcomes of such processes. Conversely, research on economic development in economics and economic geography has spawn a long line of studies investigated the effect of firm demographics on economic outcomes (cf. Carree & Thurik, 2003; Fritsch, 1997; Fritsch & Mueller, 2008; Van Praag & Versloot, 2007) but this line of research (or other lines of research as visible in our literature review) has not attended to how the demographics of individual firm founders impact economic development. One of the hallmarks of entrepreneurship research concerns the implication of entrepreneurial efforts for wider societal outcomes (Ireland, Reutzel, & Webb, 2005; Venkataraman, 1997). Recently, research has suggested that such efforts can be facilitated by the unique perspective of entrepreneurship research in linking levels of analysis (Autio & Acs, 2007; Davidsson & Wiklund, 2001). This would suggest that research on ownership transitions and succession that integrates entrepreneurship and family business research could contribute to the orthogonal gaps in the literature on economic development in economics and economic geography on the one hand, and the higher-order consequences of micro-level entrepreneurial processes in entrepreneurship research on the other hand. This is in line with calls for more aggregate measures of societal-level outcomes from micro-level entrepreneurship processes (Ireland et al., 2005; Venkataraman, 1997). A final gap in the literature on firm succession therefore is: RQ6: What are the macro level effects on wider economic outcomes given specific levels of successful vs. unsuccessful ownership transfers? CONCLUSION This paper presents a literature review of extant published research articles on the succession of private business. Our approach has been to look at this body of research through a lens that combines key facets of entrepreneurship and family business theory. Our review and analysis of the literature shows that prior research consists of either descriptive investigations of aggregated data or micro studies of firm succession based on small samples or a number of illustrative cases. Most articles take a rather normative approach with practitioner implications in focus, rather than implications for research and theory. There are few articles that report research that takes an explicit entrepreneurship perspective to the issue of ownership transition and succession. This is a major limitation, given the recent stream in the entrepreneurship literature that argues that the entrepreneurial process should include the events and dynamics associated with both entry and exit, that is, succession and transition of ownership. So far, most scholarly attention to the issues of succession and transition has been 12

paid by family businesses research. We therefore see a strong need for a research approach that more deliberately aims at integrating entrepreneurship and family business research in order to better understand ownership transition and succession. Much valuable research has been conducted so far, but we see a clear need to extend the current research. There are indeed promising areas for future research, both empirically, theoretically and policy wise. More precisely, we see three main areas that need more attention and development. The topic of ownership transition, which has been treated primarily in a technical manner, should receive more attention. In addition, theoretical arguments on the multi-level nature of the succession process need to be reflected in the research designs employed, particularly within the stream of quantitative studies. Finally, the local and regional contexts need to be incorporated into the study of firm succession and we see a need for representative/random samples in order to generate more generalizable findings. REFERENCES Aldrich, H., & Cliff, J. 2003. The pervasive effects of family on entrepreneurship: Toward a family embeddedness perspective. Journal of Business Venturing, 18(5): 573-596. Audretsch, D., & Fritsch, M. 2002. Growth regimes over time and space. Regional Studies, 36(2): 113124. Autio, E., & Acs, Z. 2007. Individual and Country-Level Determinants of Growth Aspiration in New Ventures. In A. Zacharachis (Ed.), Frontiers of Entrepreneurship Research 2007 . College Park: Babson College. Bailey, K. D. 1975. Cluster Analysis. Sociological Methodology, 6: 59-128. Barry, B. 1989. The development of organization structure in the family firm. Family Business Review, 2(3): 293-315. Bennedsen, M., Nielsen, K., Pérez-González, F., & Wolfenzon, D. 2007. Inside the Family Firm: the Role of Families in Succession Decisions and Performance. The Quarterly Journal of Economics, 122(2): 647-691. Bjuggren, P.-O., & Sund, L.-G. 2001. Strategic Decision Making in Intergenerational Successions of Small- and Medium-Size Family-Owned Businesses. Family Business Review, 14(1): 11-23. Bjuggren, P.-O., & Sund, L.-G. 2002. A Transition Cost Rationale for Transition of the Firm within the Family. Small Business Economics, 19(2): 123-133. Bjuggren, P.-O., & Sund, L.-G. 2005. Organization of Transfers of Small and Medium-Sized Enterprises Within the Family: Tax Law Considerations. Family Business Review, 18(4): 305-319. Block, J. H., Jaskiewicz, P., & Miller, D. 2010. Ownership versus Management Effects on Performance in Family and Founder Companies: A Bayesian Analysis, Working paper. Rotterdam: Erasmus University. Brockhaus, R. 2004. Family Business Succession: Suggestions for Future Research. Family Business Review, 17(2): 165-177. Cabrera-Suarez, K., De Saa-Perez, P., & Garcia-Almeida, D. 2001. The Succession Process from a Resource- and Knowledge-Based View of the Family Firm. Family Business Review, 14(1): 3746. Carree, M., & Thurik, A. 2003. The impact of entrepreneurship on economic growth. In Z. Acs, & D. Audretsch (Eds.), Handbook of Entrepreneurship Research: 437-472. Dordrecht, Netherlands: Kluwer Academic Publishers. Carter, N., Gartner, W., Shaver, K., & Gatewood, E. 2003. The career reasons of nascent entrepreneurs. Journal of Business Venturing, 18(1): 13-39. Chau, T. 1991. Approaches to Succession in East Asian Business Organizations. Family Business Review, 4(2): 161-179. 13

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McCollom, M. 1992. The Ownership Trust and Succession Paralysis in the Family Business. Family Business Review, 5(2): 145-160. Motwani, J., Levenburg, N., Schwarz, T., & Blankson, C. 2006. Succession Planning in SMEs: An Empirical Analysis. International Small Business Journal, 24(5): 471-495. Naldi, L., Nordqvist, M., Sjoberg, K., & Wiklund, J. 2007. Entrepreneurial orientation, risk taking, and performance in family firms. Family Business Review, 20(1): 33. Nordqvist, M., & Melin, L. 2009. Entrepreneurial Families and Family Firms. Entrepreneurship & Regional Development, accepted and forthcoming. Parker, S., & van Praag, C. 2006. The entrepreneur's mode of entry: Business takeover or new venture start?, Papers on Entrepreneurship, Growth and Public Policy : Max Planck Institute of Economics. Ronstadt, R. 1986. Exit, stage left why entrepreneurs end their entrepreneurial careers before retirement. Journal of Business Venturing, 1(3): 323-338. Sarasvathy, S. 2004. The questions we ask and the questions we care about: reformulating some problems in entrepreneurship research. Journal of Business Venturing, 19(5): 707-717. Shane, S. 1997. Who is publishing the entrepreneurship research. Journal of Management, 23(1): 83-95. Shane, S. 2003. A general theory of entrepreneurship: The individual-opportunity nexus. Northampton, MA: Edward Elgar Publisher. Sharma, P. 2004. An overview of the field of family business studies: Current status and directions for the future. Family Business Review, 17(1): 1. Sharma, P., Chrisman, J., & Chua, J. 2003a. Predictors of satisfaction with the succession process in family firms. Journal of Business Venturing, 18(5): 667-687. Sharma, P., Chrisman, J., & Chua, J. 2003b. Succession Planning as Planned Behavior: Some Empirical Results. Family Business Review, 16(1): 1-15. Shepherd, D., Wiklund, J., & Haynie, J. 2009. Moving forward: Balancing the financial and emotional costs of business failure. Journal of Business Venturing, 24(2): 134-148. Stam, E., Thurik, R., & van der Zwan, P. 2007. Entrepreneurial exit in real and imagined markets. Tinbergen Institute Discussion Paper, 2008-031/1. Steier, L. 2001. Next-Generation Entrepreneurs and Succession: An Exploratory Study of Modes and Means of Managing Social Capital. Family Business Review, 14(3): 259-276. Stewart, A. 2003. Help One Another, Use One Another: Toward an Anthropology of Family Business. Entrepreneurship: Theory and Practice , 27(4): 383-397. Tagiuri, R., & Davis, J. 1992. On the goals of successful family companies. Family Business Review, 5(1): 43-62. Thomas, J. 2002. Freeing the Shackles of Family Business Ownership. Family Business Review, 15(4): 321-336. Thornton, A. 1999. Variation risk management using modeling and simulation. Journal of Mechanical Design, 121(2): 297-305. Tylecote, A., & Visintin, F. 2008. Corporate governance, finance and the technological advantage of nations. London: Routledge. Van Praag, C., & Versloot, P. 2007. What is the value of entrepreneurship? A review of recent research. Small Business Economics, 29(4): 351-382. Ward, J. 1987. Keeping the family business healthy: How to Plan for Continuous Growth, Profitability, and Family Leadership San Francisco, CA: Jossey-Bass. Venkataraman, S. 1997. The distinctive domain of entrepreneurship research: An editor's perspective. Advances in entrepreneurship, firm emergence, and growth, 3: 119-138. Wennberg, K. 2005. Entrepreneurship Research Through Databases: Measurement and Design Issues. New England Journal of Entrepreneurship, 8(2): 9-18. Wennberg, K., Wiklund, J., DeTienne, D., & Cardon, M. 2009. Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers. Journal of Business Venturing, forthcoming. Wiklund, J., Davidsson, P., & Delmar, F. 2003. What Do They Think and Feel about Growth? an Expectancy-Value Approach to Small Business Managers' Attitudes toward Growth (1). Entrepreneurship: Theory and Practice, 27(3): 247-271. Zahra, S., Hayton, J., & Salvato, C. 2004. Entrepreneurship in Family vs. Non-Family Firms: A ResourceBased Analysis of the Effect of Organizational Culture. Entrepreneurship: Theory and Practice, 28(4): 363-382. 15

Table 1. Journals and number of articles (first selection, second selection and percentage) 1st

2nd

perc

Acad. of Management Jour.

41

3

2%

Jour. of Business Venturing

Acad. of Management Rev. Admin. Science Quarterly Business Ethics Quarterly California Man. Review Corp. Gov.: An Intern. Rev. Entrepr. & Regional Develop.

22 42 8 25 23 11

1 0 0 0 0 0

1% 0% 0% 0% 0% 0%

Entrepr. Theory and Practice Family Business Review Harvard Business Review Human Relations Intern. Small Business Jour. Jour. of Applied Psychology

28 106 144 45 20 22

10 78 1 0 8 0

44 27

0 0

Jour. of Business Ethics Jour. of Business Research

1st

2nd

perc

37

9

7%

Jour. of Management Jour. of Management Studies Jour. of Org. Behavior Jour. of Small Bus. Manag. Leadership Quarterly Long Range Planning

13 31 21 26 11 30

0 1 0 12 1 1

0% 1% 0% 9% 1% 1%

8% 60% 1% 0% 6% 0%

Management Science Organization Science Organization Studies Organizational Dynamics Sloan Management Rev. Small Business Economics

85 30 39 29 38 27

0 1 0 0 0 4

0% 1% 0% 0% 0% 3%

0% 0%

Strategic Management Jour. Strategic Organization

40 3

0 0

0% 0%

1068

130

TOTAL

Table 2. Categorization used to classify articles through a cluster analysis Dimension 1: Level Individual Interpersonal/group Organizational Environmental

individual level group and interpersonal level organizational level environmental level

Dimension 2: Phase General topics Planning succession Managing succession Post-succession

general studies about succession and preliminary considerations studies that refer to formal actions supporting the succession main focus is the succession from an operative perspective post succession analysis

Dimension 3: Subject Incumbent/founder Successor Parent Offspring Manager/Stakeholder Shareholder Board of directors

Incumbent, predecessor, founder Successor (insider or outsider) Father and/or mother Offspring, siblings, son, daughter Manager or internal stakeholder Shareholder (different than the owner/incumbent) Member of the board of directors

16

APPENDIX Summary of reviewed articles categorized according to level of analysis Level (numerosity) main topics most significant contributions Environmental (15) refers to economic models (Ayres, 1998; Diwisch et al., 2009)

Organizational (14)

buy-in/-out

(Scholes et al., 2007; Wright et al., 1992)

fiscal dimension

(Bjuggren & Sund, 2001, 2002, 2005; File & Prince, 1996; McCollom, 1992)

country specifics

(Chau, 1991; Huang, 1999; Kuratko et al., 1993)

preliminary considerations (Fiegener et al., 1994; Foster, 1995; Kimhi, 1997; Rogers et al., 1996; Stavrou, 2003; Steier, 2001) corporate governance

(Barach & Ganitsky, 1995; Berenbeim, 1990; Corbetta & Montemerlo, 1999; Miller et al., 2003; Poza et al., 2004; Sonfield & Lussier, 2004)

attitudes and willingness

(Birley, 1986, 2002; Cadieux et al., 2002; Dumas et al., 1995; Galiano & Vinturella, 1995; Mandelbaum, 1994; Shepherd & Zacharakis, 2000; Stavrou, 1999; Stavrou & Swiercz, 1998)

predecessor/successor

(Cabrera-Suarez et al., 2001; Cadieux, 2007; Chrisman et al., 1998; Goldberg & Wooldridge, 1993; Hoang & Gimeno, 2009; Venter et al., 2005)

broad

(DeNoble et al., 2007; Longenecker & Schoen, 1978; Sharma et al., 2003a; Sharma et al., 2001)

relations

(Fiegener et al., 1996; Handler, 1991; Lansberg & Astrachan, 1994; Seymour, 1993; Sharma et al., 2003b; Stavrou, 1998)

comparisons

(Brown & Coverley, 1999; Chittoor & Das, 2007; Fahed-Sreih & Djoundourian, 2006; Harveston et al., 1997; Motwani et al., 2006; Nam & Herbert, 1999; Peay & Dyer Jr, 1989; Tatoglu et al., 2008)

family relations

(Dunn, 1999; Harvey & Evans, 1994; Kaslow, 1998; Poza & Messer, 2001; Swagger, 1991; Vera & Dean, 2005)

internal and external transfer

(Cater & Justis, 2009; Handler, 1992; Lambrecht, 2005; Royer et al., 2008)

co-habitation and retirement style

(Ambrose, 1983; Barnes & Hershon, 1976, Boeker & Goodstein, 1993; Churchill & Hatten, Fox et al., 1996; Handler, 1990; Ibrahim et al., Matthews et al., 1999; Post & Robins, Sonnenfeld & Spence, 1989; Thomas, 2002)

broad

(Gersick et al., 1999; Murray, 2003)

Individual/group pre-succession (17)

planning (27)

managing (34)

post-succession (5)

Multilevel (9)

1994; 1997; 2001; 1993;

(Correll, 1989; Dyck et al., 2002; Harvey & Evans, 1995; Howorth et al., 2004) (Clifford et al., 1991; Davis & Harveston, 1998; Handler & Kram, 1988; Lansberg, 1988; Rubenson & Gupta, 1996; Yan & Sorenson, 2006)

17