Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 172: Implications of Intra-Family and External Ownership Transfer Of Family Firms: Short Term and Long Term Performance

Karl Wennberg (), Johan Wiklund (), Karin Hellerstedt () and Mattias Nordqvist ()
Additional contact information
Karl Wennberg: The Ratio Institute and Stockholm School of Economics, Postal: The Ratio Institute, P.O. Box 3203, SE-103 64 Stockholm, Sweden
Johan Wiklund: Whitman School of Management, Postal: Whitman School of Management, Syracuse University, 721 University Avenue, Syracuse, NY 13244-2450
Karin Hellerstedt: Jönköping International Business School, Postal: Jönköping International Business School, PO Box 1026, SE-551 11 Jönköping, Sweden
Mattias Nordqvist: Jönköping International Business School, Postal: Jönköping International Business School, PO Box 1026, SE-551 11 Jönköping, Sweden

Abstract: We contrast the performance consequences of intra-family vs. external ownership transfers. Investigating a sample of all private family firms in Sweden that went through ownership transfers during ten years, we find family firms transferred to external owners outperforming those transferred within the family, but that survival is higher among intra-family transfers. We attribute these performance differences to the long-term orientation of family firms passed on to the next generation and to the entrepreneurial willingness of acquirers to bear uncertainty. Based on distinct ownership transition routes and theoretical mechanisms explaining performance differences, we outline implications for family business and entrepreneurship research.

Keywords: long-term orientation; succession; ownership transfer; family firms; performance

JEL-codes: L26; M13

50 pages, August 17, 2011

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