Unexpected Succession, Entrepreneurial Attitudes and Performance in Family Firms

A proper and timely planning of succession is important to ensure the survival of family firms across generations. However, over half of family firms around the world do not engage in a strategic planning for succession. Several of them even undergo forced succession processes due to unexpected events, such as death, illness, divorce or other business reasons. While such unforeseen events may put at stake the wellbeing of the business, introduce concerns and pressures for the family, there are reasons to believe that they could also spur entrepreneurial behavior, which ultimately benefits firm’s innovation and performance. Despite the relevance of unexpected succession, literature is quite silent on this phenomenon. This research aims to investigate how unexpected succession in family businesses affects firm’s entrepreneurial attitudes and performance. Our sample includes 1,045 firms from around the world. Results show that unexpected succession per se does not have any effect. However, by distinguishing among different typologies of unexpected succession (individual-, family- and business-related), the picture becomes more nuanced. In particular, when unexpected succession is due to individual-related reasons other than death (e.g., illness) the results in term of firm’s entrepreneurial orientation and firm’s performance are negative. Finally, the paper explores conditions under which such effect is mitigated.