Differences and similarities in executive hiring decisions of family and non-family firms

Abstract

We juxtapose the executive recruitment decisions of family and non-family firms. We hypothesize that hiring preferences toward executive candidates differ between family and non-family firms. We test our predictions against field data from executive recruitment processes involving family and non-family firms. Drawn from an executive hiring company, the sample includes 166 candidates in 56 selection processes on behalf of 42 client companies (28 family firms). Our results indicate that family firms prefer to hire managers with strong functional competence and leadership skills, whereas non-family firms prefer to employ managers with more pronounced market knowledge. Despite these differences, both types of firms are drawn to performance-oriented candidates, i.e., individuals with a strong focus on client and result orientation. For researchers and practitioners alike, our study demonstrates the importance of understanding the distinct hiring requirements of family firms when they professionalize.