Successful family firm succession: Transferring external social capital to a shared-leadership team of siblings

Abstract

Studies on succession in family business have recognized the importance of the transfer of social capital to ensure a firm’s continuity and growth. However, although previous research has focused on succession as a one-to-one phenomenon, more and more successions in the real world are collective successions. Therefore, this study focuses on the transfer of external social capital (ESC) from a predecessor to a team of siblings because succession to a shared-leadership team changes the traditional way of transferring ESC. Using a qualitative analysis of six Canadian family companies, we show how a sibling succession process evolves for ESC transfer. We also demonstrate how predecessors transfer operational ESC on an individual basis and strategic ESC on a collective basis to the shared-leadership team. The findings also explain how successors acquire their predecessors’ ESC and use their own ESC to renew firm ESC. Those outcomes are summarized in seven propositions.