A Farewell to the Business: Championing Exit and Continuity in Entrepreneurial Family Firms

Entrepreneurship & Regional Development: An International Journal, Vol. 22, Nos. 3-4, pp. 321-348, July 2010

29 Pages Posted: 18 Nov 2012

See all articles by Carlo Salvato

Carlo Salvato

Bocconi University - Department of Management and Technology

Francesco Chirico

Macquarie University, Macquarie Business School; Jonkoping University - Jonkoping International Business School (JIBS)

Pramodita Sharma

Wilfrid Laurier University; University of Vermont - School of Business Administration

Date Written: 2010

Abstract

What factors influence exit from the founder’s business and subsequent entrepreneurial renewal in a generational family firm? Guided by this research question, we trace the development of the Italian Falck Group from its inception as a steel company in 1906 – ascension as the largest privately owned steel producer in Italy – losses in the 1970s and 1980s leading to business exit from steel industry in the 1990s – followed by successful entry in the renewable energy business. A combination of insights from the literature and triangulation of data from multiple primary and secondary sources leads to the development of a model describing how inhibitors of exit from the founder’s business can be transformed into facilitators of change. The critical role of farsighted ‘family champion of continuity’ is found central in redirecting the family from its anchoring in past activities to focus on future entrepreneurial endeavours. While the commitment to the founder’s business continues, the family champion aided by business savvy and astute non-family executives ably modifies its meaning of ‘continuity of the founder’s business’ from ‘steel production’ to ‘continuity of the entrepreneurial spirit of the family’, hence preserving the institutional identity. Insights from this study can help generational family firms which plan to exit from a failing course of action to regenerate so as to create trans-generational value.

Keywords: family business, entrepreneurial exit, business regeneration, champion of change

Suggested Citation

Salvato, Carlo and Chirico, Francesco and Sharma, Pramodita, A Farewell to the Business: Championing Exit and Continuity in Entrepreneurial Family Firms (2010). Entrepreneurship & Regional Development: An International Journal, Vol. 22, Nos. 3-4, pp. 321-348, July 2010, Available at SSRN: https://ssrn.com/abstract=2177313

Carlo Salvato

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Francesco Chirico (Contact Author)

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Pramodita Sharma

Wilfrid Laurier University ( email )

75 University Ave W
Waterloo, Ontario N2L 3C5
Canada

University of Vermont - School of Business Administration ( email )

Burlington, VT 05405
United States

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