Founder Succession and Firm Performance in the Luxury Industry

Campa, D., Torchia, M., Marceselli, C. R. C., & Sargenti, P. (2020). Founder Succession and Firm Performance in the Luxury Industry. Corporate Ownership & Control, 17(2), 88-96. DOI: 10.22495/cocv17i2art8

9 Pages Posted: 25 Feb 2020

See all articles by Domenico Campa

Domenico Campa

International University of Monaco (IUM)

Mariateresa Torchia

University of Witten/Herdecke

Chiara Rachele Caterina Marcheselli

affiliation not provided to SSRN

Patrice Sargenti

affiliation not provided to SSRN

Date Written: January 29, 2020

Abstract

Top management succession may be a real threat for the long-term profitability of companies, in particular when it involves the founder whose name also identifies their brand and their products. This is extremely important in the luxury sector where loyalty, trust and the image of brands in consumers’ minds may be affected by the succession process, especially when the founder has no direct heir to ensure continuity of the family firm. Through an analysis of three case studies, as well as a questionnaire distributed to active consumers of luxury products, this study aims to understand whether and how a brand can successfully survive after the death of its founder and whether the purchasing behaviour of customers changes after a founder succession takes place. Our findings reveal that the lack of a clear and structured succession plan may significantly threaten the survival of companies. In addition, our evidence indicates that the purchasing intention of luxury consumers is linked more to the bond and the values that they share with the founder than to the quality of the goods purchased. Accordingly, our results provide insights and suggestions concerning the optimal approach to follow when companies with heirless founders are planning a succession and highlights that the success and the survival of such entities is linked to consumers’ perceptions of the extent to which there is continuity and alignment between the values of the founder and those of their successors.

Keywords: Founder Succession Plan, Brand Image, Brand Trust, Brand Loyalty, Brand Performance, Luxury Firms

JEL Classification: G32, G34, L67, L81

Suggested Citation

Campa, Domenico and Torchia, Mariateresa and Marcheselli, Chiara Rachele Caterina and Sargenti, Patrice, Founder Succession and Firm Performance in the Luxury Industry (January 29, 2020). Campa, D., Torchia, M., Marceselli, C. R. C., & Sargenti, P. (2020). Founder Succession and Firm Performance in the Luxury Industry. Corporate Ownership & Control, 17(2), 88-96. DOI: 10.22495/cocv17i2art8, Available at SSRN: https://ssrn.com/abstract=3527518

Domenico Campa (Contact Author)

International University of Monaco (IUM) ( email )

16, rue Huber Clerissi
Building Stella
Monaco, Monaco MC-98000
Monaco
+37797986997 (Phone)

Mariateresa Torchia

University of Witten/Herdecke ( email )

Alfred-Herrhausen-Straße 50
Witten, 58448
Germany

Chiara Rachele Caterina Marcheselli

affiliation not provided to SSRN

Patrice Sargenti

affiliation not provided to SSRN

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