Back to the Future: The Effect of Returning Family Successions on Firm Performance

Strategic Management Journal, Forthcoming

Bocconi University Management Research Paper

45 Pages Posted: 1 Mar 2021

See all articles by Mario Daniele Amore

Mario Daniele Amore

Bocconi University - Department of Management and Technology

Morten Bennedsen

INSEAD - Economics and Political Sciences; University of Copenhagen - Department of Economics

Isabelle Le Breton-Miller

HEC Montreal - Department of Management

Danny Miller

HEC Montreal

Date Written: February 12, 2021

Abstract

We study successions from a non-family CEO back to a family CEO, which we label “Type-R” successions. In our sample of 489 Italian family firms experiencing the departure of nonfamily CEOs, these successions represent 42% of all cases. Our difference-in-differences results indicate that family firms undertaking Type-R successions experience an 18% improvement in profitability. Exploring the heterogeneity underlying this result, we find that Type-R successions produce weaker results in contexts that are highly volatile and that rely on innovative inputs before succession. Finally, in studying the drivers of the performance increase we find that Type-R successions reduce labor costs and spur efficiency. Collectively, our evidence suggests that Type-R successions improve performance by leveraging family assets while avoiding dysfunctional nepotism and other parochial family priorities.

Keywords: Family Business, CEO Succession, Leadership, Performance

Suggested Citation

Amore, Mario Daniele and Bennedsen, Morten and Le Breton-Miller, Isabelle and Miller, Danny, Back to the Future: The Effect of Returning Family Successions on Firm Performance (February 12, 2021). Strategic Management Journal, Forthcoming, Bocconi University Management Research Paper, Available at SSRN: https://ssrn.com/abstract=3795229 or http://dx.doi.org/10.2139/ssrn.3795229

Mario Daniele Amore (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Morten Bennedsen

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5, Bygn 26
Copenhagen, 1353
Denmark

Isabelle Le Breton-Miller

HEC Montreal - Department of Management ( email )

Montreal, Quebec H3T 2A7
Canada
15143407315 (Phone)

HOME PAGE: http://www.hec.ca/profs/isabelle.le-breton.html

Danny Miller

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3 H3T 2A7
Canada

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