The Show Must Go On: Preserving the Legacy Business through Exit in Family Business Portfolio Firms

Academy of Management Perspectives

61 Pages Posted:

See all articles by R. Duane Ireland

R. Duane Ireland

Texas A&M University - Department of Management

Francesco Chirico

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

Naveed Akhter

Jonkoping University - Jonkoping International Business School (JIBS)

Emanuela Rondi

affiliation not provided to SSRN

Rida Ijaz

Jonkoping University

Date Written: January 07, 2025

Abstract

We explore business exits in four family business portfolio firms located in Pakistan. Our research objective is to understand why when facing an unexpected situation that violates their expectations (a decline in firm performance), the owners of family business portfolio firms are more likely to retain some businesses in the firm’s portfolio while choosing to exit from one or more other businesses. Results from our qualitative analyses reveal that family business portfolio firm owners prioritize protecting the firm’s legacy business, even if it is underperforming, over pursuing potential future opportunities in satellite businesses, including successful ones. This paradoxical approach can ultimately place the overall business at risk. Our results provide insights regarding the roles of sensemaking and emotions when family business portfolio firm owners identify, evaluate, and then select a course of action to pursue to deal with an unexpected event. We observe that the owners of the family business portfolio firms in our sample engage in a sensemaking process that shapes their understanding of how their emotions of guilt, sadness, and fear—and their related emotional attachment to the firm’s legacy business—affect their business exit decisions.

Keywords: Legacy, Business Exits, Family Business Portfolio Firms, Sensemaking, Emotions

Suggested Citation

Ireland, R. Duane and Chirico, Francesco and Chirico, Francesco and Akhter, Naveed and Rondi, Emanuela and Ijaz, Rida, The Show Must Go On: Preserving the Legacy Business through Exit in Family Business Portfolio Firms (January 07, 2025). Academy of Management Perspectives, Available at SSRN: https://ssrn.com/abstract=

R. Duane Ireland

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Francesco Chirico (Contact Author)

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

Jönköping, 55111
Sweden

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Naveed Akhter

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

Emanuela Rondi

affiliation not provided to SSRN

Rida Ijaz

Jonkoping University ( email )

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