Management team replacement and family business performance: an empirical test in Southern Italy
DOI:
https://doi.org/10.7433/s94.2014.13Keywords:
chief executive officer, management team, socioemotional wealth, performances, family successionAbstract
Purpose of the paper: This empirical research has the aim of verifying the effects of management team replacement on performance in second-generation family businesses.
Methodology: Our empirical investigation examines a sample of 992 manufacturing family businesses. These firms are located in Southern Italy and they are second generation family firms. The sample was divided into: 1) a main group composed of 496 firms that replaced management teams after family succession; 2) a control group of 496 firms that did not replace management teams after family succession. The performance indicators were compared using: 1) paired samples t-test; 2) Levene’s test; 3) independent samples t-test.
Findings: The comparison between the two homogeneous groups points out that there are no significant changes in performance after family succession. Regarding management team replacement, only second-generation family businesses that have changed the management team suffer significant deterioration in performance.
Research limitations: The results only concern enterprises in Southern Italy that operate in the manufacturing sector.
Research and managerial implications: The research underlines the importance of the involvement of management teams and their business decision-making power in retaining “old” managers in family businesses.
Originality/value of paper: Few empirical studies have investigated the effects of management team replacement after family succession. The results of this research could extend the perspective of the emerging Socioemotional Wealth theory.
References
BARNEY J.B. (1991), “Firm resources and Sustained Competitive Advantage”, Journal of Management, vol. 17, n. 1, pp. 99-120.
BARNEY J.B. (2006), Risorse, competenze e vantaggi competitivi. Manuale di strategia aziendale, Carocci, Roma.
BARONTINI R., CAPRIO L. (2006), “L’effetto del controllo familiare sulla performance delle imprese: una sintesi dell’evidenza empirica internazionale”, Economia e Politica Industriale, n. 2, pp. 43-58.
BARTHOLOMEUSZ S., TANEWSKI G. (2006), “The relationship between family firms and corporate governance”, Journal of Small Business Management, vol. 44, n. 2, pp. 245-267.
BENNEDSEN M., NIELSEN K., PEREZ-GONZALEZ F., WOLFENSON D. (2007), “Inside the family firm: the role of families in succession decisions and performance”, The Quarterly Journal of Economics, vol. 122, n. 2, pp. 647-691.
BERRONE P., CRUZ C., GOMEZ-MEJIA L.R., LARRAZA-KINTANA M. (2010), “Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less?”, Administrative Science Quarterly, vol. 55, n. 1, pp. 82-113.
BERTRAND M., SCHOAR A. (2006), “The role of family in family firms”, Journal of Economic Perspectives, vol. 20, n. 2, pp. 73-96.
CARNEY M. (2005), “Corporate governance and competitive advantage in family-controlled firms”, Entrepreneurship: Theory and Practice, vol. 29, n. 3, pp. 249-265.
CHRISMAN J.J., CHUA J.H., LITZ R.A. (2003), “A unified systems perspective of family firm performance: an extension and integration”, Journal of Business Venturing, vol. 18, n. 4, pp. 467-472.
CHRISMAN J.J., CHUA J.H., LITZ R.A. (2004), “Comparing the agency costs of family and non-family firms: conceptual issues and exploratory evidence”, Entrepreneurship Theory and Practice, vol. 28, n. 4, pp. 335-354.
COLLI A. (2002), The History of Family Business, 1850-2000, Cambridge University Press, Cambridge, pp. 1-129.
CROUCH C. (2012), Il potere dei giganti, Editori Laterza, Roma-Bari, pp. 1-230.
CUCCULELLI M., MICUCCI G. (2008), “Family succession and firm performance: Evidence from Italian family firms”, Temi di Discussione, Working papers, Banca d’Italia, pp. 1-31.
DYER W. G. (2006), “Examining the family effect on firm performance”, Family Business Review, vol. 19, n. 4, pp. 253-273.
FARACI R., VAGNANI G. (2007), “I rapporti fra impresa e proprietà”, Sinergie, n. 73-74, pp. 107-126.
PANUNZI F., FAVERO C.A., GIGLIO S., HONORATI M., (2006), “The Performance of Italian Family Firms”, ECGI - Finance Working Paper No. 127/2006. Available at SSRN: http://ssrn.com/abstract=918181 or http://dx.doi.org/10.2139/ssrn.91818, pp. 1-34
GOMEZ-MEJIA L.R., NUNEZ-NICKEL M., GUITERRIEZ I. (2001), “The role of family ties in agency contracts”, Academy of Management Journal, vol. 44, n. 1, pp. 81-95.
HUSE M., MINICHILLI A., NORDQVIST M., ZATTONI A. (2008), “Board Tasks in Small Firms: The Importance of Motivation and Evaluations”, Sinergie, n. 75, pp. 17-36.
KAPLAN S., MINTON B.A. (2006), “How has CEO Turnover Changed? Increasingly Performance Sensitive Boards and Increasingly Uneasy CEOs”, NBER Working Paper No. w12465. Available at SSRN: http://ssrn.com/abstract=924751, pp. 1-35.
LA PORTA R., LOPEZ-DE-SILANES F., SHLEIFER A. (1999), “Corporate ownership around the world”, Journal of Finance, vol. 54, n. 2, pp. 471-517.
LIN S., HU S. (2007), “A family member or professional management? The choice of a CEO and its impact on performance”, Corporate Governance, vol. 15, n. 6, pp. 1348-1362.
LING Y., KELLERMANS F. (2010), “The effects of family firm specific sources of TMT diversity: The moderating role of information exchange frequency”, Journal of Management Studies, vol. 47, n. 2, pp. 322-344.
MAGGIONI M. (2010), “Una rimeditazione dei rapporti tra profitto e valore alla ricerca di una consonanza intersistemica”, Sinergie, n. 81, pp. 117-134
MAURY B. (2006), “Family ownership and firm performance. Empirical evidence from Western European corporations”, Journal of Corporate Finance, vol. 12, n. 2, pp. 321-341.
MAZZONI C., MUSTILLI M. (2007), “Il management come scienza sociale: una rilettura delle teorie sulla corporate governance”, Sinergie, n. 73-74, pp. 3-42.
MCCONAUGHY D., WALKER M.C., HENDERSON G.V. Jr., MISHRA C.S. (1998), “Founding family controlled firms: efficiency and value”, Review of Financial Economics, vol. 7, n. 1, pp. 1-19.
MILLER D., LE BRETON-MILLER I. (2007), “Kicking the habit: broadening our horizons by studying family business”, Journal of Management Inquiry, vol. 16, n. 1, pp. 27-30.
MINICHILLI A., CORBETTA G., MACMILLAN I. (2010), “Top management teams in family-controlled companies: “familiness”, “faultlines”, and their impact on financial performance”, Journal of Management Studies, n. 47, pp. 205-222.
MINICHILLI A., CORBETTA G., NORDQVIST M. (2011), “CEO Succession, Organizational Context and Performance: A Socio-Emotional Wealth Perspective on Family Controlled Firms”, Working paper. Results available at http://www.knowledge.unibocconi.eu/notizia.php?idArt=8185
MISHRA C.S., RANDOY T., JENSSEN J.I. (2001), “The effect of founding family influence on firm value and corporate governance”, Journal of International Financial Management & Accounting, vol. 12, n. 3, pp. 235-259.
MORCK R.K., WOLFENZON D., YEUNG B. (2004), “Corporate governance, entrenchment and growth”, National Bureau of Economic Research, n. w10692, pp. 1-130.
MORRESI O. (2009), “Impresa familiare e performance: una verifica empirica sulle imprese italiane quotate”, Finanza Marketing e Produzione, n. 3, pp. 7-20.
MUSTILLI M. (2008), “Corporate governance ed impresa familiare: aspetti definitori e modelli teorici”, in Mustilli M., Gangi F., (Eds.), Governance, strategie e innovazione dell’impresa. Evidenze da un contesto sfavorevole, McGraw Hill, Milano, pp. 1-174.
NICHOLSON G.J., KIEL G. (2007), “Can Directors Impact Performance? A case-based test of three theories of corporate governance”, Corporate governance, vol. 15, n. 4, pp. 585-608.
PEARSON A.W., CARR J.C., SHAW J.C. (2008), “Toward a theory of familiness: a social capital perspective”, Entrepreneurship Theory and Practice, n. 32, pp. 949-969.
PEREZ-GONZALEZ F. (2006), “Inherited control and firm performance”, American Economic Review, vol. 96, n. 5, pp. 1559-1588.
SCHULZE W.S., LUBATKIN M.H., DINO R.N., BUCHHOLTZ A.K. (2001), “Agency relationships in family firms: theory and evidence”, Organization Science, vol. 12, n. 2, pp. 99-116.
STOCKMANS A., LYBAERT N., VOORDECKERS W. (2010), “Socioemotional Wealth and Earnings Management in Private Family Firms”, Family Business Review, vol. 23, n. 3, pp. 280-294.
VILLALONGA B., AMIT R. (2006), “How Do Family Ownership, Control and Management Affect Firm Value?”, Journal of Financial Economics, vol. 80, n. 2, pp. 385-417.
VOORDECKERS W., VAN GILS A., VAN DE HEUVEL J. (2007), “Board composition in small and medium-sized family firms”, Journal of Small Business Management, vol. 45, n. 1, pp. 137-156.
ZELLWEGER T.M., KELLERMANS F.W., DEHLEN T. (2010), “The impact of relationship conflict on socioemotional wealth considerations of family firm owners (Summary)”, Frontiers of Entrepreneurship Research, vol. 30, n. 13, Article 6, Available at: http://digitalknowledge.babson. edu/fer/vol30/iss13/6.
BARNEY J.B. (2006), Risorse, competenze e vantaggi competitivi. Manuale di strategia aziendale, Carocci, Roma.
BARONTINI R., CAPRIO L. (2006), “L’effetto del controllo familiare sulla performance delle imprese: una sintesi dell’evidenza empirica internazionale”, Economia e Politica Industriale, n. 2, pp. 43-58.
BARTHOLOMEUSZ S., TANEWSKI G. (2006), “The relationship between family firms and corporate governance”, Journal of Small Business Management, vol. 44, n. 2, pp. 245-267.
BENNEDSEN M., NIELSEN K., PEREZ-GONZALEZ F., WOLFENSON D. (2007), “Inside the family firm: the role of families in succession decisions and performance”, The Quarterly Journal of Economics, vol. 122, n. 2, pp. 647-691.
BERRONE P., CRUZ C., GOMEZ-MEJIA L.R., LARRAZA-KINTANA M. (2010), “Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less?”, Administrative Science Quarterly, vol. 55, n. 1, pp. 82-113.
BERTRAND M., SCHOAR A. (2006), “The role of family in family firms”, Journal of Economic Perspectives, vol. 20, n. 2, pp. 73-96.
CARNEY M. (2005), “Corporate governance and competitive advantage in family-controlled firms”, Entrepreneurship: Theory and Practice, vol. 29, n. 3, pp. 249-265.
CHRISMAN J.J., CHUA J.H., LITZ R.A. (2003), “A unified systems perspective of family firm performance: an extension and integration”, Journal of Business Venturing, vol. 18, n. 4, pp. 467-472.
CHRISMAN J.J., CHUA J.H., LITZ R.A. (2004), “Comparing the agency costs of family and non-family firms: conceptual issues and exploratory evidence”, Entrepreneurship Theory and Practice, vol. 28, n. 4, pp. 335-354.
COLLI A. (2002), The History of Family Business, 1850-2000, Cambridge University Press, Cambridge, pp. 1-129.
CROUCH C. (2012), Il potere dei giganti, Editori Laterza, Roma-Bari, pp. 1-230.
CUCCULELLI M., MICUCCI G. (2008), “Family succession and firm performance: Evidence from Italian family firms”, Temi di Discussione, Working papers, Banca d’Italia, pp. 1-31.
DYER W. G. (2006), “Examining the family effect on firm performance”, Family Business Review, vol. 19, n. 4, pp. 253-273.
FARACI R., VAGNANI G. (2007), “I rapporti fra impresa e proprietà”, Sinergie, n. 73-74, pp. 107-126.
PANUNZI F., FAVERO C.A., GIGLIO S., HONORATI M., (2006), “The Performance of Italian Family Firms”, ECGI - Finance Working Paper No. 127/2006. Available at SSRN: http://ssrn.com/abstract=918181 or http://dx.doi.org/10.2139/ssrn.91818, pp. 1-34
GOMEZ-MEJIA L.R., NUNEZ-NICKEL M., GUITERRIEZ I. (2001), “The role of family ties in agency contracts”, Academy of Management Journal, vol. 44, n. 1, pp. 81-95.
HUSE M., MINICHILLI A., NORDQVIST M., ZATTONI A. (2008), “Board Tasks in Small Firms: The Importance of Motivation and Evaluations”, Sinergie, n. 75, pp. 17-36.
KAPLAN S., MINTON B.A. (2006), “How has CEO Turnover Changed? Increasingly Performance Sensitive Boards and Increasingly Uneasy CEOs”, NBER Working Paper No. w12465. Available at SSRN: http://ssrn.com/abstract=924751, pp. 1-35.
LA PORTA R., LOPEZ-DE-SILANES F., SHLEIFER A. (1999), “Corporate ownership around the world”, Journal of Finance, vol. 54, n. 2, pp. 471-517.
LIN S., HU S. (2007), “A family member or professional management? The choice of a CEO and its impact on performance”, Corporate Governance, vol. 15, n. 6, pp. 1348-1362.
LING Y., KELLERMANS F. (2010), “The effects of family firm specific sources of TMT diversity: The moderating role of information exchange frequency”, Journal of Management Studies, vol. 47, n. 2, pp. 322-344.
MAGGIONI M. (2010), “Una rimeditazione dei rapporti tra profitto e valore alla ricerca di una consonanza intersistemica”, Sinergie, n. 81, pp. 117-134
MAURY B. (2006), “Family ownership and firm performance. Empirical evidence from Western European corporations”, Journal of Corporate Finance, vol. 12, n. 2, pp. 321-341.
MAZZONI C., MUSTILLI M. (2007), “Il management come scienza sociale: una rilettura delle teorie sulla corporate governance”, Sinergie, n. 73-74, pp. 3-42.
MCCONAUGHY D., WALKER M.C., HENDERSON G.V. Jr., MISHRA C.S. (1998), “Founding family controlled firms: efficiency and value”, Review of Financial Economics, vol. 7, n. 1, pp. 1-19.
MILLER D., LE BRETON-MILLER I. (2007), “Kicking the habit: broadening our horizons by studying family business”, Journal of Management Inquiry, vol. 16, n. 1, pp. 27-30.
MINICHILLI A., CORBETTA G., MACMILLAN I. (2010), “Top management teams in family-controlled companies: “familiness”, “faultlines”, and their impact on financial performance”, Journal of Management Studies, n. 47, pp. 205-222.
MINICHILLI A., CORBETTA G., NORDQVIST M. (2011), “CEO Succession, Organizational Context and Performance: A Socio-Emotional Wealth Perspective on Family Controlled Firms”, Working paper. Results available at http://www.knowledge.unibocconi.eu/notizia.php?idArt=8185
MISHRA C.S., RANDOY T., JENSSEN J.I. (2001), “The effect of founding family influence on firm value and corporate governance”, Journal of International Financial Management & Accounting, vol. 12, n. 3, pp. 235-259.
MORCK R.K., WOLFENZON D., YEUNG B. (2004), “Corporate governance, entrenchment and growth”, National Bureau of Economic Research, n. w10692, pp. 1-130.
MORRESI O. (2009), “Impresa familiare e performance: una verifica empirica sulle imprese italiane quotate”, Finanza Marketing e Produzione, n. 3, pp. 7-20.
MUSTILLI M. (2008), “Corporate governance ed impresa familiare: aspetti definitori e modelli teorici”, in Mustilli M., Gangi F., (Eds.), Governance, strategie e innovazione dell’impresa. Evidenze da un contesto sfavorevole, McGraw Hill, Milano, pp. 1-174.
NICHOLSON G.J., KIEL G. (2007), “Can Directors Impact Performance? A case-based test of three theories of corporate governance”, Corporate governance, vol. 15, n. 4, pp. 585-608.
PEARSON A.W., CARR J.C., SHAW J.C. (2008), “Toward a theory of familiness: a social capital perspective”, Entrepreneurship Theory and Practice, n. 32, pp. 949-969.
PEREZ-GONZALEZ F. (2006), “Inherited control and firm performance”, American Economic Review, vol. 96, n. 5, pp. 1559-1588.
SCHULZE W.S., LUBATKIN M.H., DINO R.N., BUCHHOLTZ A.K. (2001), “Agency relationships in family firms: theory and evidence”, Organization Science, vol. 12, n. 2, pp. 99-116.
STOCKMANS A., LYBAERT N., VOORDECKERS W. (2010), “Socioemotional Wealth and Earnings Management in Private Family Firms”, Family Business Review, vol. 23, n. 3, pp. 280-294.
VILLALONGA B., AMIT R. (2006), “How Do Family Ownership, Control and Management Affect Firm Value?”, Journal of Financial Economics, vol. 80, n. 2, pp. 385-417.
VOORDECKERS W., VAN GILS A., VAN DE HEUVEL J. (2007), “Board composition in small and medium-sized family firms”, Journal of Small Business Management, vol. 45, n. 1, pp. 137-156.
ZELLWEGER T.M., KELLERMANS F.W., DEHLEN T. (2010), “The impact of relationship conflict on socioemotional wealth considerations of family firm owners (Summary)”, Frontiers of Entrepreneurship Research, vol. 30, n. 13, Article 6, Available at: http://digitalknowledge.babson. edu/fer/vol30/iss13/6.
Downloads
Published
2014-08-29
