Socioemotional Wealth, Family Control, and the Choice of Business Exit

We’re pleased to welcome authors Francesco Chirico of Jönköping University and Tecnológico de Monterrey, Luis R. Gómez-Mejia of Arizona State University, Karin Hellerstedt of Jönköping University, Michael Withers of Texas A&M University, and Mattias Nordqvist of Jönköping University. They recently published an article in the Journal of Management entitled “To Merge, Sell, or Liquidate? Socioemotional Wealth, Family Control, and the Choice of Business Exit,” which is currently free to read for a limited time. Below, they briefly discuss the significance of this research.]

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Our study provides evidence that family firms exit less than nonfamily firms and tend to endure increased financial distress to avoid losses in the affect-related value embedded in the family firm. Furthermore, when forced to exit, family firms prefer to do so via mergers, liquidation and sale (in that order) while nonfamily firms prefer to exit via sale, liquidation and mergers (in that order). We argue that these different exit behaviors are attributed to family owners’ desire to maintain some of the family legacy (as in mergers) while avoiding losses of family identity (as in a sale). Especially in distressed situations, considering business exit as a way to free up resources for the strategic regeneration of a firm is fundamental. Business exit, for instance in terms of a merger, should be viewed as a way to identify and evaluate new opportunities for owners. Firms—especially family firms—need to balance socioemotional and economic perspectives; otherwise, even when the need for exit is recognized, it may not occur.

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This entry was posted in Management, Management Theory and tagged , , , by Cynthia Nalevanko, Senior Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Senior Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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