Family leadership succession and firm performance: The moderating effect of tacit idiosyncratic firm knowledge

• Published in: Knowledge and process management Vol. 26; no. 1; pp. 32 - 40
• Main Authors: Williams, Ralph I., Mullane, John
• Format: Journal Article
• Language: English
• Published: Chichester Wiley Periodicals Inc 01.01.2019
• Subjects: Family owned businesses; Leadership
• ISSN: 1092-4604; 1099-1441
• DOI: 10.1002/kpm.1594

The expression “clogs to clogs in three generations” illustrates the widely held perception that family business performance wanes with each generation of intrafamily leadership succession. Hence, family businesses would benefit from a better understanding of practices that help prepare potential heirs for leadership succession and, thus, improve postsuccession firm performance. Specifically, this paper proposes that the transfer of tacit idiosyncratic firm knowledge moderates the relationship between family leadership succession and firm performance. The resource‐based view of the firm and transaction cost economics is utilized to theoretically explain the nature of this relationship. Processes that potentially enhance the transfer of tacit idiosyncratic firm knowledge, particularly in family firms, are presented from extant literature.