A Social Exchange Perspective to Successor Withdrawal from Intergenerational Succession

Abstract

We investigate why eligible successors of family businesses decide to withdraw from the succession process. Using an inductive exploratory multi-case study design, we investigate six Australian food manufacturers currently undergoing the successor training stage. Interviews, observations and archival data reveal that successors’ decision to remain or withdraw from the succession is driven by the combination of two dimensions: pursued outcome and reciprocity in the relationship with the incumbent. Successors afflicted by economic concerns accompanied by incumbent-successor negative exchanges are prone to withdrawing from the succession process despite their eligibility. Positive exchanges based on trust and commitment appear to encourage successor retention.