Do External Successors Contribute to SMEs Financial Performance?

Abstract

In developed countries, the aging of the population is increasingly significant and, in most cases, SME owners need to pass the baton to retire. Literature in entrepreneurship argues that SMEs are often transferred to external successors because they make changes in the firms’ strategies by implementing fresh initiatives. However, scholars fall short into explaining what are these initiatives, and what are the consequences in terms of financial performance. In this research, we intend to fill this gap by explaining how external successor personal traits (such as creativity) and cognitive abilities (such as entrepreneurial alertness) contribute reaching superior financial performance. Our findings underline that the relationship between creativity and financial performance is sequentially mediated by the three dimensions of entrepreneurial alertness (i.e., information scanning, information association, and opportunity evaluation). These results provide new insights by underlining that creative personalities and inclination towards new business opportunities contribute regenerating the transferred SME by improving financial performance.