Abstract
In spite of the proliferation of studies in various areas regarding the benefit of being first, the first mover advantage (FMA), in the context of family firms the work is (at best) scant. Adding to this, the impact that such firms have on the world economic stage it becomes both an interesting and a necessary research avenue. To study FMA in these firms, we will focus on one of the most critical stages in the lives of such firm: succession. As most of family firms do not outlive their founders, the passage of the executive power to the next generation is a crucial test that these firms face. It is not uncommon during this stage to see siblings rival to be nominated successor. This paper advances the succession game presented by Jayantilal et al. (2016), to study whether there is any advantage for the child who moves first in the succession race. The results indicate that indeed the first mover advantage exists, and that the emotional cost of conflict plays an important role in determining it.
Highlights
Firms account for more than 70% of global annual GDP and are responsible for generating 50 to 80 % employment worldwide (European Family Business, 2012)
Family firms are driven by both economic and noneconomic goals (Gómez-Mejía et al, 2001, 2007). Both financial values and emotional values contribute to the assessments and decision making in family firms, where the emotional values refers to the net benefits related to the family dimension
The relative importance which is attributed to the family or the business dimension, in the decision making process in family firms is dependent on many factors, but the cultural setting which envelopes the firm plays an essential role
Summary
Firms account for more than 70% of global annual GDP and are responsible for generating 50 to 80 % employment worldwide (European Family Business, 2012). Given the overlap of the business and the family dimension, are prone to be a fertile ground for conflict and tension This has triggered research on conflict in family firms and its impact on the firm’s growth and continuity little attention has been paid to the specific conflict resulting from sibling rivalry in the succession race. Mathews and Blumentritt (2015) resorted to a sequential-move tournament game to model family firm succession Their analysis identified the possibility of FMA yet their game, did not explicitly consider the emotional costs (related to the family dimension of the family firm) resulting from sibling competition. We advance their model to study whether or not there is any advantage for the child who moves first in the succession race
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