Inter-Generational Socio-Emotional Wealth and Succession In Family Firms During Adversity

Abstract

Despite research underscoring socio-emotional wealth as a core consideration in decision making among family firms, results on whether such considerations affect leadership succession during periods of adversity such as crises remained mixed. Our qualitative interviews of 20 family firms during the COVID-19 pandemic reveal that such mixed findings can be attributed to the insufficient attention paid to the heterogeneity of SEW priorities and concerns among family members within the firm. Because of the gap in SEW priorities, leadership succession can be challenging. We find that whereas the older generation of family members have implicit plans for succession, the young-er generation of family managers and employees engage in strategic communications to gain the trust of the older generation. Moreover, that the adversity of the COVID-19 pandemic could either facilitate the alignment or exacerbation of the differences of SEW priorities between the older and younger generation. Our grounded model presents a more nuanced understanding of how SEW priorities affect succession planning in family firms during times of adversity.