It’s all about who you know: The role of social networks in intra-family succession in small and medium-sized firms

Abstract

Intra-family succession is a complex and challenging process in which the resources of the owning family are used, preserved, and potentially expanded. Social capital, as a result of investments in networking, is a valuable resource in this context, and its successful retention and development during intra-family succession could be decisive for the continuance of small and medium-sized family business. Therefore, the transfer of the social network from the predecessor to the successor during succession in the context of a family business is crucial. Based on 11 case studies of German small and medium-sized family businesses, this article offers the first empirical insights on social network transfer on an individual level. The social network relevant for the family business and bounded on predecessor and successor changes over the time span of succession and is closely connected with a role change of the involved actors. Moreover, the article identifies the different patterns related to the transfer of network contacts, for example influencing the length and structure of the succession process. By introducing the renewal-of-network-effect and the generation-gap-effect as well as developing an overarching model, we illustrate, that if a resource such as social capital is evaluated as crucial for the future success of the family business, it can help structure and shorten or extend the succession process and influence the behavior of the parties involved.