Modes of Business Entry and Exit in Family Firms: The Role of Resource Intangibility

Abstract

Are family firms’ business entry (internal development versus acquisition) and exit (dissolution versus sale) mode choices distinct from those of non-family firms, and what is the role played by intangible resources? Building on a comprehensive sample of privately-held Swedish firms, we find that family firms are more likely than non-family firms to enter a new business via internal development than acquisition, and more likely to exit from an existing business via dissolution than sale. Additionally, resource intangibility at the organizational level strengthens the differences in exit and entry modes between family and non-family firms such that compared to non-family firms, family firms are increasingly more likely to rely on the internal development and dissolution of business units as the availability of intangible resources increase. Contributions to existing literature on entry and exit modes and on family business’ strategic choices are shared in the concluding section.