Legitimation strategies in an emerging field: family firm succession consultancy in Germany

Finding a successor has become a severe challenge for family firms in Germany. As family firms are disproportionately concentrated in rural economies, succession has also become a considerable threat for peripheral regions and their labor markets. It therefore lies in the interest of regional stakeholders to help support family business continuity. One way to do this is by providing consulting services for family entrepreneurs, especially when searching for a family-external successor. Succession consultancy, however is still in its infancy. Applying the framework of the organizational field that centers on the concept of legitimacy, this paper examines the strategies consultants employ in order to get selected by family entrepreneurs in their succession process, as well as consultants’ strategies to match family firms with external successors. Based on expert interviews with succession consultants in the region of Upper Palatinate in Bavaria, we demonstrate the importance of geography and interpersonal linkages in establishing legitimacy in the early stages of field formation, when heterogeneous groups of actors offer their services without set rules or standards. Our content analysis sheds light on the variety of strategies based on trust, networked, and public reputation in order to gain legitimacy as consultants, depending on whether or not they can draw on existing relationships with family firms. We furthermore identify a discrepancy between these legitimation strategies and the actual ways that consultants use to match family firms with external successors. Here, regardless of their previous contact with family firms, geography plays a major role in constraining both consulting and succession: Family firms more readily accept local consultants, and the consultants also preferred to screen succession candidates through their regional networks due to the higher chances of successful succession when finding external successors from within the same region. Conceptually, our analysis contributes to institutional theory by carving out legitimacy-enhancing mechanisms in emerging organizational fields, and by demonstrating the crucial role of geography and interpersonal linkages for succession as well as field formation processes.