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CEO succession in family firms: Stewardship perspective in the pre-succession context

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  • Chen, Yi-Min
  • Liu, Hsin-Hsien
  • Yang, Yung-Kai
  • Chen, Wei-Hua

Abstract

CEO succession is a key theoretical and empirical issue in the fields of organizations and strategic management. Previous studies investigating the influences and effects of CEO succession mostly focus on post-succession contexts. This study focuses on the pre-succession context and offers a comprehensive theoretical framework based on agency theory and stewardship theory. Specifically, this study empirically tests the influence of several pre-succession factors on the founding CEO's decision to either sell the family firm or hire a professional manager as a successor. The results show that executive compensation schemes and industry dynamism separately influence the degree of stewardship through perceived pay premium and industrial growth potential. The findings help explain CEO succession decision-making in family firms, and provide empirical evidence for the incentive mechanisms between executive compensation schemes, industry dynamism, and professional managers' stewardship behaviors. This study broadens agency theory, stewardship theory, and upper echelons theory's explanation of CEO succession decision-making in family firms.

Suggested Citation

  • Chen, Yi-Min & Liu, Hsin-Hsien & Yang, Yung-Kai & Chen, Wei-Hua, 2016. "CEO succession in family firms: Stewardship perspective in the pre-succession context," Journal of Business Research, Elsevier, vol. 69(11), pages 5111-5116.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:11:p:5111-5116
    DOI: 10.1016/j.jbusres.2016.04.089
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    4. Cunha, Miguel Pina e & Rego, Arménio & Clegg, Stewart & Jarvis, Walter P., 2021. "Stewardship as process: A paradox perspective," European Management Journal, Elsevier, vol. 39(2), pages 247-259.
    5. Lude, Maximilian & Prügl, Reinhard, 2018. "Why the family business brand matters: Brand authenticity and the family firm trust inference," Journal of Business Research, Elsevier, vol. 89(C), pages 121-134.
    6. Peng Xu & Guiyu Bai, 2019. "Board Governance, Sustainable Innovation Capability and Corporate Expansion: Empirical Data from Private Listed Companies in China," Sustainability, MDPI, vol. 11(13), pages 1-17, June.
    7. Liu, Fangyi, 2021. "Family business succession roadblock model based on fuzzy linguistic preference relations," The North American Journal of Economics and Finance, Elsevier, vol. 55(C).
    8. Alam, Ahmed W. & Farjana, Ashupta & Houston, Reza, 2024. "Geopolitical risk, CEO power, and corporate lobbying: Do powerful CEOs lobby more?," Finance Research Letters, Elsevier, vol. 62(PA).
    9. Mahto, Raj V. & Vora, Gautam & McDowell, William C. & Khanin, Dmitry, 2020. "Family member commitment, the opportunity costs of staying, and turnover intentions," Journal of Business Research, Elsevier, vol. 108(C), pages 9-19.
    10. Jara, Mauricio & López-Iturriaga, Félix J. & Torres, Juan Pablo, 2021. "Firm value and pyramidal structures: New evidence for family firms," Journal of Business Research, Elsevier, vol. 127(C), pages 399-412.
    11. Azizi, Mohammad & Salmani Bidgoli, Masoud & Maley, Jane F. & Dabić, Marina, 2022. "A stewardship perspective in family firms: A new perspective for altruism and social capital," Journal of Business Research, Elsevier, vol. 144(C), pages 764-775.
    12. Norazlin Ahmad & Irene Wei Kiong Ting & Imen Tebourbi & Qian Long Kweh, 2022. "Non-linearity between family control and firm financial sustainability: moderating effects of CEO tenure and education," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 719-741, December.
    13. Waldkirch, Matthias, 2020. "Non-family CEOs in family firms: Spotting gaps and challenging assumptions for a future research agenda," Journal of Family Business Strategy, Elsevier, vol. 11(1).

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