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Company metamorphosis: professionalization waves, family firms and management buyouts

Author

Listed:
  • Carole Howorth

    (University of Bradford School of Management)

  • Mike Wright

    (Imperial College Business School
    University of Ghent)

  • Paul Westhead

    (Durham University
    Nord University)

  • Deborah Allcock

    (University of Huddersfield)

Abstract

We explore the process of professionalization pre- and post-buyout (MBO) or buyin (MBI) of former private family firms using longitudinal evidence from six UK family firms undergoing an MBO/I in 1998. Professionalization behaviour was monitored up to 2014. Previous studies have conceptualized professionalization as a threshold to be attained. We demonstrate that professionalization is a complex process occurring in waves, triggered by changes in firm ownership and management. Waves of professionalization converge during the MBO/I process. Buyouts provide a funnelling mechanism enabling diverse control systems to be standardized. Post-MBO/I, divergence in the professionalization process reoccurs contingent on firm-specific contexts. Professionalization focuses on operations when stewardship relationships predominate, but on agency control mechanisms when there is increased potential for agency costs. Buyout organizational form is an important transitory phase facilitating the professionalization process. Professionalization is not a once-for-all development stage.

Suggested Citation

  • Carole Howorth & Mike Wright & Paul Westhead & Deborah Allcock, 2016. "Company metamorphosis: professionalization waves, family firms and management buyouts," Small Business Economics, Springer, vol. 47(3), pages 803-817, October.
    • Handle: RePEc:kap:sbusec:v:47:y:2016:i:3:d:10.1007_s11187-016-9761-6
    DOI: 10.1007/s11187-016-9761-6
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    References listed on IDEAS

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    Cited by:

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    2. James J. Chrisman & Jess H. Chua & Alfredo Massis & Tommaso Minola & Silvio Vismara, 2016. "Management processes and strategy execution in family firms: from “what” to “how”," Small Business Economics, Springer, vol. 47(3), pages 719-734, October.
    3. Hamilton, Eleanor & Discua Cruz, Allan & Jack, Sarah, 2017. "Re-framing the status of narrative in family business research: Towards an understanding of families in business," Journal of Family Business Strategy, Elsevier, vol. 8(1), pages 3-12.
    4. Marco Pini & Paolo Quirino, 2016. "Piccole imprese e family business: evoluzione, divari territoriali, governance e competitivit?," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2016(2), pages 71-100.
    5. Łukasz Sułkowski & Katarzyna Kolasińska-Morawska & Robert Seliga & Piotr Buła & Paweł Morawski, 2021. "Sustainability Culture of Polish Universities in Professionalization of Management," Sustainability, MDPI, vol. 13(24), pages 1-22, December.
    6. Gaia Bassani & Cristiana Cattaneo & Francesca Maria Cesaroni & Annalisa Sentuti, 2018. "Sistemi di gestione e controllo e professionalizzazione delle imprese familiari. Uno strumento di accreditamento intraparentale?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2018(2 Suppl.), pages 15-35.
    7. Nguyen, Pascal & Rahman, Nahid & Zhao, Ruoyun, 2013. "Ownership structure and divestiture decisions: Evidence from Australian firms," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 170-181.
    8. Lukasz SULKOWSKI & Robert SELIGA & Piotr BULA & Katarzyna KOLASINSKA-MORAWSKA, 2020. "Professionalization Of University Management In Poland," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2020(35), pages 167-183, December.
    9. Burton, Nicholas & Vu, Mai Chi & Cruz, Allan Discua, 2022. "Our social legacy will go on: Understanding outcomes of family SME succession through engaged Buddhism," Journal of Business Research, Elsevier, vol. 143(C), pages 105-118.
    10. Schickinger, Antonia & Leitterstorf, Max P. & Kammerlander, Nadine, 2018. "Private equity and family firms: A systematic review and categorization of the field," Journal of Family Business Strategy, Elsevier, vol. 9(4), pages 268-292.
    11. Martin R. W. Hiebl & Barbara Mayrleitner, 2019. "Professionalization of management accounting in family firms: the impact of family members," Review of Managerial Science, Springer, vol. 13(5), pages 1037-1068, November.

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