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Heart and Soul: Transferring ‘Socio-emotional Wealth’ (SEW) in Family Business Succession

Author

Listed:
  • Csaba Makó
  • Péter Csizmadia
  • Balázs Heidrich

Abstract

The importance of the family business (FB) is not only stable but it is also improving its position in the global economy and playing a key role in the European economy. They represent 60 per cent of the employment and more than 60 million jobs in the private sector. But they face many internal challenges, of which the importance of ‘company succession’ is growing together with the need for technology renewal and attracting the right skills/talents ( PwC, 2014 ). This article focuses on the transfer of socio-emotional wealth (SEW) as a key intangible asset during intergenerational changes in the FB ( Debicki, Kellermanns, Chrisman, Pearson, & Spencer, 2016 ; Gómez-Mehija, Takács Haynes, Núnez-Nickel, Jackobson, & Moyano-Fuentes, 2007 ; Martinez-Romero & Rojo-Ramírez, 2016). Using empirical experiences based on multi-site company case studies in three countries (Hungary, Poland and the UK), the analysis presents the transfer of the following key components of the SEW to the next generation: a trust-based social-system, generic human values (namely, openness, mutual respect, correctness, reliability and responsibility) and ‘practice based–embedded collective knowledge’. We find that a key lesson is that transferring physical assets in the succession process seems to be less important than the transfer of the intangible ones embedded in the company’s culture because of the complex, informal and dynamic nature of the transferring mechanisms and of the role they play in sustaining entrepreneurial willingness and economic success over generations.

Suggested Citation

  • Csaba Makó & Péter Csizmadia & Balázs Heidrich, 2018. "Heart and Soul: Transferring ‘Socio-emotional Wealth’ (SEW) in Family Business Succession," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 4(1), pages 53-67, January.
    • Handle: RePEc:sae:jouent:v:4:y:2018:i:1:p:53-67
    DOI: 10.1177/2393957517749708
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    References listed on IDEAS

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    1. Thomas M. Zellweger & Robert S. Nason & Mattias Nordqvist & Candida G. Brush, 2013. "Why Do Family Firms Strive for Nonfinancial Goals? An Organizational Identity Perspective," Entrepreneurship Theory and Practice, , vol. 37(2), pages 229-248, March.
    2. Debicki, Bart J. & Kellermanns, Franz W. & Chrisman, James J. & Pearson, Allison W. & Spencer, Barbara A., 2016. "Development of a socioemotional wealth importance (SEWi) scale for family firm research," Journal of Family Business Strategy, Elsevier, vol. 7(1), pages 47-57.
    3. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
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