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Should I sell part of my family firm? Exploring the drivers of a minority sale

Elias Kurta (WHU – Otto Beisheim School of Management, Vallendar, Germany)
Nadine H. Kammerlander (WHU – Otto Beisheim School of Management, Vallendar, Germany)
Christopher Khoury (WHU – Otto Beisheim School of Management, Vallendar, Germany)

Journal of Family Business Management

ISSN: 2043-6238

Article publication date: 16 December 2022

35

Abstract

Purpose

This study aims to extend the research in the field of external investments in family firms. It contributes to the literature by analyzing the drivers of the family firm owner-managers selling a minority stake to a strategic investor. This type of external investment might be of great interest to family firms because the family firm owner-managers can secure control over the firm and preserve socioemotional wealth while simultaneously generating additional financing and gaining strategic and managerial know-how. Likewise, minority investments in family firms might also be of high interest to strategic investors, thus enabling close collaborations (e.g. in R&D, purchasing and sales) with minor equity investments.

Design/methodology/approach

This study tests the hypotheses using a vignette study leveraging 327 observations from family firm owner-managers.

Findings

Based on the socioemotional wealth perspective, this study hypothesizes that the degree of family prominence, the degree of employee orientation and pure family management influence the willingness to sell. In addition, this study hypothesizes that the moderating effect of a below-average financial performance weakens the abovementioned direct effects. This study finds support for most hypotheses.

Originality/value

This study extends the research in the field of external investments in family firms. It contributes to the literature by analyzing the drivers of the family firm owner-managers selling a minority stake to a strategic investor.

Keywords

Acknowledgements

The authors are grateful for the constructive editorial and reviewer comments. Moreover, the authors thank the participants of the WHU family business doctoral seminar as well as the AOM 2022 and IFERA 2022 participants for the helpful input. The authors also thank Pöllath & Partners for the financial support to execute this study.

Citation

Kurta, E., Kammerlander, N.H. and Khoury, C. (2022), "Should I sell part of my family firm? Exploring the drivers of a minority sale", Journal of Family Business Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFBM-08-2022-0111

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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