Chapter 6: The Role of Social and Human Capital in the Succession Process in Family Firms
This chapter investigates the succession process in family firms. The succession process produces several changes in the distribution of power and management structure in family firms (Handler, 1992). It also has significant effects on the family. The transition from one generation to the next is considered the most important phase in family business management (Ayers, 1990; Lane, 1989), and is very difficult to manage (Handler and Kram, 1988). This chapter shows how the successor’s human capital and social capital influence the succession model. Family firms are an organizational form that is widespread in the international economic landscape (Beckhard and Dyer, 1983; Ciambotti, 1991; Shanker and Astrachan, 1996) and help to define occupational levels, demand models, financial choices and levels of education in many countries (Heck and Stafford, 2001; Ward, 1987). Several entrepreneurial activities have been influenced by the transfer of family aspirations, principles, values and culture (Chrisman et al., 2003). Lack of a precise and commonly accepted definition of the family firm makes it difficult to determine their ratio in the total number of firms. Sexton and Van Aucken (1982) estimate that some 80 per cent of all the businesses in the USA are managed by families and contribute to 50 per cent of gross domestic product (GDP). Beckhard and Dyer (1983) argue that some 95 per cent of firms in the USA can be considered to be family owned and that family businesses account for some 80 per cent of the USA workforce. In 2003, Business Week (Weber et...
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