Decision Making in Entrepreneurship
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Decision Making in Entrepreneurship

Selected Joint Papers of Dean A. Shepherd

Dean A. Shepherd

In this volume, Dean Shepherd focuses on the varying topics of entrepreneurship unified through conjoint analysis. Although the topic of entrepreneurial decision making is broad, in doing so, he reveals the mechanisms that come into play during the entrepreneurial decision-making process.
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Chapter 11: Structuring Family Business Succession: An Analysis of the Future Leader's Decision Making

Dean A. Shepherd and Andrew Zacharakis


This article examines the perception of potential family business leaders from a behavioral economics theory perspective. The findings suggest that high financial and behavioral sunk costs, as well as the requirement to 'earn' the right to lead the family business results in the future leader valuing the business more highly. Only financial sunk costs lowered the successors proclivity to take risky action after acquiring the business. Therefore founders should structure succession so that the future leader incurs both financial and behavioral sunk costs as well as hold the future leader to stringent performance requirements prior to the succession.

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