Family Buyouts - Influence of Corporate Governance on Strategic Renewal

It is the goal of many entrepreneurs to keep the business within the hands of their family. From the standpoint of firm survival, passing leadership and ownership from generation to generation represents a degree of persistence. Herein lies a paradox. The longevity of family firms is imperiled by the process that is necessary for their continued existence: succession. On one hand, family firms can experience stability as a result of internal succession. On the other hand, the extrapolation of the existing strategy can threaten the firm. It is this phenomenon - the way to the future for family businesses - that the present dissertation seeks to understand. The focus hereby lies on buyouts, the popular succession option whereby the incumbent management or external managers buy the company. The thesis examines the implications of leadership- and ownership fluctuations on strategic change and growth. 118 buyout-entrepreneurs evaluate changes in those variables from a retrospective perspective. The method of structural equation modeling is used to examine the sample. It is found that the composition and power of the entrepreneurial teams as well as the diminishing influence of the family relate to strategic change. Moreover, the results show that strategic change leads to growth. These results have important implications for succession research and entrepreneurial practice.