Inheriting the legacy but not the business: When and where do family nonsuccessors become entrepreneurial?

ABSTRACT

Entrepreneurship declines precipitously across generations in family firms, except in families that convey an entrepreneurial legacy to successors. However, because an entrepreneurial legacy is imprinted on all children, its impact should extend beyond successors. Inductive analysis of data from 26 nonsuccessor adult children from 13 multigenerational German wineries reveals that whether and where—at the firm, within the family’s portfolio of firms, or elsewhere—such adult children pursue entrepreneurship depends, in addition to having an entrepreneurial legacy, on family cohesiveness and flexibility. Implications are that whereas entrepreneurial legacies affect all children, whether and where children leverage their legacy depends on the business family behind the family firm.

KEYWORDS:

• Family business entrepreneurship
• entrepreneurial legacy
• business families
• family portfolios

Acknowledgments

We acknowledge the assistance of Andreas Roehm and Katharina Hedtke-Heinrichs in gathering and organizing some of these data, and we thank Bob Gephart and Tomaso Minola for their insights concerning our method. We thank Hyunju Choi and Amlan Datta for their help with earlier versions of the manuscript.

Notes

¹ We use the term entrepreneurship broadly to include new venture creation and all of the entrepreneurial behaviors first listed by Schumpeter (1934): creating new products and services, entering new markets, adopting innovative processes, developing new raw materials, and implementing new ways of organizing.

² As is common in qualitative research, comments in interviews conducted for one purpose sparked new research questions (Alvesson and Kärreman, 2007), in this case about nonsuccessors. Accordingly, as described in Methods, we (a) began with data from Jaskiewicz et al. (2015), (b) removed data pertaining to their focus (designated successors), and (c) added interviews focused on nonsuccessors.

³ Somewhat ironically, the use of the term exaptation in business is itself an exaptation. The term is “fit for” its role in business but “not designed for it” (Gould & Vrba, 1982, p. 6).

⁴ We only removed the parts of interviews in which designated successors and incumbents focused on the designated successors’ entrepreneurial choices. We kept text from these interviews dealing with the history of the firm, its current business activities, or general comments about the family.

⁵ A review of the firms not included in this study suggests that families with a high level of conflict were both unable to share an entrepreneurial legacy and had fewer children, which explains why a disproportionate number of families without an entrepreneurial legacy were excluded from this study.

⁶ The flexibility these families offer extends to designated successors. One of the two has a successor, but succession is still unclear in the other case.