First mover advantage on family firm succession

Abstract

In spite of the proliferation of studies in various areas regarding the benefit of being first, the first mover advantage (FMA), in the context of family firms the work is (at best) scant. Adding to this, the impact that such firms have on the world economic stage it becomes both an interesting and a necessary research avenue. To study FMA in these firms, we will focus on one of the most critical stages in the lives of such firm: succession. As most of family firms do not outlive their founders, the passage of the executive power to the next generation is a crucial test that these firms face. It is not uncommon during this stage to see siblings rival to be nominated successor. This paper advances the succession game presented by Jayantilal et al. (2016), to study whether there is any advantage for the child who moves first in the succession race. The results indicate that indeed the first mover advantage exists, and that the emotional cost of conflict plays an important role in determining it.