It is well known and also supported by reviews of literature that empirical work on gender and CEO successions in family firms is still very rare. New research from the ifm family business team sheds light on this uncharted territory and reveals several interesting findings.
Building on a unique data set on CEO successions, the research article "Gender Preferences in CEO Successions in Family Firms: Family Characteristics and Human Capital of the Successor" investigates labor market constraints in CEO succession contests in family firms with concentrated ownership. The article finds that a preference for male family heirs limits labor market selectivity. Furthermore, the results show that only 23% of all single family successors in the sample are females indicating that males are still the preferred choice. Family successions are significantly more likely to occur when a son is among the predecessor’s children. Under specific family structures, such as when both genders are represented among the predecessors’ children, the number of female successors even decreases to 19% of the family successions with one successor. Sons among the children increase the likelihood of CEO succession contest constraints. Further, it is observed that the selected female family successors seem to be equipped with higher values of human capital as compared to the selected male family successors. The results of the forthcoming research article indicate that male family successors are not chosen because of higher human capital levels, but due to the contest rulers’ gender preferences in favor of male family heirs which adversely affect the selectivity of CEO succession contests.
From these findings several implications for practice can be derrived. First of all, it is important to note that the predecessor’s preferences play a crucial role in determining CEO succession contest rules, the attributes of the successor, and finally subsequent firm performance. As a consequence, it seems central to sensitize the predecessor regarding this aspect and to increase the predecessor’s self-awareness of the influence of his or her preferences: The strongest education, experience and willingness to take the lead may not always be found among first-born sons. Indeed, the strongest successor may be a daughter. The findings highlight the importance for the predecessor or the reigning family to notice, value, and fairly judge the management abilities of all potential successors. It might be helpful to employ objective successor evaluation criteria and to reflect upon one’s considerations in the light of advice from less preference-oriented third parties when considering potential CEO successors: Considering daughters as successors doubles the pool of potential family successors, clearly increasing the chances for a successful transition to the next generation.
But one the other side these results are also encouraging: With the rest of the German republic still debating over female board quotas, Germany's family firms silently make solid facts: One quarter of their inside family CEO successors are female leaders. Put differently, family firms may indeed be fostering a change in the managerial world towards gender equality and a leadership selection process based on ability.
The full article including detailed results is accepted for publication and will be forthcoming in the Journal of Family Business Strategy.
The Journal of Family Business Strategy publishes research that contributes new knowledge and understanding to the field of family business. The Journal is international in scope and welcomes submission that address all aspects of how family influences business and business influences family. Topics include, but are not limited to, the following:
• Reasons for family business performance
• Impact of family and business on strategy and performance
• Branding strategies (when to be family and when not)
• Long term strategies, growth vs. survival strategy
• Processes and outcomes of corporate entrepreneurship
• Role of family on new venture strategies
• Impact of family and ownership on strategic processes
• Efficacy of strategic plan vs. strategic planning process
• The role of financial and non-financial goals in strategy and resource allocation
• Impact of family on network relations and consequent impact on centrality and performance
• Corporate governance; role of boards of directors in family business, beyond board interlocks, and the role of non board relations,
• The role of top management teams, and executive compensation, professional non-family management
• Development of family groups in developing economies
• Strategy- as- practice, and strategizing activities in family businesses