It takes two to Tango - Conceptualizing the “succession dance” in family firms through social exchange theory

Abstract

We draw on Social Exchange Theory (SET) and show that a “succession dance”—a phase of joint successor and predecessor activity inside the firm—occurs due to prior social exchanges between successor and predecessor. It can be guided by altruism, friendship, or partnership (i.e., a generalized exchange relationship) as well as a professional need for informational and material social exchanges at the firm-level (i.e., a restricted exchange relationship). By utilizing mixed methods encompassing quantitative data on 522 CEO successions in family firms and qualitative data from 34 in-depth interviews, we find support for these coherences. We also discuss how altruistic versus transactional motives for predecessors to remain active inform the burgeoning debate on positive versus negative nature repercussions of prolonged predecessor activity.