Sins of the parents: how parenting style affects successors and key family firm outcomes after succession
The intent to transfer control to the next generation is a defining characteristic of family firms. Yet, most family-controlled firms fail to transfer control and, when they do, the next generation’s leadership often fails to meet expectations. The succession literature describes characteristics of key actors and relationships that shape effective successions, but it does not leverage sociology research and theory on the key aspect that makes family firms different – i.e., families. Consequently, current theory does not explain how parenting influences successors’ personality, emotional well-being, or behavior, nor does it explain how these factors affect employees and the firm’s future prospects. I, therefore, develop new theory and extend parental control theory from sociology to help explain how parents in family firms influence successors and the family firm. In particular, I predict that predecessor parenting styles, described by Baumrind (1971) and later modified by Maccoby and Martin (1983) (i.e., Authoritative, Authoritarian, Indulgent Permissive, and Negligent Permissive), affect successor’s psychological profile (i.e., well-being, impostor phenomenon, and entitlement), which then has consequences for the leadership style the successor adopts, employee behavioral responses to the successor, and the firm’s strategy. My theory helps explain why some family successors are more successful than others. In order to test my theory, I developed a parenting style scale using student responses (N=233) and working adult responses (N=260). I also conducted a series of mediation regression analyses using a sample of matched employee and successor survey responses (N=52 firms). Results suggest that Authoritative predecessor parenting leads to successor psychological well-being, and Indulgent Permissive predecessor parenting leads to successor entitlement. Additionally, I found that successor psychological well-being mediates the relationships between Authoritative predecessor parenting and successor transformational leadership, and employee affective commitment. Overall, I found that the best kind of parenting style (i.e., Authoritative) in family science literature has the most positive impact in family firms. Broadly speaking, my theory and findings have implications for future research in that they point to the importance of family dynamics in family firms. Research in family science shows that parenting affects the behavior of family members, and my study is among the first to show how this research might be leveraged to better explain key attributes and outcomes of family firms.