Abstract
We examine the influence of succession in small and medium-sized family businesses by focusing on investment decisions, credit financing, and business performance. Using data on German SMEs, we find that the succession event affects investment behavior negatively before but positively after the transfer takes place when compared to firms without any succession intentions. With respect to performance, we show that firms’ growth rates increase after succession has taken place. Although hypothesized, we find no empirical evidence to suggest that banks tend to reject successors more often than they reject other business owners when deciding to extend credit to firms for investment purposes.
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Notes
The sample size for those firms with a recorded succession event between 2002 and 2006 in the pre-succession phase was n = 14 (Table 3) and n = 12 (Table 4). The sample size in the post succession phase for these firms was n = 60 and n = 45 (Table 3, model ts + 1 and ts + 2) as well as n = 54 and n = 41 (Table 4, model ts + 1 and ts + 2).
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Werner, A., Schell, S. & Haunschild, L. How does a succession influence investment decisions, credit financing and business performance in small and medium-sized family firms?. Int Entrep Manag J 17, 423–446 (2021). https://doi.org/10.1007/s11365-019-00613-5
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DOI: https://doi.org/10.1007/s11365-019-00613-5