Strategic exits in family firms: understanding mechanisms and implications

Abstract

Purpose Despite the recognized importance of exit in family firms, our broad understanding of the underlying mechanisms shaping the family firm’s exit, family-specific strategies underlying different modes of exit and exit outcomes is still limited. While scholars acknowledge that long-lived family businesses can successfully pursue business exit while pursuing business continuity goals, the distinctive nature of family-owned firms presents unique challenges, where emotional and socio-emotional goals often precede purely economic objectives. Sparse attention has been given to the exit strategies in the family business context. Our understanding of the underlying mechanisms shaping the family firm’s exit, mode of exit employed and outcomes is still limited. Design/methodology/approach Given the lack of reviews summarizing family firms’ exit, we conduct a systematic literature review to comprehensively synthesize existing knowledge on entrepreneurial exits by family firms and to guide future research directions. Findings The thematic analysis revealed three themes: a. exit as a strategic choice, b. uniqueness of family firm’s business exit and c. exit outcomes. Originality/value By gaining insights into exit strategies in family firms, we intend to improve our comprehension of the role of family and family firms by providing crucial insights into the genesis of long-lived family firms. We trace out avenues for future research, including the intricacies of varied exit strategies, repercussions following an exit and exploration of the linkage between exit and subsequent performance.