Company metamorphosis: professionalization waves, family firms and management buyouts

Carole Howorth (), Mike Wright, Paul Westhead () and Deborah Allcock ()
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Carole Howorth: University of Bradford School of Management
Paul Westhead: Durham University
Deborah Allcock: University of Huddersfield

Small Business Economics, 2016, vol. 47, issue 3, No 14, 803-817

Abstract: Abstract We explore the process of professionalization pre- and post-buyout (MBO) or buyin (MBI) of former private family firms using longitudinal evidence from six UK family firms undergoing an MBO/I in 1998. Professionalization behaviour was monitored up to 2014. Previous studies have conceptualized professionalization as a threshold to be attained. We demonstrate that professionalization is a complex process occurring in waves, triggered by changes in firm ownership and management. Waves of professionalization converge during the MBO/I process. Buyouts provide a funnelling mechanism enabling diverse control systems to be standardized. Post-MBO/I, divergence in the professionalization process reoccurs contingent on firm-specific contexts. Professionalization focuses on operations when stewardship relationships predominate, but on agency control mechanisms when there is increased potential for agency costs. Buyout organizational form is an important transitory phase facilitating the professionalization process. Professionalization is not a once-for-all development stage.

Keywords: Family firms; Professionalization; Management buyout; Stewardship; Agency; D21; G32; G34; M10 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s11187-016-9761-6

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