Family Business Review

Not All Created Equal: Examining the Impact of Birth Order and Role Identity Among Descendant CEO Sons on Family Firm Performance

The Practitioner(Authors: Mark T. Schenkel, Sean Sehyun Yoo, and Jaemin Kim)

Research Applied précis prepared by Judy Green, Family Firm Institute

The authors of “Not All Created Equal” present a thoughtful and well-researched paper on the topic of birth order and role identity. Interestingly enough, their own section on “Limitations” highlights why this paper may have narrow applicability to practitioners dealing with clients outside of Korea while at the same time raising broad theoretical questions for family enterprise research on birth order, gender and primogeniture.

Using a sample of all Korea Exchange-listed, non-financial firms for which family data is available, the analysis is conducted on 1,776 firm-year observations from 1999-2002. Some of the more interesting findings of this study are as follows:

  • Founders, first son (FS) owners, and non-first son (NFS) owners appoint themselves CEO in 72%, 67% and 51% of the cases, respectively.
  • The prevalence of non-family CEOs is greater in NFS owner firms.
  • The prevalence of external influences in control and monitoring structures is higher for NFS controlled firms, than in founder or FS controlled firms.
  • NFS descendants are associated with higher family firm performance, perhaps because they are more inclined toward non-familial meritocracy.

Here are some thoughts for your consideration on the limitations of the paper as identified by the authors:

  1. Since the results are based on data solely from Korea, it is possible that country-level characteristics have influenced the results.
  1. The sample contains no women, examining only “descendant CEO sons.” In fact, out of the 444 separate firms that were in the sample, only one firm had two daughters as descendant family members. This firm was excluded from the sample.
  1. The theoretical models for succession theory are open to criticism since they do not sufficiently address cross-cultural studies and/or the issue that succession theory may be completely culturally bound.
  1. Unspoken but possibly the proverbial elephant on the table is the possibility that the practice of primogeniture may not actually be declining in family enterprises worldwide.

On the other hand, here are some thoughts on the broader questions raised by this paper:

  • How applicable is birth order as a concept for understanding success in the family enterprise transition process? It might work well in understanding certain behaviors but is it relevant or applicable to the authors’ “enduring question: Why do some family firms outperform others? “
  • Does research on one gender (FS in this instance) fit the modern world when gender in many countries and some sciences is now considered fluid, e.g. could first born theory apply but is gender obsolete as a concept?
  • Are researchers in the family enterprise field ducking the question of primogeniture globally? If primogeniture is still the yardstick used by more than 50% of the world’s economies, what are the implications for both research and practice? What are the distinctions between emerging and established economies? What does primogeniture mean in an era of surrogates and frozen embryos and sperm?

Obviously there is more that can be discussed here on a philosophical level and this paper gives practitioners, family enterprise owners and researchers alike, much to think about and ponder. How will 20th century behavioral and health science models need to be reexamined given the changing demographic models of the 21st century?

About the contributor

Judy Green, PhD, is the president of the Family Firm Institute. She is the recipient of the 2008 Barbara Hollander Award and the 2016 International Award. Judy can be reached at judy@ffi.org.

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