Towards a model of justice in ownership succession: An exploratory study of the intergenerational transfer of family business ownership

This exploratory study examines the intergenerational transfer of family business ownership in light of distributive justice concepts. It addresses three research questions: (a) How do families decide upon and enact ownership distribution plans for their family businesses? (b) How do younger generation family members form their perceptions of fairness? and (c) How do these perceptions influence the behavior of family members?; Interviews were conducted with 56 members of 9 business families, and a grounded theory approach was utilized to analyze the data. The primary goals were to identify significant variables, suggest relationships among variables and generate hypotheses for future research.; Four significant themes emerged concerning the development and enactment of ownership succession plans. First, family history has a strong influence on the process and outcomes of ownership transitions. Second, ownership succession is a sequential process that involves a series of decisions. Third, fairness is a major issue for parents as they develop their ownership distribution plans. Finally, the involvement of the younger generation in decision-making varies across families.; Four significant themes also arose regarding perceptions of fairness among the younger generation. First, perceptions of fairness evolve over time. Second, perceptions of fairness are based on a sense of entitlement. Third, perceptions of fairness are multi-dimensional, consisting of a subjective integration of multiple factors. Finally, involvement in the decision-making process increases perceptions of fairness among the younger generation.; Surprisingly, specific behavioral responses on the basis of perceived fairness did not emerge. Participants gave greater emphasis to the attitudinal dimension of justice. The results suggest that behavior unfolds in an iterative fashion, and the impact of fairness perceptions may take years to unfold.; Two conceptual models were created based on the results of this investigation. The first model describes the process of ownership transition planning. A second model describes the formation of perceived fairness among the younger generation.; Several hypotheses for future research on ownership succession and distributive justice are presented. The implications of this study for researchers, family business members and advisors are also provided.