‘I want this firm to be in good hands’: Emotional pricing of resigning entrepreneurs

Abstract

Given the importance of non-economic considerations throughout the entrepreneurial life cycle, I aim to investigate the drivers of owner-managers' 'emotional pricing' when they wish to sell their firms to successors. Emotional pricing thereby denotes those elements of the ownermanagers' price expectations that cannot be traced to economic considerations. Building on arguments from behavioral finance, I hypothesize that 'emotional pricing', which in this study reflects owner-managers' willingness to sell the firm at a discount, is driven by the reluctance to lose access to information about the firm and to lose influence on the firm, and by an aversion to putting the firm's future at risk. In particular, I argue that a long-term relationship between an owner-manager and a firm, a familiar relationship between an owner-manager and a successor, and situational contingencies -especially unsatisfactory firm performance -increase the owner-manager's emotional-pricing component. I test the hypotheses using a sample of 1354 owner-managers of Swiss small and medium-sized enterprises (SMEs), who provided their views on their exit intentions. I subsequently compare those results to 455 actual ownership transfers involving Swiss SMEs.

If we can't have it, then no one should: Shutting Down Versus Selling in Family Business Portfolios

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Enviropreneurial marketing in greening corporate activities

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When the Former CEO Stays on Board: The Role of the Predecessor’s Board Retention for Product Innovation in Family Firms

“…While in large, publicly owned firms, the former CEO might not be considered a stakeholder any more after he or she left the firm, this is different for smaller, privately owned firms and in particular for family firms. Due to their typically long tenures; their vigorous relationships to employees, customers, and suppliers; as well as their strong emotional attachment to the firm (Kammerlander, ), prior CEOs are often granted a specific status that makes their opinion count even in the case of lacking official power. To improve our understanding of the predecessor’s influence on product innovation postsuccession, we thus rely on stakeholder salience theory, which posits that the extent to which stakeholders are able to influence the decision‐making processes and outcomes of firms depends on their salience, which is based on three attributes: power, legitimacy, and urgency as perceived by the decision‐maker (Mitchell et al, , ).…”