No Heir apparent? Exploring the Worker Co-operative Model as a Solution to Family Business Continuity

Abstract

Family businesses, with no apparent heir, face the risk of discontinuity. While a number of family businesses rely heavily on non-family employees, the role of non-family employees in the continuity of family businesses is under-researched. The workers' co-operative model offers one way to address this gap as it represents a model whereby non-family employees gain a stake in ownership whilst the family remains involved. In practice, conversion to ensure continuity is actively promoted in a number of countries. In this paper, the authors explore the role of the workers' co-operative model as one possible solution to succession difficulties facing family firms. Based on the reported experiences in a number of countries, we identify the motivations behind conversion, the barriers faced and the benefits accruing. We find that, in theory, the worker co-operative model merits the attention of family business scholars as a means of securing continuity and survival of family business. We explore the factors that appear to aid or hinder successful conversions in practice and we make recommendations to policy-makers surrounding the supports required to encourage and facilitate successful conversion.

Embedded but not asleep: Entrepreneurship and family business research in the 21st century

“…Fourth, the growing proportion of never-married and childless adults might lead family business scholars to investigate the implications of switching from family groups to "institutional individuals" as the key to social life, with people making choices based on personal interests and tastes for both the family and the firm-level outcomes. When looking at the role of resources, this trend could inform research on family businesses that lack heirs (Liu et al, 2015;Murphy et al, 2017) and on the availability of human capital from within family networks (Aldrich et al, 1998;Danes et al, 2009;Dawson, 2012;Dyer Jr & Dyer, 2009;Sorenson & Bierman, 2009). For instance, we invite scholars to investigate the extent to which families can provide the necessary resources (financial, human and social) to ensure the survival and continuity of a business, given the increasing number of never-married and childless adults.…”

Survival advantage of worker buyouts over newly created worker-owned firms

“…The pre-conversion age effect might significantly increase the survival of only WBOs of sound firms because their conversion entails continuing with the same workforce and investment strategy. In this case, converting into WOFs is more a formal than a substantive change (Barbot-Grizzo, 2019;Murphy, 2017). Workers and managers are accompanied by the regional support agencies for several years to ensure the smoothest conversion possible (Charmettant and Renou, 2021).…”