Company metamorphosis: professionalization waves, family firms and management buyouts

Carole Howorth, Mike Wright, Paul Westhead, Deborah Allcock

Research output: Contribution to journalArticle

12 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)803-817
Number of pages15
JournalSmall Business Economics
Volume47
Issue number3
Early online date21 Jul 2016
DOIs
Publication statusPublished - 1 Oct 2016

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