Waves of Professionalization Before, During and After Management Buyouts and Buy-ins of Private Family Firms: ERC Research Paper No.37

Carole Howorth, Mike Wright, Paul Westhead, Deborah Allcock

Research output: Book/ReportOther report

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.
LanguageEnglish
PublisherEnterprise Research Centre
Number of pages33
Volume37
Publication statusPublished - Nov 2015

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Management buyouts
Professionalization
Family firms
Buy-out
Agency costs
Control mechanism
Buy-outs
Organizational form
Firm ownership
Stewardship
Development stage
Divergence

Cite this

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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.",
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Waves of Professionalization Before, During and After Management Buyouts and Buy-ins of Private Family Firms : ERC Research Paper No.37. / Howorth, Carole; Wright, Mike; Westhead, Paul; Allcock, Deborah.

Enterprise Research Centre, 2015. 33 p.

Research output: Book/ReportOther report

TY - BOOK

T1 - Waves of Professionalization Before, During and After Management Buyouts and Buy-ins of Private Family Firms

T2 - ERC Research Paper No.37

AU - Howorth, Carole

AU - Wright, Mike

AU - Westhead, Paul

AU - Allcock, Deborah

PY - 2015/11

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AB - 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.

KW - family firms

KW - professionalization

KW - management buyout

KW - stewardship

KW - agency

UR - https://www.enterpriseresearch.ac.uk/our-work/publications/

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