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Sons are favored in family firms – but daughters do better

Sons are much likelier than daughters to take over the family firm – despite the fact that businesses run by daughters outperform those run by sons. This according to new research from the Stockholm School of Economics and Jönköping International Business School.

The researchers looked at 8,000 family businesses from across Sweden and a variety of different sectors. The businesses were co-owned by the parents and had at least one son and one daughter. Out of the studied companies, 360 had a generational shift in family leadership. In only 18% of the cases, the companies appointed a daughter as CEO.

Not only are daughters less likely to be appointed CEO, but it also takes them longer. On average, daughters must wait four years longer than sons. This gender inequality between siblings in family firms doesn’t favor the bottom line. Firms run by daughters clearly outperform those run by sons.

“More research is needed to better understand exactly why firms run by daughters perform better. Some studies exist that suggest that women often have higher qualifications and more experience than men when they apply and are appointed to a CEO position. This could be one of the explanations”, says Professor Mattias Nordqvist who is the SEB Chair of Entrepreneurship and Family Business for the House of Innovation at the Stockholm School of Economics.

"Tradition and culture"

Interestingly, if the mother is the family firm CEO, daughters have at least an equal chance as their brothers to get a leadership position, and there is also no delay to their succession, the researchers find.

So why do family firms favor sons as heirs? And what do firms stand to gain by examining the gender gap between siblings?

“Most likely it has to do with tradition and culture, both family culture and organizational culture. Of course, it is very important that all firms examine the gender gap between men and women in the top management. In family firms, it is crucial because if only sons are considered as successors for the CEO position, not all competence and resources are taken into account. Naturally, this creates a serious limitation for the success, longevity, and performance of family firms”.

This study is a work in progress and will be presented at a leading management conference in August 2022.

House of Innovation Gender Inequality Entrepreneurship Equality Family economics Leadership Article Journal Paper Research