Family businesses can be a springboard for later-born siblings
Birth order is linked to different career paths in family businesses, new Swedish research suggests. Later-born siblings are more likely to start their careers in the family firm, but also more likely to leave it and pursue opportunities elsewhere.
Who joins the family business, and who eventually takes charge? New research based on 205,247 children from Swedish business-owning families finds that birth order is linked to distinctly different career paths.
Later-born siblings are more likely to join their parents’ company as their initial career choice. But once inside, the pattern reverses: they are less likely than earlier-born siblings to reach managerial positions and more likely to leave the business.
The study uses Swedish register data from 1993 to 2017, allowing the researchers to follow careers over time – from entering the labor market to joining, advancing within, and leaving the family firm.
“The interesting thing is that younger and older siblings seem to use the family business in different ways. For younger siblings, it can provide an important first step into working life, rather than necessarily becoming a lifelong career,” says Mohamed Genedy, Assistant Professor at the House of Innovation at the Stockholm School of Economics.
Why later-born siblings enter the family firm
The researchers find evidence that some differences emerge before working life begins.
Later-born children tend to have lower school grades than their earlier-born siblings. The study estimates that differences in grades account for around 20 percent of the relationship between birth order and joining the family business. Later-born siblings are also less likely to start their own business as an initial career choice.
Together, the findings suggest that later-born siblings may face different options when they first enter the labor market. The findings also suggest that the family business can provide a relatively accessible route into working life.
But what starts as a safe harbor may also become a springboard.
Later-born siblings whose early careers included work in the family firm went on to earn around 5 percent more in subsequent outside employment than comparable later-born siblings whose early careers did not. The pattern is consistent with family-firm experience helping them build skills or credibility that may improve their position in the wider labor market.
As opportunities outside the family firm improve, later-born siblings may therefore have more reason to move on.
Earlier-born siblings more likely to take charge
Earlier-born siblings follow a different path. They are less likely to choose the family company as their initial career choice, but when they do join, they are more likely to reach managerial positions and less likely to leave.
The researchers link this pattern to previous research suggesting that earlier-born siblings often receive more parental attention and supervision while growing up and may consequently develop a stronger sense of responsibility and obligation. The study cannot directly measure these motivations, however, so birth order should not be interpreted as determining an individual child’s career.
“Getting a job in the family business is one thing; being given the opportunity to grow into a position of responsibility is another. Family-business owners should consider whether expectations and opportunities differ between their children,” says Genedy.
For family-business owners, the findings have a practical implication: giving children access to the company is not necessarily the same as giving them equal opportunities to develop within it.
The findings suggest that family-business owners may benefit from considering how responsibility, support, and opportunities are distributed among siblings.
The study focuses on Sweden, and the researchers note that family and business cultures differ between countries. Further research is needed to establish whether the same patterns appear elsewhere.
About the study
The study uses Swedish population-register data covering 205,247 children from business-owning families and more than one million child-year observations between 1993 and 2017.
Read the full study: First In, First Out? Birth Order and Next-Generation Engagement in Family Firms
For more information, please contact:
Mohamed Genedy
Assistant Professor, House of Innovation
Stockholm School of Economics
Email: Mohamed.Genedy@hhs.se
