Organizational renewal in family firms

The authors investigate whether organizational renewal impacts on the performance of family firms and identify aspects of 'familiness' acting as facilitators or inhibitors of organizational renewal. A survey instrument captured data on relevant family-related characteristics, organizational renewal and firm performance from the CEOs of 140 family firms in Greece. Regression analysis was used to test hypotheses. Strong evidence was found that organizational renewal impacts positively on the profit growth of family firms. Where CEOs had a strong growth aspiration for the future and were firm founders, and where succession planning was taking place, renewal was more likely to be enacted. Efforts are focused on creating a business that will thrive in the future, and not on curating an organizational heirloom shaped and constrained by the past. Their strong future focus liberates these family firms from possible cross-generational path dependency, allowing the special resources of their family's business to act instead as a springboard for ongoing organizational renewal. Conversely, those family firms with a high level of family altruism indicated by extensive kin employment seem to be more likely to be destined for stagnation than stewardship, as they promote (past-focused) historical family sentiment and tradition. The dangers of cross-generational path dependency indeed seem pronounced in such past-focused firms.