---
title: "Family Firms: Succession and Socioemotional Wealth"
description: "Five lenses on family firms (agency, stewardship, resources, SEW, bifurcation bias) as five succession questions, with a worksheet and an invented case."
url: "https://staging.khoi.co.uk/en/blog/doanh-nghiep-gia-dinh-ke-thua"
lang: en-GB
author: "Lê Quốc Khôi"
date: 2026-11-03
updated: 2026-11-03
topics: ["Ethics & corporate governance"]
tags: ["Family business", "Succession planning", "Socioemotional wealth", "Corporate governance", "Bifurcation bias"]
---

# Family firms: socioemotional wealth and succession

## Key takeaways

- The library groups five lenses on family firms: agency, stewardship, resources, socioemotional wealth (SEW) and bifurcation bias. Faced with a succession choice, each lens raises a different first concern.
- Gómez-Mejía et al. (2007) studied 1,237 family-owned olive oil mills in Southern Spain over 54 years. The mills could join a cooperative (losing family control but lowering business risk) or stay independent (preserving SEW but greatly raising the hazard to performance) (Gómez-Mejía et al., 2007).
- Le Breton-Miller and Miller (2009) say agency and stewardship theory conflict directly, so predictions must fit the context (Le Breton-Miller and Miller, 2009). Verbeke and Kano (2012) argue that the prosperity and survival of family firms depend on the absence of a dysfunctional bifurcation bias (Verbeke and Kano, 2012).
- None of these abstracts treats succession as a topic. Turning the lenses into succession questions is my inference, and no lens supplies a decision rule.
- Firm Q in the example is hypothetical. Every figure about it is invented.

You are nearly 70, you own a paper-packaging factory, and three outcomes are open: your son, who heads sales, takes over; the production director, who has worked for you for 22 years and is not family, takes over; or you sell to a buyer outside. You ask: whom do we hand this to, and what do we lose by bringing in an outsider? [The five theoretical lenses on family firms](https://staging.khoi.co.uk/en/framework/family-firm-theories) will not answer for you. They tell you what to ask first. This post does not claim that family firms do better or worse than others, because nothing I read allows that claim.

## What does each of the five lenses ask when you pick a successor?

Each lens asks its own question, so one succession decision produces five different first concerns. "What the source says" below rests on the abstract of each paper. The "question for you" is mine.

> **Figure:** [Five theoretical lenses on family firms](https://staging.khoi.co.uk/en/framework/family-firm-theories) Five lenses on family firms as organised by the library (Gómez-Mejía et al., 2007; Verbeke and Kano, 2012; Chrisman et al., 2005; Le Breton-Miller and Miller, 2009; Penrose, 1959).

1. Agency. Le Breton-Miller and Miller (2009) summarise this view: families pursue their own utility, to the detriment of public shareholders (Le Breton-Miller and Miller, 2009). See also the [agency problem](https://staging.khoi.co.uk/en/glossary#agency-problem). Question for you: who can say no to the successor, and who protects shareholders outside the family?
2. Stewardship. The same paper describes the opposing view: family owners invest deeply in the enterprise, to the benefit of all (Le Breton-Miller and Miller, 2009). The library entry on [stewardship](https://staging.khoi.co.uk/en/glossary#stewardship) adds that tight monitoring may be unnecessary. Question for you: what has the candidate done, when nobody was checking, that shows care for the firm?
3. Resources. Chrisman et al. (2005) list agency theory and the resource-based view as the two leading perspectives in the strategic study of family firms (Chrisman et al., 2005). The library credits Penrose (1959) as the origin. Question for you: which [resources and capabilities](https://staging.khoi.co.uk/en/glossary#resource-vs-capability) make customers pay you, and which sit in your head or your personal contacts?
4. SEW. The library defines [socioemotional wealth](https://staging.khoi.co.uk/en/glossary#socioemotional-wealth) as the non-financial value owners feel, such as family name, attachment and standing. Gómez-Mejía et al. (2007) argue that the family's main reference point is avoiding the loss of SEW, and that to avoid it families accept significant risk to business performance (Gómez-Mejía et al., 2007). Question for you: if control leaves the family, what is lost besides money, and how much risk will the family carry to keep it?
5. Bifurcation bias. Verbeke and Kano (2012) describe [bifurcation bias](https://staging.khoi.co.uk/en/glossary#bifurcation-bias) as asymmetric treatment of family and non-family assets, especially human assets (Verbeke and Kano, 2012). Question for you: do pay, promotion and access to the numbers follow two different sets of rules?

## How do you use the five questions on your own firm?

Write an answer to each question above and attach one piece of evidence you can check on paper or in figures, not by feel. The worksheet below is a first version.

| Lens | Evidence to look for | Where it goes wrong |
|---|---|---|
| Agency | Articles of association, board makeup, outside shareholders' right to see the books | Tight checks on outsiders, none on relatives |
| Stewardship | Specific things the candidate took on and saw through | Trust based on blood, not behaviour |
| Resources | Largest customers, core processes, who holds each | Mistaking machines you can buy for capabilities you cannot see |
| SEW | A list of what the family wants to keep, each with a rough price | Treating emotional value as free when someone else pays for it |
| Bifurcation bias | Pay scales, promotion criteria, who sees the figures | Reviewing only the rules written down |

It suits you if you have a year or two and can ask people outside the family. It does not suit you if you must choose this week: the sheet only opens more questions.

## A hypothetical firm: what does each lens worry about first?

**Hypothetical example.** Firm Q, a paper-packaging plant in Long An, and every fact below is invented by me. It matches no real business. The founder is 68. The family (the founder, spouse and two children) holds 80 per cent of the shares; an outside investor holds 20 per cent. The son, 38, is sales manager. The daughter, 35, lives abroad and plays no part in running the firm. The production director, not a relative, has been there 22 years. Three options: the son becomes managing director, an outside managing director is hired, or the firm is sold to a competitor.

> **Figure:** (compare) All content is hypothetical, to show how each lens picks a different first concern.

```json
{
  "type": "compare",
  "columns": ["First concern", "What to check first"],
  "rows": [
    { "label": "Agency", "cells": ["Son as managing director, father still chairman: who monitors him, and what can the 20 per cent holder see?", "Articles, the 20 per cent holder's information rights, rules on dealings between the firm and relatives"] },
    { "label": "Stewardship", "cells": ["Does he want the job for the firm's sake or to meet his father's expectations?", "What he has taken on and seen through in sales; the same question for an outside candidate"] },
    { "label": "Resources", "cells": ["Who works with the main customers, and whose head holds the production know-how?", "A list of key accounts with named owners; which processes nobody has written down"] },
    { "label": "SEW", "cells": ["The family name on the sign, jobs for relatives, standing in the region: what goes if the firm is sold?", "Write each item down and give it a rough price"] },
    { "label": "Bifurcation bias", "cells": ["The production director, 22 years in, has no shares and no route to managing director; the son's pay is set by his father", "Compare the two people's pay, promotion criteria and access to the figures"] }
  ]
}
```

No row says choose the son or sell. Each row says what to check before weighing the options.

## If the family chooses to keep control, who bears the gap?

Assume Firm Q earns 12 billion dong profit after tax a year. A competitor offers 6 times profit, which is 72 billion dong. The family's adviser cautiously estimates the firm is worth 60 billion dong if the family keeps it and runs it. All these figures are invented.

| Party | Share | If sold (72bn) | If kept (60bn) | Gap |
|---|---|---|---|---|
| Family | 80% | 57.6bn | 48.0bn | 9.6bn |
| Outside investor | 20% | 14.4bn | 12.0bn | 2.4bn |
| Total | 100% | 72.0bn | 60.0bn | 12.0bn |

The 12 billion dong is the price of keeping control in this scenario, and the family may think it fair for the SEW it holds. The olive oil mill study describes the same kind of trade: staying independent preserves SEW but greatly raises the hazard to performance, while joining a cooperative loses family control but lowers business risk (Gómez-Mejía et al., 2007). That is my analogy; selling a firm is not identical to joining a cooperative.

The arithmetic shows something else. Of the 12 billion dong, 2.4 falls on the 20 per cent investor, who is outside the family and may not have been asked. In my reading, agency asks about this, and bifurcation bias may too (Verbeke and Kano write mainly about human assets): one party's feelings are weighed, while the other receives a number. The lenses do not say what to do. The family could buy the 20 per cent at the offer price (14.4 billion dong), give the investor information rights and a right to sell, or make up part of the gap. Each has its own cost.

The production director loses no money in the table. But if he leaves because he sees no route upward, 22 years of knowledge leaves with him, and that is the resources question.

## What does a family that has made wine since the 1300s say about passing things on?

According to Frescobaldi's own website (read on 1 November 2026), the family has produced wine in Tuscany for seven hundred years, beginning in the early 1300s, and the present generation is the 30th. The site also says a thousand years of family history is a treasure of knowledge and tradition, and that sharing that passion with future generations is a duty (Frescobaldi, n.d.). This is the company's own account, not an independent source. See the [Frescobaldi case](https://staging.khoi.co.uk/en/case/frescobaldi).

In my reading, language about duty to future generations is the kind of non-financial value the SEW concept names. The pages I read do not say who owns or runs the company today, or how any handover was decided, so I draw no succession lesson from them.

## Going deeper: where do the lenses come from, and where do they stop?

On 3 November 2026 I read the abstracts of the four journal articles through their DOI pages. I did not read the full texts, so I quote nothing verbatim and give no page numbers. For Penrose (1959) I rely only on publication details and the library's description, and I do not quote the book.

First, samples. Gómez-Mejía et al. (2007) observed olive oil mills in Southern Spain, and the choice was joining a cooperative or staying independent, not succession (Gómez-Mejía et al., 2007). Le Breton-Miller and Miller (2009) write about public family firms, which Firm Q is not (Le Breton-Miller and Miller, 2009). Whether the findings carry over to Long An, I do not know.

Second, the lenses disagree. Le Breton-Miller and Miller propose reconciling agency and stewardship through the social embeddedness of each kind of family firm. Verbeke and Kano say the two can also be reconciled, but through how the family handles bifurcation bias (Verbeke and Kano, 2012). Two different reconciliations mean the literature itself does not hand you a single lens. The library records the same trap: picking one theory and applying it to every family firm.

Third, performance. Chrisman et al. (2005) say evidence is accumulating that family involvement may affect performance, and the abstract gives no direction (Chrisman et al., 2005). This post does not conclude that family firms do better or worse.

Fourth, the decision. No abstract says whether to hand over to a relative, an outsider or a buyer. Mapping three options onto five questions is mine, and the figures 72, 60 and 12 billion dong are invented.

## Frequently asked questions

### Can socioemotional wealth be turned into a money figure?

The abstract I read for Gómez-Mejía et al. (2007) does not say how they measured it, so I make no claim about measurement. In practice you can ask the family one question: how much lower a sale price would you accept in order to keep control? That number is a tool for internal negotiation, not a scientific measure.

### Is favouring relatives always a bifurcation bias, and always wrong?

Verbeke and Kano (2012) define the bias as asymmetric treatment of family and non-family assets, especially human assets, and they write about the dysfunctional kind. The abstract does not list which asymmetries count as dysfunctional, so you have to judge each practice in your own firm.

### Does agency theory still apply if the firm has no outside shareholders?

The abstract by Le Breton-Miller and Miller (2009) describes the agency view as families pursuing their own utility to the detriment of public shareholders. Without outside shareholders I would guess the question moves to other parties, such as a lending bank or non-family managers. That is my inference, not a result from the paper.

### Which lens should I start with?

In my analysis, start with resources, because you can answer it in an afternoon: list your largest customers, your core processes and who holds each one. The answers usually make the other four questions more concrete.

## References

- Chrisman, J.J., Chua, J.H. and Sharma, P. (2005) ‘Trends and directions in the development of a strategic management theory of the family firm’, *Entrepreneurship Theory and Practice*, 29(5), pp. 555–575. https://doi.org/10.1111/j.1540-6520.2005.00098.x
- Frescobaldi (n.d.) *Frescobaldi (company website)*. Available at: https://www.frescobaldi.com/en (Accessed: 1 November 2026).
- Gómez-Mejía, L.R. et al. (2007) ‘Socioemotional wealth and business risks in family-controlled firms: evidence from Spanish olive oil mills’, *Administrative Science Quarterly*, 52(1), pp. 106–137. https://doi.org/10.2189/asqu.52.1.106
- Le Breton-Miller, I. and Miller, D. (2009) ‘Agency vs. stewardship in public family firms: a social embeddedness reconciliation’, *Entrepreneurship Theory and Practice*, 33(6), pp. 1169–1191. https://doi.org/10.1111/j.1540-6520.2009.00339.x
- Verbeke, A. and Kano, L. (2012) ‘The transaction cost economics theory of the family firm: family-based human asset specificity and the bifurcation bias’, *Entrepreneurship Theory and Practice*, 36(6), pp. 1183–1205. https://doi.org/10.1111/j.1540-6520.2012.00545.x

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