Law and HRM Challenges in Generational Transition of Family Firms

Law and HRM Challenges in Generational Transition of Family Firms

Emiliano Marchisio
Copyright: © 2021 |Pages: 23
DOI: 10.4018/978-1-7998-4814-1.ch015
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Abstract

This chapter examines some of the most relevant HRM problems in generational transition of family firms and proposes a number of legal instruments capable of resolving them. Use of corporations as vehicles to run the family business is examined, also with respect to consequences of this choice in business transition. Definition and “protection” of family roles within the firm are observed. Patrimonial issues are compared to personal issues and their interplay is explained by reference to five different scenarios. Last, the possibility to “select”, so to say, the law applicable to one's succession under Regulation (EU) no 650/2012 of the European Parliament and of the Council of 4 July 2012 is explored. At the end, it is concluded that even if HRM in family business shows informality along with formality in designing business practices, generational transition of family firms requires structuring and needs be planned, appropriately and in detail, in advance.
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Background

For the purposes of this chapter, family firms are defined as firms owned and run, to a relevant extent, by members of the same family, so that they range from small “mom and pop” businesses to much bigger organizations – such as the U.S. Walmart and Tyson Foods. Even if such a variability may bring about completely different issues and problems, they are all organizations where ownership and business roles overlap with family relations. Such element, which allows to consider all of them as sharing common characteristics, is capable of enriching family firms with peculiar features as concerns many aspects of their activity. In particular, their management may be fostered and enhanced by reason of the relationship existing between members of the same family as regards, among others, vision of the business, definition of goals and loyalty (De Massis, Kotlar, Chua & Chrisman, 2014; De Massis, Sharma, Chua & Chrisman 2012).

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