Learning the Bias? How Successor Pre-Succession Firm Experience Affects Family

Prior research shows that learning performance enhancing stewardship behavior in family firms is frequently achieved through the experiences gained inside the firm prior to succession. However, upper echelons research on managerial decision making shows that this experience inside the family firm may lead to cognitive biases which decrease firm performance. This study addresses these two opposing views via using a sample of 804 German family firms. Our findings reveal that the detrimental effects of cognitive biases arising from pre-succession firm experience have overall a negative impact on post-succession family firm performance. However, this relationship is moderated by different individual and firm level factors. In particular, our results show a u-shaped impact for a non-family successor and a successor with academic education. Furthermore, the overall negative effect of pre-succession firm experience is aggravated for firms introducing product innovations and firms operating in dynamic high R&D intensive industries."