Contracts and communication among family members: Business succession from a contractual view

During family business succession, much information has to be exchanged among the family members involved, contacts have to be transferred, and expectations must be negotiated among the family members. How this exchange of information occurs remains unclear but can be a key success factor during the postsuccession period as information is critical for decision making. By conducting 14 in-depth case studies and considering institutional contract theory and family communication theory, we find that situations arise in which involved members of the entrepreneurial family have different levels of information and different expectations of one another. This study contributes to the family business succession literature through an intrafamily business succession model in which two types of contracts organize information exchange among the involved family members-(psychological implicit) family contracts and (explicit) business contracts. Both contracts serve the purpose of exchanging information in the family and business systems and aligning expectations such that the family and the family business remain capable of operating.