Seminar #6 – October 14, 2020

ABSTRACT – What career does the offspring of business owners choose? This question tends to be answered differently in the entrepreneurship literature and the family business literature. The difference hinges largely on whether offspring will start their own business or will join and make a career in the business of the parent. Whereas the entrepreneurship literature assumes the presence of role-modeling between the parent and offspring and holds that having a business owner as a parent increases the probability that children will start their own business, the family business literature focuses on the possibility that offspring will join the parent business and eventually take the position as successor. We seek to reconcile these seemingly different views by drawing on the birth order theory. Using hazard models, we find that early-borns are more likely to follow their parent’s model and start their own business (self-employed), while later-borns are more likely to join the business of their parents. However, when the offspring join the business of parent, later-borns are more likely to leave as compared to the early-borns, unless the business operates in a challenging environment.