Our study comes with limitations that offer opportunities for further research. First, we did not have the possibility to analyze interviews regarding failed successions, which could be very profitable for the research of information asymmetries in the succession process. However, it is almost impossible to get both parties of a failed succession to participate in an interview about their conflicts. The second limitation is that we found that repeated interviews in every
63 phase of the succession could be better for the analysis of the information asymmetries because people undervalue the asymmetries, conflicts, and problems in retrospect. For a deeper understanding and assignment of the types and consequences of information asymmetries, interviews with a deeper and closer relationship between the interview partners and with repeating interviews before, during, and after the succession would be needed. Thus, a qualitative (or quantitative) panel study is recommended for the future. Furthermore, longitudinal studies, including observations, can offer more hints about the strategies of family firms in overcoming information asymmetries. Moreover, opportunistic behavior and the results of such behavior could be analyzed more thoroughly. The awareness of information asymmetries in family internal business succession also enables a better understanding of the processes and difficulties that can occur. This can be helpful for predecessors and successors as well as for practitioners and consultants in this field.
To date, the principal agency theory has been under-represented in family internal succession research. We have shown that this theory can help explain problems, conflicts, and perhaps failed successions in this context. In the next step, an attempt should be made to more precisely typecast information asymmetries according to the classical types of the principal agency theory. Examples for the assignment of these themes were found in the interviews, such as in the case of the duration of cooperation between successor and predecessor. The information asymmetries in this category can be classified as a hidden characteristic due to the successor’s unawareness of this duration, or they can be classified as a hidden intention because of a planned behavior of the predecessor or successor, or as hidden information from one or both. According to the principal agency theory, in the next step, the consequences of these types of information asymmetries, such as ‘adverse selection’, ‘moral hazard’, and ‘hold-up’, have to be identified. Identifying consequences and evaluating them in a scheme that is related to the theory was not possible. Nevertheless, some mentions of conflicts between predecessor and successor were found, and a few of them can also be connected
64 with information asymmetries in the later stages of the succession process. In line with this, we found many possible information asymmetries in the interviews, especially in cases when the successor underestimates the financial obligations of the enterprise, which can be described as a hidden characteristic of the enterprise and, consequently, as an adverse selection – regarding the takeover of the business in worse conditions than expected. In other cases, the (potential) successor intends to undertake measures and changes in the family business that the predecessor would never appreciate (under any circumstances) – this could be interpreted as a hidden intention that will lead to moral hazard. This example shows that we would need more detailed information from the interviewees regarding their intentions and motivations for a closer assignment of these classical types of information asymmetries.
In further research, the identification and evaluation of the consequences of these information asymmetries could provide deeper insights into business succession processes and consequences. Finally, the research about the mechanisms to reduce information asymmetries in this framing should be analyzed based on the now better-known information asymmetries.
To conclude, our study shows that information asymmetries in family internal successions do exist and that different types at different stages in the process can be observed. The identified information asymmetries vary thematically and in their respective frequencies between the phases of succession. Our findings provide a new perspective, offer a better understanding of family internal business succession, and complement the existing theories.
The study shows that there are information asymmetries in family firms and it seems that there are inherent processes to overcome these information asymmetries. The presented study differentiates between different categories and underlines that there are categories of information asymmetries that can be located in the family business and information asymmetries that are closer to the family. Moreover, the study underlines the change of information asymmetries over time.
65 The pre-phase and the during-phase describe the time until the predecessor leaves the management of the family firm; the management succession takes place as a caesura. This time can be evaluated as a personnel selection process, because until this time, the potential successor has the option to leave the pool of candidates and then there is no further need for exchanging information.
The next chapter of this dissertation focuses on this process and attempts to answer the call for research about the mechanisms to reduce information asymmetries in this framework. The study focuses on management succession and the selection process of family firms before and during the succession process. The understanding that there is a principal-agent situation in family business internal succession remains. Signaling theory is used to explain the behavior of family firms in overcoming the existing information asymmetries. The exchange of information through signaling includes sending signals, getting feedback, and the possibility to adapt behavior and signals according to expectations in order to align the interests of both actors.
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