WCVE Forum September 11: The Church of “Scionology”
From Freakonomics Radio – When you spend your life building a successful business, whether it's a small bakery or a corporate empire, it's a natural step to hand off the reins to your son or daughter. But economic research shows that handing down a business to an heir is, on average, a terrible idea. Profitability, for example, drops an estimated 10 to 20 percent when a family firm is passed on to the next generation. So why do we do this?
You know the story. Some incredibly hard-working person starts a business – maybe a bakery or a brewery, a carmaker or a newspaper – and, against all odds, the business doesn’t just succeed; it flourishes. But someday, it’s inevitable that the founder will retire (or die). So who takes over then?
That’s easy: the founder’s son or daughter. The scion of the family. Who better to protect and grow the family brand?
That’s the theme for this first hour-long episode called “The Church of Scionology.” The episode is built on a foundation of academic research by economists including Antoinette Schoar, Vikas Mehrotra, and Francisco Perez-Gonzalez. Among the papers they discuss are, respectively: “The Role of Family in Family Firms”; “Adoptive Expectations: Rising Sons in Japanese Family Firms”; and “Inherited Control and Firm Performance.” Bottom line? Handing the business off to a scion is generally a poor move — although there are caveats, bizarre exceptions, and surprising reasons. And you’ll hear from Matt McGue, a behavioral geneticist at the University of Minnesota, discussing whether there’s a “CEO gene.”
We also go deep inside a few family firms to see how they’re run and how succession happens (or doesn’t). These include a pair of breweries: Yuengling and Anheuser-Busch.
Join WCVE Public Radio for WCVE Forum, Sunday at 6:00 p.m.