First In, First Out? Birth Order and Next-Generation Engagement in Family Firms

Research shows that next-generation engagement in the family business is important for the business’s long-term survival. However, the literature has neglected how differences among children could explain their career choices in the family business. We address this gap by drawing on birth order theory to examine differences in three career choices of the next-generation: joining the family business, holding a managerial position, and leaving the family business. Using a sample from Sweden, we employ family-stratified hazard models and show that later-borns are more likely to join the family business as their initial career choice compared to earlier-born siblings. However, when the next-generation joins the family business, later-borns are less likely to hold managerial positions in the family business and more likely to leave the family business. We conduct several mechanism tests explaining our hypotheses and run additional robustness tests to support our results. This study advances the research on next-generation engagement in family firms.