Communication Traps: Applying Game Theory to Succession in Family Firms

Using game theory to expand our understanding of the interaction between a founder and a successor in a family business, we explore the impact of poor interpersonal communication on family harmony during the succession process. Results show how deficient communication leads to disagreements and clashes between the founder and the successor and systematically reduces family harmony during the succession process. We term these situations communication traps. The findings demonstrate how inadequate communication hampers a transition process above and beyond psychological effects, even when the involved individuals share the same priorities, attitude, and interests.