Theses and Dissertations

ORCID

0009-0002-7629-815X

Advisor

Chrisman, James

Committee Member

Markin, Erik

Committee Member

Kofford, Steve

Committee Member

France, Steven

Date of Degree

8-12-2026

Original embargo terms

Embargo 2 years

Document Type

Dissertation - Open Access

Major

Business Administration (Management)

Degree Name

Doctor of Philosophy (Ph.D.)

College

College of Business

Department

Department of Management and Information Systems

Abstract

Family firms represent one of the most prevalent organizational forms globally and are distinguished by their pursuit of both economic and family-centered noneconomic (FCNE) goals, such as preserving family control, sustaining legacy, and ensuring transgenerational continuity. While prior family business research has extensively examined succession as a mechanism for preserving family ownership and control, comparatively less attention has been devoted to the opposite phenomenon: entrepreneurial exit and governance restructuring. As family firms encounter increasing market pressures, generational shifts, and performance challenges, maintaining continuity may no longer represent the most desirable or viable strategic option. Yet existing research provides limited theoretical explanation for why family firms abandon continuity-oriented governance structures in favor of external ownership transfer, professionalization, or other forms of governance change. To address this gap, this dissertation addresses this gap by examining governance transitions in family firms through the lens of prospect theory. Drawing on prospect theory and the socioemotional wealth (SEW) perspective, this research argues that family firm governance decisions are shaped not only by economic considerations, but also by reference-dependent evaluations tied to FCNE goals. Specifically, family firm owners evaluate outcomes relative to psychologically salient reference points associated with family control, legacy preservation, reputation, and intergenerational succession. When these reference points are threatened, family firms may engage in strategic responses that deviate from traditional economic expectations, including governance restructuring, leadership change, or entrepreneurial exit. Building on this foundation, this dissertation develops a conceptual framework explaining how perceived threats to economic and noneconomic reference points influence governance decision-making in family firms. In doing so, it examines the conditions under which family firms choose to retain control, partially relinquish control through professionalization or ownership restructuring, or fully exit through external transfer of ownership. The study further explores how loss aversion, socioemotional priorities, and shifting performance expectations shape these governance responses under conditions of uncertainty.

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