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A finance professional who understands the family: family firms’ specific requirements for non-family chief financial officers

Abstract

Non-family chief financial officers (CFOs) are often the first non-family members recruited into a family firm’s top management team. Based on the extant literature and with reference to the resource-based view of the firm, family firm peculiarities can also be expected to affect the requirements family firms look for when hiring non-family CFOs. To analyze these requirements, this paper draws on interviews with family firm owners, chief executive officers and non-family CFOs. Family firms’ specific requirements for CFOs are analyzed along four dimensions, namely education, professional know-how, career path and social/interpersonal skills, and 11 propositions are then developed. The presented findings suggest that family firm owners seek to integrate non-family CFOs with professional non-family firm experience in order to enrich the family firm’s resource pool. In turn, non-family CFOs are required to adapt to the specific governance characteristics prevalent in family firms.

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Notes

  1. 1.

    The term “C-suite” refers to the corporate executive suite and comprises all chief officers such as the CEO or CFO. The term “C-suite” is often used interchangeably with the term “top management team” (Nath and Mahajan 2011).

  2. 2.

    Keywords that described each of these three literature streams were formulated and various electronic databases searched. These databases were Scopus, Emerald, SpringerLink, EBSCO Business Source Premier, ScienceDirect and Google Scholar. I searched these databases for various combinations of the following keywords: “Chief Financial Officer*”, “CFO*”, “qualification*”, “requirement*”, “skill*”, “education*”, “family business*”, “family firm*”, “family controlled”, “family owned”, “non-family manage*”, “Chief Executive Officer*”, “CEO*”, “top management” and “C-suite”. Note that the asterisks allowed for different suffixes such as “non-family management” as well as “non-family manager”.

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Acknowledgments

An earlier version of this paper has been presented at the 57th International Council for Small Business (ICSB) World Conference in Wellington, New Zealand and I would like to thank the anonymous reviewers and participants of the ICSB conference for their helpful comments on the paper. I also gratefully acknowledge helpful comments by Birgit Feldbauer-Durstmüller, Helmut Pernsteiner, Norbert Kailer, Dorothea Greiling and Reinbert Schauer and I am indebted to two anonymous reviewers for their valuable suggestions on earlier versions of the paper. Special thanks go to the CFOs, CEOs and firm owners I interviewed, who devoted significant amounts of time to this research project.

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Correspondence to Martin R. W. Hiebl.

Appendix: Interview manual used in the present multi-case study

Appendix: Interview manual used in the present multi-case study

Standardized questionnaire

Open-ended questions

  1. 1.

    Which elements do you consider as crucial when evaluating a CFO candidate’s career path?

    (For CFO interviewees: Which elements of your career path do you consider crucial for your current role?)

  2. 2.

    When searching for a new CFO, which functional and personal requirements are most important for you? Do you have educational requirements for the CFO?

    (For CFO interviewees: Which functional and personal requirements are most important for your current role? What part does your education play?)

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Hiebl, M.R.W. A finance professional who understands the family: family firms’ specific requirements for non-family chief financial officers. Rev Manag Sci 8, 465–494 (2014). https://doi.org/10.1007/s11846-013-0112-6

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Keywords

  • Family firms
  • Chief financial officer (CFO)
  • Non-family management
  • Qualifications

JEL Classification

  • G30
  • M40