Does having more generations in leadership help or hurt family firm growth?

Succession in family businesses is rarely a clean handover. One generation steps up while another steps back — but the transition can stretch across years, even decades. During that overlap, multiple generations work side by side in the top management team, each carrying different experiences, risk appetites, and strategic instincts. The question is simple. Does that generational mix fuel growth or fragment it?

This study by Daniel Pittino, Francesco Chirico, Bart Henssen, and Wouter Broekaert provides an unusually rigorous answer. Using data from 561 Belgian family firms over five years, the researchers show that the effect of multigenerational leadership depends heavily on context — specifically, on how much of the firm the family owns and how many management positions family members hold. It is both. The finding upends the assumption that generational diversity is either good or bad. It depends on the governance structures around it.

What We Studied

The researchers compiled 1,350 firm-year observations from unlisted Belgian family firms between 2009 and 2013, combining a 2014 survey with annual financial data from the Bel-first database. Three dimensions of growth served as outcome measures: asset growth (investment in fixed assets), size growth (workforce expansion), and revenue growth (sales performance).

The key independent variable was generational involvement in management — how many family generations were simultaneously active in the top management team. Two moderating variables captured the family's governance structure: family ownership (the proportion of shares held by family members) and family management (the proportion of managers who are family members).

The theoretical foundation draws on upper echelons theory, which holds that the composition of the top management team shapes a firm's strategic direction and performance. The theory has been widely applied in corporate governance research, but its application to family firms — where team composition is shaped by kinship as much as competence — adds a distinctive wrinkle. When that team spans generations, the cognitive diversity it brings — different mental models, different time horizons, different assumptions about risk — can be either a resource or a liability. The study's contribution is to identify the conditions that determine which one.

Key Insights

Generational involvement is neither inherently helpful nor harmful

The headline finding is nuanced. Multigenerational top management teams bring diverse strategic perspectives — older generations tend toward conservation and risk aversion, while younger ones often push for innovation and expansion. That diversity cuts both ways. Creative tension or destructive conflict. The data are clear. No universal effect. Whether generational involvement helps or hurts depends entirely on the governance context.

Families who add the next generation to the management team without thinking about governance structure are gambling. The mix of generations is only as productive as the system around it allows it to be.

High family ownership makes generational diversity productive

When the family holds a large share of ownership, multigenerational management teams drive stronger asset and size growth. The mechanism is straightforward: concentrated family ownership aligns incentives. Everyone is pulling in roughly the same direction, even when they disagree on pace or method. Disagreements between generations still arise, but they are resolved within a shared framework of long-term family goals, socioemotional wealth preservation, and collective identity. External shareholders are not pulling the conversation in different directions. The family can hash out its differences internally and still commit to a coherent strategy.

This is one of the clearest arguments for maintaining concentrated family ownership during generational transitions. Diluting ownership precisely when multiple generations are trying to lead together removes the glue that makes their diversity productive.

Fragmented ownership turns generational diversity into a liability

When non-family shareholders hold a meaningful stake, the dynamics change sharply. Generational differences in the management team no longer get resolved through family-internal negotiation. Instead, different generations may ally with different external stakeholders, creating factions rather than creative tension. The study finds that under lower family ownership, greater generational involvement actually reduces growth. The cognitive diversity that should be an asset becomes paralysis. Growth stalls.

This finding matters for families considering bringing in outside investors during a transition period. The timing is risky. Adding ownership complexity at the same moment you are adding generational complexity to the management team can overwhelm the firm's decision-making capacity.

High family management presence dampens the growth benefit

Here the findings become counterintuitive. When a large proportion of management positions are held by family members, the positive effect of generational involvement on growth weakens. Why? The authors argue that too many family managers — especially across generations — can create a leadership team that is internally focused, resistant to outside input, and prone to kinship-based conflict. The firm becomes insular. Family-rich but perspective-poor.

More family in management is not always better. Families should consider strategic non-family hires at the management level, especially during multigenerational periods, to balance the team's cognitive diversity with professional objectivity. This is the most practically actionable finding in the paper.

Revenue growth does not respond to generational composition

While asset growth and size growth showed clear responses to generational involvement, revenue growth did not. The authors suggest that revenue growth is more sensitive to market dynamics, competitive positioning, and commercial agility — factors that depend less on who sits in the management team and more on operational execution and external conditions. Generational composition shapes long-term investment decisions. Not short-term sales.

Families looking for immediate revenue impact from a generational transition are looking in the wrong place. The benefits of multigenerational leadership are structural and long-term, not commercial and immediate.

Takeaways for Family Business Leaders

Protect ownership concentration during transitions

If the family is bringing the next generation into the management team, this is the wrong moment to dilute ownership. Concentrated family ownership provides the alignment needed to make generational diversity productive. Selling equity to external investors during a leadership transition introduces competing agendas at the worst possible time. If the family needs capital, explore instruments that do not dilute governance control — family-internal financing, preferred shares without voting rights, or staged buyouts that keep decision authority within the family during the critical overlap period.

Balance family managers with non-family professionals

A management team composed entirely of family members from different generations can become insular and conflict-prone. Bringing in experienced non-family executives — particularly in operational and commercial roles — provides a buffer against kinship dynamics and introduces perspectives the family may lack.

Set expectations about what generational transitions can and cannot deliver

Multigenerational leadership supports long-term strategic investments. It does not, by itself, drive revenue growth. Families should frame the transition accordingly — as a structural investment in the firm's future capacity, not as a quick fix for current commercial challenges.

Impact

This study stands out for its methodological rigor — 561 firms, five years of panel data, three distinct growth measures — and for the nuance of its conclusions. Most research on multigenerational leadership treats it as uniformly positive or negative. Pittino, Chirico, Henssen, and Broekaert show it is neither. The effect depends on governance. Full stop.

For the broader family business community, the practical implication is clear: generational transitions must be designed, not just endured. Adding the next generation to the management team is a governance intervention, not a calendar event. It requires deliberate choices. Ownership structure, management composition, and decision-making processes all need attention before the next generation joins. Families that treat it as a natural evolution — without adjusting the structural context — are likely to discover that cognitive diversity generates friction rather than growth.

Recommendations

• For business families: Before expanding the management team across generations, assess whether the ownership structure supports the additional complexity. High family ownership and moderate family management presence create the best conditions for multigenerational leadership to drive growth.
• For advisors: Use the ownership-management framework from this study as a diagnostic tool. When advising families on succession timing, check whether the governance context is set up to make generational diversity productive — or destructive.
• For boards: Ensure that at least some management positions are held by non-family professionals, especially during multigenerational periods. This reduces the risk of family-internal conflict dominating strategic decisions. A management team that is 100% family across three generations is a team optimized for loyalty, not for objectivity.
• For scholars: The distinction between asset, size, and revenue growth matters. Future research should continue disaggregating growth outcomes rather than treating firm performance as a single measure.