"I want this firm to be in good hands:" Emotional pricing of resigning entrepreneurs
Journal
International Small Business Journal
ISSN
0266-2426
ISSN-Digital
1741-2870
Type
journal article
Date Issued
2014-06-03
Author(s)
Abstract
Given the importance of non-economic considerations throughout the entrepreneurial life cycle, I aim to investigate the drivers of owner-managers' "emotional pricing" when they wish to sell their firms to successors. Emotional pricing thereby denotes those elements of the owner-managers' price expectations that cannot be traced back to economic considerations. Building on arguments from behavioral finance, I hypothesize that "emotional pricing," which in this study reflects owner-managers' willingness to sell the firm at a discount, is driven by the reluctance to lose access to information about the firm and to lose influence on the firm, and by an aversion to putting the firm's future at risk. In particular, I argue that a long-term relationship between an owner-manager and a firm, a familiar relationship between an owner-manager and a successor, and situational contingencies-especially unsatisfactory firm performance-increase the owner-manager's emotional-pricing component. I test the hypotheses using a sample of 1,354 owner-managers of Swiss SMEs, who provided their views on their exit intentions. I subsequently compare those results to 455 actual ownership transfers involving Swiss SMEs.
Funding(s)
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Sage
Publisher place
London
Volume
2014
Number
in press
Start page
1
End page
40
Pages
40
Subject(s)
Division(s)
Eprints ID
231933
File(s)![Thumbnail Image]()
Name
ISBJ-EmotionalPricing.pdf
Size
1.07 MB
Format
Adobe PDF
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