The last few years have been characterized by the deaths of great Italian family entrepreneurs, such as Silvio Berlusconi, Leonardo Del Vecchio, and Roberto Colaninno. These events have given further prominence to the issue of generational succession and the choice of the Chief Executive Officer (CEO), who is one of the “most powerful individuals in the organization”, influencing why and how organizations behave in a certain way. The selection of a CEO is particularly crucial for family firms as they have to consider the fit between firm and candidate identities. Specifically, family firms have to decide whether to appoint a family member (i.e., a family CEO) or to hire an external professional (i.e., a nonfamily CEO).

In the last decade, it has become increasingly common for family firms to hire nonfamily CEOs. An example of a professionalized Italian company is Ferrero, which in 2017 announced the appointment of a nonfamily CEO for the first time in its 70-plus-year history. As the family’s previous CEO, Giovanni Ferrero, argued, the new CEO should represent “the best of both worlds”, combining family history, entrepreneurship, and managerial excellence. But is the choice to professionalize the family firm always the right one? The answer is not univocal, but rather influenced by various factors.

CEO identity is pivotal in shaping and maintaining organizational culture and values as well as in providing vision and direction for the organization. In family firms, CEO identity plays a role that goes beyond strategic direction, helping with the preservation of family tradition and legacy, aligning family and business values, and ensuring a long-term orientation. But the CEO is not only among the individuals in charge of the firm management, but s/he also represents the firm to the public. For instance, the CEO can become the “face of the firm” by frequently appearing in the press and obtaining the so-called celebrity status through such exposure.

It is thus reasonable to expect that the choice of the next CEO identity might shape how external stakeholders (such as media) look at the family firm. In a recent study, we investigated what role CEO identity (i.e., being a family or nonfamily CEO) plays in the media perception of a family firm’s brand. We captured media perception through the concept of brand importance, that is “the degree of importance that external stakeholders attribute to a brand”. Further, we built our arguments on endorsement theory, supporting the notion that the persuasiveness of the firm’s brand message depends on the perceived credibility of its source, particularly through its expertise, trustworthiness, and credibility.

To understand the relationship between CEO identity and brand importance, we analyzed a sample of 63 Italian family firms and 52,555 news articles published in 2017 about these family firms. Results support our arguments in favor of a positive and significant relationship between the presence of a nonfamily CEO leading the firm and brand importance, suggesting that opting for an individual external to the family might be beneficial in terms of media perception. Media indeed associate greater brand importance with family firms led by a nonfamily CEO than with those led by a family CEO. This is because nonfamily CEOs running family firms are more likely to be regarded as credible endorsers of the family firm, having superior managerial abilities and specialized knowledge. Conversely, family CEOs often have limited cognitive exposure to the external business environment, as their experience is primarily within the family firm. This insularity results in longer tenures, cognitive rigidity, and a tendency to maintain the status quo, preventing innovation. Therefore, family firms led by nonfamily CEOs are perceived by the media (and other stakeholders) as better managed and more likely to succeed, translating into greater brand importance.

Nevertheless, data confirm that the positive relationship between nonfamily CEOs and brand importance is dependent on family firm generation, that is the family generation in control of the firm (1st, 2nd, 3rd, …). Specifically, family firm generation negatively moderates the aforementioned positive relationship: media value the presence of a family CEO better when the control of the firm is in the hands of later generations. As family firms progress through generations, their identity becomes more deeply rooted in familial values, traditions, and community ties. In later-generation family firms, a family CEO is thus perceived as better aligned with these values, enhancing brand importance due to their ability to uphold tradition and to foster responsible behaviors toward the community where both the family and the business have long been rooted. Thus, as confirmed by our analyses, the media attribute greater brand importance to later-generation family firms led by family CEOs, counteracting the general tendency to favor nonfamily CEOs for their professional expertise. Conversely, in earlier-generation family firms, where traditions and community ties are less established, the presence of a nonfamily CEO enhances the firm’s brand importance. Therefore, in these cases, the positive influence of a nonfamily CEO on brand importance is amplified, as the media prioritize the perceived benefits of professionalization over adherence to family traditions.

In conclusion, family firms must carefully consider what type of CEO (family vs nonfamily) to appoint or hire when aiming to reinforce their brand importance. In line with the results of our study, family firms seeking to strengthen their brand presence might benefit from appointing nonfamily CEOs, especially in early-generation firms where traditions and values are still in their development. This suggests that a certain level of professionalization can benefit these family firms. Nevertheless, a nonfamily CEO is preferable only for earlier-generation family firms, as our results suggest that media might value the family firm’s brand better when these firms are at most in their 4th generation. For later-generation family firms, appointing a family member as CEO is preferable as s/he usually personifies the custodian of family values, narratives, and traditions.

Our study also aims to generate awareness among the media on aspects that might influence their perceptions of family firms’ brands. Specifically, we believe that, when covering family firms, media outlets should strive to balance their portrayal of family versus nonfamily CEOs and recognize the unique strengths each type of CEO brings. Moreover, media should acknowledge the generational stage of the family firm when reporting news about them. Later-generation family firms with family CEOs may emphasize tradition and community ties, which could be appealing to specific audiences. Reporting should reflect how these aspects contribute to the firm’s brand and long-term stability. Similar implications are valid for family business consumers. In particular, we suggest consumers to be aware that media portrayals may emphasize certain CEO traits or leadership styles over others. Consumers are advised to seek out diverse perspectives, consider the broader context where the firm is embedded, and try to understand the background, values, and generational context behind the family firm.

This article by Paola Rovelli (Free University of Bozen-Bolzano) and Carlotta Benedetti (University of Innsbruck) was also published in the Südtiroler Wirtschaftszeitung. The primary study was disseminated under the title: Is Cain more able? A behavioral perspective on the relationship between family CEO birth order and family firms' CSR.