Generations in family businesses: connecting dots and people.

Family businesses navigate a dual mandate: achieving financial goals while also upholding socioemotional priorities. Although downsizing can offer immediate economic benefits, it often results in social costs, including reduced employee morale and reputational damage. Motivated by this tension, this chapter explores how two dimensions of family heterogeneity—specifically, family generational involvement and family eponymy—influence downsizing decisions. Analyzing panel data from 104 Italian family businesses listed on the Euronext Milan market between 2014 and 2019, the findings reveal that greater family generational involvement is linked to a lower likelihood of downsizing. This finding underscores the strategic interplay between aligning business strategy with family perspectives (“connecting the dots”) and sustaining deep relationships with employees and external stakeholders (“and the people”). This chapter contributes to the understanding of downsizing's dual economic and social dimensions in family firms and offers valuable managerial insights on leveraging generational diversity.