The founder’s psychological ownership and its strategic implications

Abstract

Purpose The purpose of this paper is to understand the change of the founder’s psychological ownership when s/he sells the business and its implications for the organization’s strategy. Design/methodology/approach The study contributes with a longitudinal study of psychological ownership, accounting for its development over time in a Swedish e-commerce company. By applying a case study methodology, conclusions are drawn from a vast amount of archival data and interviews. The empirical material covers the transition from a founder-run, family-owned to a first foreign-owned, and currently private-equity owned company. Findings Theoretically, it extends understandings of psychological ownership and its strategic implications by including former legal owners; that is, how psychological ownership changes after legal ownership ceases. Thereby, it develops the individual dimension (founder and former owner) of psychological ownership as well as its collective dimension (employees toward founder). The paper contributes to the psychological ownership founder and exit-literatures by highlighting continuity after the formal sale of legal ownership and its consequences for the organization. Practical implications It finds that new legal owners can use this heritage to signal continuity and launch strategic changes by transforming it into artifacts. Originality/value This study extends the understanding of development of psychological ownership of founders from foundation to exit and its consequences for the organization’s strategy. This extension sheds new light on founders as artifacts of organizations and thereby their role for the organizational heritage.

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