CFB Family Business Translates - The Paradox of Heritage: Managing the ‘Liability of Legacy’
Can a proud history become a burden?
Imagine inheriting a thriving family business built on centuries of tradition, only to find that those very traditions are now stopping you from growing. For many family firms, "the way we’ve always done it" is a source of pride, but in a fast-moving world, it can quickly become a "strategic hangover".
The study Managing the Liability of Legacy in Family Firms explores this critical paradox: how can family firms deal with inherited legacies, particularly when legacies come to be perceived as liabilities as the business seeks to innovate and grow?
Traditions can sometimes become liabilities
The study explored seven Irish family firms. This included a long-established 18th-century food producer, a seventh-generation funeral services business, and a multi-generational hot-beverage business. All the businesses reached a point where their inherited legacy felt "out of sync" with market needs and opportunities, as well as the changing competitive landscape.
Through 61 interviews and nearly 600 archival documents, the team investigated how these firms identified "legacy liability" and the specific steps they took to modernise and innovate without losing the advantages of these strong legacies.
How does a business know when a legacy becomes a liability?
The research identifies three "triggers" that signal it is time for a businesses to reconsider a legacy:
- The Change Agent Mindset: A CEO recognises that existing family goals are clashing with the business’s need to innovate.
- Changing Times: A gradual shift in the market means that the old ways of working no longer fit the competitive landscape.
- The Sudden Shock: Unexpected events can turn a trusted tradition into a high-risk vulnerability (for example, for a food manufacturer, the 2013 horsemeat scandal made a trusted tradition of using small, local suppliers a strategic vulnerability).
Can you negotiate with the past?
When a liability is identified, family firms don't just "start over." Instead, they engage in "legacy work" through three key mechanisms:
- Initiating Dialogue: Leaders start long-term, sometimes "heated," conversations between generations to align old values with new goals.
- Convening a "War Cabinet": In times of crisis, the family rallies together to make high-stakes decisions rapidly.
- Bringing in New Voices: Businesses look outward, seeking advice from trade bodies, university research centres, or external advisors to gain a fresh perspective.
How should firms respond to these challenges?
The researchers found three distinct ways firms successfully managed the liability of legacy:
- Embracing: Some firms accepted the liability, choosing to preserve their heritage because the non-economic value of the legacy was more important than financial gains.
- De-emphasising: Others chose to respect the past but move away from it. One Irish firm, for example, moved from its original 1913 site to a modern facility, while turning the old building into a research hub so as to honour the family and business history without letting it restrict growth.
- Partitioning: Some firms "separated" the legacy. For instance, a firm might decide that the family, rather than the business, owns and protects the legacy, freeing the business to pursue business and financial goals.
The takeaway
These findings are vital for the thousands of family-owned businesses across Ireland and the EU. Legacy change is not the same as standard "organisational change"; it is deeply emotional and intangible. The core lesson is that legacy is not a static "monument" but a dynamic process that can be updated. Family firms do not have to choose between their history and their future. By actively discussing and refining their legacy, they can transform a potential burden back into a powerful competitive advantage.
Read the full paper here:
Clinton, E., Faherty, C. M., O’Gorman, C. and Kammerlander, N. (2025) ‘Managing the Liability of Legacy in Family Firms’, Academy of Management Perspectives doi:10.5465/amp.2023.0319.