Effects of Family Involvement on Succession Planning: Mediating Role of Socioemotional Wealth

Abstract

This study aims to clarify the paradoxical relationship between family involvement in ownership and management on succession planning and ascertain the mediating role of socioemotional wealth (SEW) in this relationship. Succession, which is considered as transfer of leadership and ownership from one generation to another, is a critical component within family businesses. Based on the SEW perspective, this study argues that family ownership and management positively influence succession planning via CEOs perceived SEW toward family business. Hypotheses were tested through structure equation modeling with a data set of 174 Taiwanese family controlled publicly listed firms. The results showed that family management positively impacts succession planning through the partial mediating effect of SEW. However, nonsignificant relation was obtained from the path of family ownership to succession planning. These findings contribute to clarifying the heterogeneity within family businesses in terms of the mechanism through which family involvement in management affects succession planning.