Family Business Succession and Post Succession Performance: Evidence from Thai SMEs

Vanvisa Chaimahawong,Atthapong Sakulsriprasert

doi:10.5539/ijbm.v8n2p19

Vanvisa Chaimahawong, Atthapong Sakulsriprasert

Open Access

https://doi.org/10.5539/ijbm.v8n2p19

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Abstract

This paper aims to study the key factors affecting the process of business succession and post succession offamily firms in Thailand. The purpose of this research paper is to identify the level of impacts and classify intofour determinants i.e. the personal factor, the intra-family relationship factors, the context factors, and thefinancial factors. The paper also aims to study the relationship between the four factors and the post successionperformance of family firms in Thailand. The methods use to assess the level of impacts of the factors onsuccession process of family firms in Thailand is by using the method of Structural Equation Model (SEM). Theresults of the SEM are based from the sample size 374 family business owners across various industries inThailand. Context factors and personal factors are the two factors that have the highest levels of impact on theeffectiveness of the succession process in comparison to the financial factors and the intra-family relationship.The results from this research paper also indicate that the succession process and the post-successionperformance are positively related with a high level of impact.

Highlights

The study of family business has been of interest to researchers in the past few decades
In order to ensure that a family business in Thailand can survive through different generations, it is crucial to be able to identify the key factors that will affect the succession process
By using Structural Equation Model (SEM) this paper has successfully identified and determined the level of impact that each of four different factors has on the succession process

Summary

Introduction

The study of family business has been of interest to researchers in the past few decades. A family-owned business can be defined as “a business managed with the intention to pursue the vision of the business held by a dominant coalition controlled by members of family”, (Sharma, Chrisman, Pablo & Chua, 2001). One of the most crucial research topics in the study of family business is “family business successions”, which refers to the actions, events, and developments that affect the transfer of managerial control from one family member to another (Sharma, et al, 2001). From past studies on the topic of family business, scholars have suggested that approximately 30 percent of family firms survive into the second generation of family ownership (Kets de Vries, 1993) and roughly 16 percents survive further into the third generation (Morris, et al, 1997). One the reasons for the low survival rate of family businesses is the problem of family business succession

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