Influence of Owner-Manager-Related Factors on the Succession Process in Small and Medium-Sized Family Businesses

Abstract

In this study, owner-manager-related factors that can influence the succession process in small and medium-sized family businesses are empirically investigated. The study was conducted among 2,458 owner-managers and successors in 1,038 family businesses identified via a snowball sampling technique. A total of 332 usable questionnaires was returned. The dependent variable in this study, namely the ‘perceived success of the succession process’, is measured by two underlying dimensions, namely the ‘satisfaction with the process’ and ‘continued profitability of the business’. The empirical results indicate that the owner-manager-related factors that influence ‘satisfaction with the process’ are the ‘relationship between the owner-manager and successor’, the ‘owner-manager's trust in the successor's abilities and intentions’ and ‘family harmony’. The ‘continued profitability of the business’ is influenced by the ‘relationship between the successor and owner-manager’ and the ‘trust that the owner-manager has in his or her successor's abilities and intentions’. The willingness of the owner-manager to hand over the business is in turn influenced by the extent to which he or she has ‘interests outside of the context of the family business’ and has ‘trust in the successor's abilities and intentions’. The extent to which there is ‘harmony among the family members’ will influence the ‘relationship between the owner-manager and successor’. Based on these findings, recommendations for successful successions are offered.