Retired Yet Involved: How Even After the Succession Predecessors of Family Businesses Continue to Influence Their Firms

Sinan Caykoylu

doi:10.5539/ijbm.v14n2p19

Abstract

Successions are usually portrayed as events where predecessors quickly and quietly fade away from the picture once the transfer of managerial authority is complete. However, for majority of the family firms this is not the case. Family firm predecessors can continue to be involved with the family business even after their retirement in myriad of ways through on-going and overlapping business and kinship relations. Based on interviews with predecessors and successors from nineteen family businesses in Turkey, this article presents that it is the successors&rsquo; expectation how their predecessors should act after the succession that determines whether post-succession predecessor involvement has a positive or negative influence on the family business.

Highlights

Succession in family businesses is seldom a seamless and continuous transition that ends with the “transfer of the baton” (Sigalas et al, 2008)
It is the interlocked spheres of family, management and ownership in family businesses that makes it possible and easier for predecessors to find alternative ways to continue to be involved with the family business (Harvey and Evans, 1995)
To ensure only organizations that fit the theoretical family business definition provided by Chua, Chrisman and Sharma (1999) were considered, the following factors about the organizations were controlled for: the amount of stock owned by a member or members of a single family had to represent the majority of the company shares, at least one family member had to be involved in the management activities, and there had to be the intention to keep the business sustainable, at least for the generation family member(s)

Summary

Introduction

Succession in family businesses is seldom a seamless and continuous transition that ends with the “transfer of the baton” (Sigalas et al, 2008). Using anthropological theory, Grote (2003) argues that predecessors might not want to sever their ties with the family business after the succession because it reminds them of their own mortality and because the firm has become a surrogate family that they do not want to abandon. During predecessors’ tenure they can build influential and loyal network ties with other stakeholders (i.e. other family members, employees, suppliers, customers, etc.) After their retirement, predecessors can still continue to be involved with the family business via commanding family relationships or loyalties of their networks (Davis & Harveston, 1998). Predecessors who have given up their top managerial titles could still hold on to certain authority and power through their stocks, legacy, and family authority

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