Succession planning and family business performance in SMEs

Abstract

PurposeThe purpose of this paper is to examine the impact of preparation level of heirs and the relationship between family and business members on the performance of family business in small- and medium-sized enterprises (SMEs) in Malaysia.Design/methodology/approachA quantitative research design involving the use of a survey questionnaire was implemented to investigate the influences of succession planning factors on the performance of family business in SMEs. The survey was conducted on 50 family business successors in Malaysian SMEs.FindingsThe result showed that the two studied factors – preparation level of heirs and the relationship between family and business members – have a positive impact on the performance of family business.Research limitations/implicationsThe research concentrated on the performance of family business in SMEs in Malaysia’s southern region. The generalization therefore must be made very cautiously to the overall Malaysian SMEs.Practical implicationsThe findings help family businesses to better understand the importance of the preparation level of heirs and the relationship between family and business members on business performance. This study shows the importance of key factors influencing succession planning so that the successor to the family business can bring the family firm to the next stage of success.Originality/valueThis study serves as a reference or guide for the management of family businesses to better understand the important factors for effective succession planning. It considers the best possible preparation and family-related factors affecting the end results of business, particularly in Malaysian SMEs.