Abstract
This study reports the results from a survey of 368 family-owned small to medium size enterprises (SMEs) with regard to the importance, nature, and extent of succession planning. By categorizing SMEs according to their annual revenues, total number of employees, and number of family members employed within the firm, significant differences were found between larger and smaller firms. Consistent with extant literature, the findings reveal that most family members join the firm for altruistic reasons. Issues related to family relationships were rated as significantly more important in firms in which more family members were employed within the firm. Moreover, for firms with less than US$1m in revenues, a high priority is placed on selecting a successor who possesses strong sales and marketing skills. The findings show that regardless of their size, it is important for family-owned businesses to develop a formal plan for succession, communicate the identity of the successor, and provide training/mentoring to the incumbent CEO.
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