Abstract
In this study family-related factors that can influence the succession process in small and medium-sized family businesses are empirically investigated. The dependent variable in this study is measured by two underlying dimensions, namely satisfaction with the process and continued profitability of the business. The empirical results indicate that the family-related factors that influence both the aforementioned dimensions are the mutual acceptance of roles, the relationship between the owner-manager and successor, and family harmony. The continued profitability of the business is also influenced by the agreement to continue the business. The existence of family harmony in itself influences the relationship between the owner-manager and successor, the agreement to continue the business, as well as the mutual acceptance of roles. The managerial implications of these empirical findings are discussed and recommendations offered.
Highlights
Until recently, entrepreneurship and family business were almost unknown phenomena in most developed and developing economies and certainly did not receive the attention they deserve
The factors related to the family in family businesses that could directly influence succession that were investigated in this study are: the mutual acceptance of roles in the business by family members; the agreement by family members to continue the business; family harmony; and the relationship between the owner-manager and successor
Empirical proof of this relationship is offered by Handler (1989: 163), Sharma (1997: 230) and Santiago (2000: 30), who argue that family members acceptance of their relative position of power and responsibility in the family business will positively influence their satisfaction with the succession process and lead to a more successful process
Summary
Entrepreneurship and family business were almost unknown phenomena in most developed and developing economies and certainly did not receive the attention they deserve. Today it is acknowledged that family businesses are a primary contributor to the economic and social well-being of most economies in the world (IFERA, 2003; Sharma, 1997; Tan & Fock, 2001; Ward, 2004). Their lack of longevity is, a cause for concern. This study consolidates and integrates the existing literature on the various family-related factors that can influence succession in a theoretical model. The empirical findings reveal important relationships that, if managed properly, can secure successful succession in these businesses and improve the longevity of small and medium-sized family businesses. Businesses that have gone through a succession process or are planning to do so in the near future are in the best position to express an opinion of those important factors that influence a successful succession process
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