Family Business Succession Planning Research Articles

A conceptual framework of executive coaching in family business succession planning: the Malaysian context

ABSTRACT Family business succession planning receives much attention globally, but executive coaching remains underutilized. This applies to family-owned businesses; particularly challenging would be the survivorship of small and medium enterprises. Given the growing need for more effective succession planning, this paper aims to improve the existing executive coaching framework by applying it to family business succession planning in Malaysia. This conceptual article contains an accessible definition and presentation of executive coaching. Each framework component depicts the coach, coached person (‘coachee’), and organizational roles in the coaching, which leads to the possible leadership transfer outcome. This paper suggests a new succession planning direction for researchers and executive coaches. The planning direction aims to aid family business owners in understanding the executive coaching ‘what, why, and how’ and an alternative succession planning approach is suggested. The mechanism of executive coaching and the basis for novel family business research are discussed and established.

ENTREPRENEURIAL SELF-EFFICACY DRIVES AND AMPLIFIES PERCEIVED OPPORTUNITY TOWARDS THE ENTREPRENEURIAL INTENTION OF ULOS WEAVERS GENERATION

The basic problem of family business succession planning is whether the generation intends to continue the family business, so this study aims to examine the intention of generations to continue their family's ulos weaving business based on the planned behavior theory (Ajzen, 1991). The Purposive Random Sampling method was selected and obtained as many as 131 generations of ulos weavers aged at least 15 years in North Tapanuli Regency who were collected using the snowball technique. Data analysis used the Structural Equation Model with the Lisrel program. The findings of this study indicate that entrepreneurial self-efficacy (ESE) plays a role in encouraging perceived opportunity (PO) towards entrepreneurial intention (EI). However, the role of entrepreneurial self-efficacy (interaction with PO to become ESEXPO) cannot strengthen PO towards EI. Gender effect testing found that women's EI was higher than men's because it was related to weaving skills. The weakness of this study is the cross-sectional time dimension so the implications for future research are the longitudinal time dimension, especially for testing moderation as well as in different contexts for testing the role of moderation or results that are inconsistent with a combination of theories so as to find novelty. In addition, other predictors and controls need to be added to enrich research in the field of family entrepreneurship. The implication for family business actors is to have a succession plan long before being 'forced' or as early as possible so that entrepreneurial self-efficacy and perceived opportunity arise, as well as other factors (internal and external) that are needed by the next generation of family businesses.

Individual and Family Attributes Related to Succession Planning

Management change is a decisive factor for the longevity of family organizations. In this article, we seek to understand the connections between individual and family attributes and succession planning in family businesses. The literature provided us with support for the elaboration of research hypotheses, which we tested in a sample composed of 264 Brazilian family companies. The analysis of the data, through the Structural Equation Modeling with estimation by the method of Partial Least Squares, allowed us to confirm five of the hypotheses formulated. The results demonstrate that some attributes of the successor and the prior knowledge of the business of the possible successor are positively related to the planning of the succession process. As a contribution, the article provides a better understanding of family organizations, mainly contemplating the relationships between: family and business; and successor and predecessor, variables that impact the succession planning level in different ways.

Polygamy and family member relationship on Guinean family business succession planning

PurposeThe aim of the paper is to identify the key factors that affect Guinean family business (FB) succession planning. The study also evaluates the impact of these factors on the succession planning process to ensure business continuity.Design/methodology/approachThis descriptive quantitative research is based on a survey of 383 family businesses FBs in Conakry, the capital city of Guinea. The structural equation model (SEM) was used to analyze and validate the model featuring factors that influence family business FB succession planning (FBSP). The Theory of Stewardess and the Theory of FB Rivalry have been employed in the study.FindingsWhile the incumbent attributes, firm attributes, and estate tax were revealed to have no significant influence on succession planning, the successor attributes and the family relationship significantly affected succession planning. Besides, undesirable domestic relationships among children of different mothers from polygamous families had an indirect impact on business succession planning.Research limitations/implicationsThe limitations of the study include the population of the FBs being restricted only to those located in Conakry, the capital city. The study did not consider other regions and cities of Guinea. Besides, the grouping of attributes or characteristics was problematic, and studying each attribute separately as an independent variable would be much better. Finally, the limited literature and available data on Guinean FBs in general and succession planning generalize the findings to be done cautiously. Therefore, more studies are needed on FB succession in the country to further confirm these findings.Social implicationsThe study may help ensure social solidarity based on the findings of factors associated to polygamous families in relation to businesses.Originality/valueFew studies have been done on FBs in Conakry. Besides, putting attributes or characteristics into categories has been presented. Moreover, there is inadequate relevant literature and data on Guinean FBSP. Considering these limitations, the generalization of the findings should be done with caution. Therefore, this study touched on the issue of family business succession in Guinea which substantiates the findings.

Stewardship theory of corporate governance and succession planning in family businesses of UAE: views of the owners

PurposeThis paper aims to explore corporate governance (CG) and succession planning in family-owned businesses in the United Arab Emirates (UAE).Design/methodology/approachSemi-structured interviews are conducted with 16 owners and heirs of UAE family businesses. The interviews – face-to-face and asynchronous electronic – are conducted instead of a questionnaire to get an in-depth analysis of the topic in the context of both medium- and large-sized family businesses.FindingsThe responses are mixed with regard to governance challenges (duality, gender, internal control, transparency, etc.). The majority of the interviewees indicate that succession planning remains one of the biggest challenges for family businesses in the UAE. Fifteen of the sixteen interviewees document that a sound succession strategy must be in place to ensure the continuity of the business and prevent future disputes among potential successors. Similarly, the respondents also emphasise the importance of transparency and accountability for the sustainability of family businesses. The sustainability of family businesses relies on many aspects, such as national regulations, corporate systems and the succession process. Finally, most of the respondents from medium-sized companies opined that incorporating CG is a time-consuming and expensive process.Practical implicationsThe interviewees supported stewardship theory in case family members are occupying positions on the board as they have more long-term commitment and a greater sense of belonging to the business (socio-emotional wealth) compared to non-family members. The interviewees acknowledge that the lack of professionalism and conflicts of interest among family members can be offset by recruiting non-family members.Originality/valueFamily businesses are particularly significant in the Arab world as they account for over 60% of gross domestic product (GDP) and use above 80% of the workforce which make them interesting research subject. In addition, this paper explores the CG challenges faced by both large- and medium-sized family businesses in the UAE within the theoretical framework of stewardship theory.

Perceptions of succession planning in family-owned businesses

ABSTRACT India has the third highest number of family-owned businesses (FoBs) globally, yet their intergenerational survival is at risk. The country faces a steep decline in female labor force participation and a “youth bulge,” with 54 percent of the population below the age of 25. The postpandemic era has necessitated the need for small and medium-sized enterprises to reinvent themselves to adapt to the fast-paced digital landscape. The perceptions of human capital and the inclusion of women in family business succession planning are often ignored. The aim of this study is to investigate the relationship of nonfamily employees and gender inclusivity on the survival of family-owned businesses. The authors propose a more inclusive culture in the FoB landscape as they undertake an ethnographic study to review literature between 2017 and 2022 while highlighting the impact of organizational culture to achieve gender egalitarianism and aid the United Nations Sustainable Development Goals.

Family business succession planning in the Gambia textile market

Family business succession planning in the Gambia textile market

Carry the past into the future: the effects of CEO temporal focus on succession planning in family firms

In this study, the relationship between CEO temporal focus and family business succession planning is examined and the moderating effects of family interactions and environmental uncertainty are assessed. Based on data from 198 CEOs of family businesses and additional data from 15 semi-structured interviews in China, we find that CEO temporal focus (i.e., past, present, or future focus) is positively associated with succession planning. In addition, family interactions strengthen the relationship between CEO past focus and succession planning and weaken the relationship between CEO future focus and succession planning. Moreover, in uncertain environments, past-focused CEOs are more likely to plan for succession than present-focused CEOs. The theoretical contributions and practical implications of the study are also discussed.

A Family Affair: A Quantitative Analysis of Third-Generation Successors’ Intentions to Continue the Family Business


 
 
 Family businesses face a succession crisis where only 13% survive until the third generation (Lee-Chua, 2014). While there is sufficient literature on family business succession planning , research on the motivations behind next-generation engagement in family firms, especially for third-generation successors, is limited (Garcia, Sharma, De Massis, Wright & Scholes, 2018). Thus, the present study tested Garcia et al. (2018)’s model where perceived parental support and psychological control predict next-generation engagement, with family business self-efficacy and commitment to family business mediating this relationship. 118 third-generation successors were surveyed using established and newly developed scales based on previous literature. Mediation analysis showed that normative commitment partially mediated verbal encouragement and next-generation engagement, while affective commitment fully mediated parental psychological control and next-generation engagement. Results were also compared against 124 second-generation successors, revealing that there were no significant differences between generations. Combining these two datasets led to a new conceptual framework, where normative commitment partially mediated verbal encouragement and next-generation intention, while affective commitment partially mediated parental psychological control and next-generation intention. The results of the study can contribute to the enrichment of family business literature, particularly on the factors that influence the intentions of third-generation successors, and to the creation of effective succession plans.
 
 

Intra-family dynamics and succession planning in family businesses in South Africa: the daughter as a potential successor

PurposeLiterature considers the succession process to be successful when both the continuity of the business and harmony within the family are preserved. This study empirically investigates intra-family dynamics with regard to daughters as potential successors in family businesses.Design/methodology/approachThe study takes place in South Africa where family businesses represent a significant amount of all listed businesses on the Johannesburg Stock Exchange. A structured survey instrument is used to collect primary data from family businesses in South Africa. The study hypotheses are statistically tested using regression analyses.FindingsResults highlight the importance of the business context (BC), intra-family cohesion (IFC), intra-family adaptability (IFA) as well as the parent-daughter relationship (PDR) in successful daughter succession planning (SP). An important insight which emerges from the findings is the extent to which a harmonious business environment is conducive in accommodating the daughter as a successor to the business.Practical implicationsFamily business owners need to be aware of the often conflicting pressures that daughters face as potential successors. Evidence-based and fit for purpose to the South African family BC processes and directives must be formulated that guide the implementation of SP. The provision of training specifically focused on gender bias issues and women empowerment programmes in family business is recommended.Originality/valueInvestigating theoretical and practical problems related to daughters in SP in South Africa is important considering that firms in African countries in general tend to be poorly managed.

Philanthrocapitalism as wealth management strategy: Philanthropy, inheritance and succession planning among the global elite

In the resurgence of interest in inheritance flows following the publication of Piketty’s work, little attention has been paid to the affective practices that ensure the success of inheritance processes as wealth moves down generations of dynastic families. This article explores these practices, drawing on research among wealth managers, philanthropy advisors, family offices and their clients, to show how philanthropy is promoted by advisors to the wealthy as a tool to support inheritance and family business succession planning. In this process, advisors draw on the philanthropic imagination to style wealthy families as custodians of both private capital and the common good, thus mirroring the narratives used by philanthrocapitalists to legitimise their wealth in the public sphere. Here, however, the discourse of philanthrocapitalism is turned inwards to the private realm of the family, to persuade younger generations to rally around the collective project of the custodianship of wealth. By bringing together research on philanthropy and inheritance, this article contributes to the growing sociological literature on elites and the global inequalities driven by their accumulation of wealth. It shows how wealth accumulation is increasingly dependent not only on the mechanics of financial markets and inheritance flows, but also on affective wealth management strategies framed around ethical notions of kinship and social responsibility.

Cultural embeddedness of family businesses succession planning: a comparative study of Poland and Indonesia

The research investigates the bases of succession planning in family businesses (FB), especially the cultural background of the phenomenon. The significance of the issue under study comes from the importance of family business in every economy and the delicate matter of succession as an important business development element. The research is based on the observation that the succession determinants are still outside the mainstream of the research. In this study, it is hypothesized that succession planning is influenced by cultural background. The investigation is done by performing a comparative analysis of family businesses’ potential successors from the culturally distant countries: Poland and Indonesia. An empirical survey-based method is applied to investigate the younger generation’s involvement in preparations for the transfer of the family business. The differences in the approach to the younger generation’s succession identified in the survey are not related to such factors as age, size, or succession experience of the business. Instead, there are premises to say that the differences come from the family and business culture based on national specificity. First-hand support for the cultural embeddedness of FB succession planning was found. Furthermore, the results also reaffirm the doubts concerning the importance of post-communist countries’ economic transformation for succession planning. The empirical study confirms the expectations that the specificity of cultural background in Poland could be especially harmful to succession planning in the family business.

The relationship between financial risk management and succession planning in family businesses

PurposeThis article examines the relationship between financial risk management and succession planning in family businesses. Motivated by the Theory of Planned Behaviour, we hypothesize that the use of professional risk management practices is associated with an increased likelihood that businesses adopt professionalized approaches to succession planning. We then investigate if succession planning professionalization is, in turn, positively related to the financial performance of family businesses.Design/methodology/approachWe apply binary probit and ordered dependent variable regressions to unique data generated from a survey sample of Australian family businesses. To check the robustness of our results to potential endogeneity concerns we apply difference tests to propensity score matched sub-samples from our original cohort of respondents.FindingsThe results show that, in contrast to verbal or absent succession arrangements, formal written succession plans are both positively associated with the use of financial risk management practices and with superior financial performance in family businesses.Originality/valueOur arguments and findings suggest that active financial risk management provides a platform for planning succession in family businesses, and that this links with improved short-term financial performance. In light of the critical role that succession plays in ensuring long-term business sustainability, our findings provide important and novel insights into the conditions under which family businesses are most likely to use formal professionalized succession planning.

Primogeniture in Turkish Family Owned Businesses: An Examination of Daughter Succession, the Impact of National Culture on Gendered Norms and Leadership Challenge

Family owned and controlled businesses, which may be owned, controlled or operated by various family members, account for an enormous percentage of global employment, revenues and GDP. Although the majority of well-known companies are family owned, research indicates that unfortunately, only thirty percent of family businesses survive to the second generation. Therefore, successful transfer of the business to the next generation is an important issue for the family business literature. However, although succession is a vital issue for Family Owned Businesses (FOBs), the process is unfortunately very gender biased in most societies, with boys being generally favoured over girls so daughters are always excluded as candidates and other women are seldom considered as successors in family businesses. In many cases, especially in certain cultures, female members of the next generation are not even perceived as a viable option. Even in today’s rapidly changing business climate, primogeniture continues to dominate the value system of family businesses. Primogeniture is an accepted approach to family business succession planning; daughters are only considered for family business succession when all descendants are female or the daughter is the first born. This study aims to identify the reasons behind the primogeniture in Turkish FOBs. The objectives of the study were to examine the key factors identified by the incumbents related with the primogeniture. In this research study, an interpretive methodology was adopted to explore, interpret and to understand meanings of knowledge. For this research, qualitative data were gathered via in-depth open-ended interviews with 20 male FOB owners who have at least one daughter and 20 daughters working at their FOB with their fathers. The questions were designed to measure different facets of FOB demographics and culture to understand their effects on the selection process within Turkish FOBs and gender norms in the context of FOB norms, which influence both family members and the business it. This study investigated daughters’ succession in FOBs in Turkey, a developing country where women are less likely than men to engage in entrepreneurial activities and show that gendered norms are still considered when choosing the successor, in other word, primogeniture still dominates the family business succession process. Keywords: Woman entrepreneurship; Primogeniture; Family Business; Gender; Culture;

Strategy for succession in family owned small businesses as a wicked problem to be tamed

Contemporary strategic-planning processes don’t help family businesses cope with some of the big problems they face. Owner managers admit that they are confronted with issues, such as those associated with succession and inter-generational transfer that cannot be resolved merely by gathering additional data, defining issues more clearly, or breaking them down into small problems. Preparing for succession is often put off or ignored, many planning techniques don’t generate fresh ideas and implementing solutions is often fraught with political peril. This paper presents a framework to explore the idea of wicked problems, its relevance to succession planning in family businesses and its implications for practice and policy. A wicked problem has many and varied elements, and is complex as well as challenging. These problems are different to hard but ordinary problems, which people can solve in a finite time period by applying standard techniques. In this paper we argue that the wicked problem of family business succession requires a different approach to strategy, founded on social planning processes to engage multiple stakeholders and reconcile family/business interests to foster a joint commitment to possible ways of resolution. This requires academics and practitioners to re-frame traditional business strategic planning processes to achieve more sustainable family business futures.

Passing the baton

Purpose The purpose of this paper is to consider the factors affecting the success of succession planning in family businesses. Design/methodology/approach The study reports on a panel discussion in which the former chairman of the William Jackson Food Group describes the processes put in place to manage succession at this family firm and his own experience of handing over to his successor. Findings Once upon a time, saying that you were going into the family business marked the end of any career discussion. Now it’s just the beginning – interest in family firms has never been greater. Succession planning is a subject guaranteed to generate questions – everyone wants to know how to get it right. Fortunately, it’s an area where some are happy to share their experience. Research limitations/implications The paper highlights the need for more longitudinal research on family firms. Practical implications This paper provides a practical guide to structures and processes that can facilitate succession planning in family firms. Social implications It draws attention to the emotional and psychological impact of succession on the retiring individual and the need to create life structures to replace former business involvement. Originality/value This paper aims to present a frank discussion of the approach to succession planning taken by one family business and the broader research questions that it raises.

The weakness of strong ties: Sampling bias, social ties, and nepotism in family business succession

Decision-making is a complex cognitive activity filled with bias. Leader decision-making is unique because it occurs in a social context. We examine how biases resulting from social network dynamics complicate leaders' decision-making. In particular, we focus on a specific case of leader cognition: nepotism in the succession decisions in the context of family businesses. Succession often leads to a decline in performance because leaders frequently choose family members as their successor, a form of nepotism. We show that even when a leader can overcome individual decision biases, a bias in sampling resulting from families' strong ties can still allow a leader to wrongly conclude that family members are better qualified than external candidates when the opposite is true. We demonstrate this phenomenon using simulation modeling and explore solutions to family business succession planning.

Relationship between Succession Planning and Retirement Variables Among Family Businesses in India: A Cross Gender Study

This study investigates the relationship between retirement planning and succession planning in the family businesses in India across gender. Data was collected from 80 i.e. 40 female and 40 male CEOs of small and medium sized family businesses in India with help of a structured self administered questionnaire. Confirmatory factor analysis (CFA) in LISREL (8.70) was done to check the validity of the scale. Results of the study strongly suggest that though there were certain visible differences across gender, succession planning in Indian family businesses is typically an unplanned affair. The relationship between succession planning and retirement planning varies across gender. Therefore, indicating that the dimensions of strategy planning and implementation need to change according to gender. The results of the study highlight the patriarchal nature of the Indian family businesses even the ones run by female CEOs. The results indicated that top ranking dimension across gender for CEOs is relationship with family after retirement but the rating across the dimensions changes between male and female CEOs. The results indicated that the planning for retirement needs was unique across gender in Indian Family Businesses. Analysis highlighted that there was significant difference in the variables of retirement which influenced succession planning across gender. In case of males succession planning was strongly correlated to retiree well being and development, continuity and viability of the enterprise and ownership and succession planning. While for females it was strongly correlated to one variable i.e. ownership and succession planning. Regression analysis indicated that for males well being dimension of retirement influences succession planning most strongly i.e. increasing well being one unit will increase chances of successful succession planning by 8.223. As for females results indicated that ownership dimension of retirement influenced succession planning strongly i.e. increasing ownership by one unit will increase chances of successful succession planning by 3.513. Because of different problems faced by genders in running their businesses Indian female entrepreneurs were found to be more concerned about ownership transfer of their enterprise than other variables of their retired life. The study will help the family business owner/managers, advisors, consultants and/or researchers in developing a proactive succession planning strategy formulation and implementation. The research will also contributes to the growing body of knowledge establishing links between the retirement and succession planning.

Europa: Managing Growth

The case deals with the issues in managing the growth of a family business engaged in retail and discount stores in Chennai. It highlights one of the strengths of family businesses, namely leveraging family resources into the business. The case also deals with issues of succession planning in family businesses.

Family businesses' succession planning: a seven‐country comparison

PurposeThe purpose of this article is to measure and compare differences in levels of family business planning for succession in seven countries: Croatia, Egypt, France, India, Kosovo, Kuwait, and the USA.Design/methodology/approachThe research methodology was survey research collecting data from seven countries. Analysis of covariance (ANCOVA) was run to test for differences in family business succession planning between countries, controlling for years in business, number of employees, industry, and type of ownership. ANCOVA was followed by a post hoc pairwise comparisons least significant difference (LSD) to determine which countries did have significant differences in their extent of succession planning.FindingsThe paper finds that there were statistically significant differences in family business succession planning between Croatia, Egypt, France, Kosovo, Kuwait, and the USA. However, there were no statistically significant differences between India and the other six countries.Research limitations/implicationsThere is a growing body of literature focusing on family business succession, as researchers attempt to better understand the problems of passage that can exist in family firms. Thus, an important research question is: why are some family businesses able to successfully manage succession while others are not? Further research is needed to answer this question.Originality/valueThis research is original in that it is the first study to test differences in family business succession planning in multiple countries; thus taking the succession planning literature in a new direction.