Intra-family Succession Research Articles

Sustainable Development of Chinese Family Businesses: Exploring the Role of Succession Planning in Maintaining Organizational Sustainability from the Perspective of Socioemotional Wealth

Identifying the factors affecting organizational sustainability is a crucial topic in the field of social science and business research. Especially in family businesses, the most crucial issue is how to maintain corporate sustainability across generations. In this regard, succession planning plays a key role in maintaining the sustainable development of family businesses. From the perspective of socioemotional wealth, this study discusses the motivations and consequences of intrafamily succession by measuring the impact of the internal determining factors of succession planning on family business performance. Based on a sample of 281 Chinese family firms, this study uncovers the relationship between succession planning and organizational performance. The core findings of this study include succession planning is positively related to organizational performance in the matter of the successor’s training; succession planning has a positive effect on organizational performance in terms of the successor’s self-preparation; and succession planning is positively correlated with organizational performance in the aspect of the relationship between the successor and business. By illustrating that the formulation of succession planning is an essential pursuit for family businesses to preserve sustainability and socioemotional wealth, the results reveal ways to facilitate succession planning through internal factors in the family business. This study contributes to organizational sustainable development literature, family business sustainability studies, and succession management research by validating the positive relationship between succession planning and organizational performance, indicating that succession planning is a vital driving force for achieving organizational sustainability.

I want to break free: Successor Emancipation in Family Business

Family business successors live at the nexus of past, present and future, nourished and inspired by past legacies while also craving to build a brand-new future. The senior generation is generally the guardian of firm continuity in charge of preserving past achievements, whereas the next generation might dream about introducing change and innovation within the current landscape of the family firm. Yet these attempts too often trigger resistance and anxiety in the senior generation, who might respond with increasing control and suspicion to any tentative of challenging the status quo such as transforming current products, services, business models, or organizational structures. Successors operate at the intersection of these opposite forces of conservatism and reform, and one of their major issues is that they need to handle them effectively, that is without jeopardizing family relations and harmony nor losing themselves into the process. Unless they succeed in doing so, succession failure might follow. By combining two different streams of literature grounded in distinct disciplines, namely succession literature in family business and emancipation literature in entrepreneurship, we reveal successor emancipation as a novel explanation of why successions fail and offer some practical advice on how to handle these tensions in intra-family succession.
 Received: 10 May 2023 Accepted: 28 Jun 2023

Coexisting with the national will: state logic and intrafamily succession

Coexisting with the national will: state logic and intrafamily succession

Intra-family succession motivating eco-innovation: A study of family firms in the German and Italian wine sector

Despite the increasing relevance of environmentally friendly practices in the wine industry, which are mainly shaped by family firms, research has yet to examine in detail the internal drivers of eco-innovation in such firms. Intra-family succession as a driver of eco-innovation is an intriguing topic of study, as prior studies indicate that it may create new opportunities. Accordingly, a field study of 28 family firms was conducted to examine the internal drivers of eco-innovation in depth, with a specific focus on family firms and intra-family succession. The results revealed that intra-family succession encourages family firms to engage in eco-innovation, to different extents, in three ways: (i) becoming a facilitator in the community; (ii) fostering environmental consciousness; and (iii) developing environmental passion. Overall, this study widens the examination of internal factors influencing eco-innovation, improves the understanding of eco-innovation among family firms, and provides evidence of how to support next-generation members to develop their future orientation and consciousness about the importance of protecting natural resources and their responsibility towards stakeholders and the community.

Not all crises are the same: the effects of crisis triggered successions in family firms

PurposeAlthough succession planning can be important for the continuity of family firms, not all family business have the opportunity to engage in this planning. Sometimes, these organizations face crisis events that may trigger an intra-family succession. However, what happens when there is an unplanned succession? Are family businesses doomed to fail? This project aims to explore unplanned successions that are triggered by crisis and the impact that this can have on post-succession financial performance. The authors also examine the moderating role of successor characteristics (i.e. education and previous work experience) on this relationship.Design/methodology/approachThe ideas were tested using data from 151 publicly listed family firms in China.FindingsThe findings indicate that having a crisis driven intra-family succession does not always result in lower post-succession performance. It is only successions that are triggered by market crises that negatively impact financial performance after the unplanned succession. In these instances, the education and previous experience of the successor moderate the negative relationship between market crisis succession and financial performance such that having more experience and a college education diminishes these negative effects on performance.Practical implicationsThe results point to the importance of the preparation of the next generation in helping family firms navigate unplanned successions. The findings indicate that education and previous work experience of the successor can help a family firm manage a crisis.Originality/valueThis study continues to build the understanding about unplanned successions and the important role that successor preparation can have for the success of the family firm.

The soft landing: Does intrafamily succession matter for corporate risk-taking?

Succession has been recognized as one key challenge to family firms. To manage succession risks, founders aiming for intrafamily succession might adopt risk-averse strategies in advance. Using a sample of A-share listed family firms in China, we find that family firms with apparent family successors are indeed more risk-averse than those without such successors: the former group has fewer investments in research and development (R&D), lower debt, more cash holdings, and less volatile earnings than the latter. These effects are weaker for firms in a more market-oriented environment, firms with stronger family control, or firms faced with more intense market competition. Further analyses show that the reduced risk-taking for intrafamily succession is stronger when successors have been involved in family businesses. Firms with male successors are also more risk-averse than those with female successors except in R&D investments. By illustrating that founders proactively curb firm risks to increase risk capacity for family successors, this paper not only contributes to the literature on family succession, but also extends the literature about determinants of corporate risk-taking decisions.

Does Internet exposure reduce the desire for family control? Evidence from China

Family firms (FFs) are known as holding strong desire for family control but it is yet to be known whether and how Internet would alter such inclination. Invoked on the institutional logics perspective, we proposed that FFs with greater Internet exposure would reduce the desire for family control whereas the power of family logics manifested by the current (i.e., family ownership) and transgenerational (i.e., intention of intra-family succession) control should drag down the changes. Based on a Chinese national survey data, we found strong supports for the hypotheses except the moderating effect of transgenerational control. Overall, the study contributes to the family business (FB) literature by unveiling that technological changes can serve as additional antecedent of FFs' professionalization. It further highlights that different levels of family ownership lead to different responses to new institutional logics and findings in developed economies may not apply to those in emerging economies like China.

Knowing me, knowing you: A study of the types of knowledge transferred during the succession process in intra-family takeover of family businesses in Hungary

This study aims to examine the role of knowledge in ensuring the successor’s readiness for intra-family succession in Hungarian family businesses. The study investigates the research question: which types of knowledge shape the successor’s readiness for succession from both the founder and successor perspectives? A dyadic approach is employed, examining both the founders’ and successors’ perspectives through semi-structured interviews. Based upon the findings, propositions are set out for further research directions. For practitioners, the findings uncover the key types of knowledge when preparing for succession and the order in which these should take place. Practitioners can thus develop strategies for improving the development of successor’s knowledge capital, increasing the chances of a successful succession process.

The Italian Legal Framework of Agricultural Land Succession and Acquisition by Legal Persons

The work outlines the Italian legal framework of agricultural land succession and of land acquisition by legal persons. The issue of the inter-generational turnover in agriculture is a fundamental issue of the political agenda of the European Union and is particularly relevant in Italy, where farms are predominantly family-owned. For this reason, intra-family succession is the preferred mechanism to transfer farm management to future generations, and it is carried out mainly through the so-called Family Pact (art. 768-bis of the Civil code) before the death of the farmer. Considering this type of transfer between generations, it is necessary to distinguish three different scenarios (that in which the agricultural holding is currently managed as a sole proprietorship farm business by one of the parents; that in which management of the agricultural holding has already been transferred to the children, but land and buildings remain the property of the parents; and that in which the holding is currently managed as an agricultural company in which the parents retain a majority interest).The single compendium, a specific legal institution aimed at preventing fragmentation of rural land, is also analyzed, as well as the consequences of the death of its owner. Succession in agricultural land and/or holdings and in agricultural contracts is also considered. With regard to succession of agricultural land and/or holdings, in case of death of the owner of agricultural land conducted or cultivated directly by him or by his family members, art. 49 of Law no. 203/1982 provides for the coercive establishment of an agricultural lease relationship, as the heir who is also a professional agricultural entrepreneur or a direct farmer becomes tenant by law (ex lege) of the land owned by the hereditary community for a period of 15 years, which corresponds to the minimum duration of leases of agricultural land established/set by art. 1 of Law no. 203/1982. At the end of said period, art. 4 of Law no. 97/1994 states that the heirs who are considered leaseholders of the portions of rural land included in the other co-heirs’ quotas, pursuant to art. 49 of Law no. 203/1982, have the right to purchase, on expiration of the coercive lease of land established by law, ownership of said portions (at the average agricultural value of the land) together with stocks, appurtenances, and annexed sheds. The last part of the work explores the rules of acquisition of land/holding by domestic and foreign legal persons. There are no limitations in Italian law on the acquisition of agricultural companies and/or agricultural holdings by foreign persons, both individuals and companies. Foreign investments or ownerships of farm property are neither supervised nor forbidden. As a result, a foreign investment is not subject to any specific government approval or consent from a public authority before the acquisition of any shares in a domestic agricultural company. However, the acquisition of a farm property may be subject to general rules related to ownership acquisition, and planning and environmental rules applicable to any other property.

Family influence and succession strategies in private businesses at the cusp of leadership change: comparison between family firms and lone founder enterprises

PurposeThis paper investigates the impact of family influence measured by the F-PEC scale on private enterprise (both family firms and lone founders) leadership succession strategy.Design/methodology/approachThe research dataset is comprised of 390 private enterprises whose head offices were situated in the voivodeships of Lower Silesia and Wielkopolska in Poland. The authors collected data through CAPI (computer-assisted personal interviewing) method, as well as through comprehensive, structured interviews with company owners. Data were analysed using hierarchical logistic regression for each type of succession strategy.FindingsThe results suggest that increased family influence does not necessarily lead to intra-family leadership succession in private enterprises. Importantly, a range of findings contradicted authors' predictions. The relationship between the overall F-PEC scale values signifying the multi-faceted family influence over the business and the choice of internal successor was weakly negative for the total sample; also, the higher the overlap between family and business values and the higher the commitment to family business, as evidenced by the Culture subscale, the lower was the occurrence of intra-family successor choice in the population of lone founders. The Culture subscale also increased the prevalence of lack of succession planning in the sample of lone founders.Originality/valueWhile several studies suggests that family firms may be more prone to choose an intra-family succession scenario, it remains unclear how lower levels of business and succession experience, may influence the successor choice. Indeed, some studies suggest that a strong family influence over a business, may stimulate family firms to choose a family outsider as a business leader. Therefore, the key contribution of this study is contextualizing the response to an ongoing succession debate. This study investigates the strategic choices of companies in the first generation of ownership operating in Poland, which serves as an example of a post-transition economy. While the characteristics of this economic environment may be unique, the authors discuss how the surprising findings may add to the understanding of the general succession processes present in private enterprises.

The Effects of Family Firm CEO Political Ideology on Successor Choice

Integrating upper echelons theory and socioemotional wealth (SEW) literature, this study examines how family CEOs’ political ideology influences their decisions on family firms' successor choices. Using donations records to measure CEO political ideology, we test our ideas on a sample of 157 family CEOs from S&P 1500 firms from 1991 to 2021. We show that a family CEO's political ideology regarding conservatism has a significant positive effect on the probability of choosing a family member as a successor. In addition, the SEW endowment (family control and management) mediates the positive relationship between CEO conservatism and intrafamily succession. By showing that CEO political ideology manifests in family business succession, we contribute to research on family business succession, CEO political ideology, SEW, and upper echelons theory.

Family social capital as a driver to leverage challenged transgenerational entrepreneurship

PurposeThe purpose of the study is to unveil the key role of family social capital (FSC) as a driver for transgenerational entrepreneurship (TE) in the specific contexts of challenged successor-driven entrepreneurship.Design/methodology/approachThe paper adopts a multi-case study methodology. Guided by three theoretical propositions, three TE case studies are analyzed. Drawing on ten in-depth interviews with at least three different informants from each intra-family succession case study, evidence about this particularly complex phenomenon was obtained.FindingsThe paper highlights the effect of FSC as the key familiness driver to leverage challenged successor-driven entrepreneurship. The paper underscores the systemic and dynamic network of multiple exchanges required to construct successor’s own pool of knowledge resources and to support familiness and thus the competitive advantage of the family firm (FF).Practical implicationsDifferent scenarios are illustrated, and specific lessons are provided for successors and families that face TE opposition in intra-family succession, regarding the restoration of damaged FSC and involving non-family stakeholders in the successor-driven entrepreneurship. In these cases, opposition to successor-driven entrepreneurship may help to develop successor’s leadership abilities.Originality/valueFocusing on a specific intra-family succession context where successor-driven entrepreneurial initiatives face stakeholder opposition, the paper highlights the specific role played by FSC in the successor knowledge construction in specific contexts of challenged intra-family succession.

Back to square one: The measurement of Socioemotional Wealth (SEW)

Whilst Socioemotional Wealth (SEW) has been acknowledged in a vast amount of family firm literature, most papers continue to treat this construct at the theoretical level, while assuming that all family firms possess SEW and strive to preserve it. However, family firms are highly heterogeneous and it is therefore possible that there is much variance in SEW across these organisations. Using a large sample of family firms from Spain, the original FIBER scale proposed by Berrone et al. (2012) is validated with items that were inferentially drawn from a literature review, and we compared our results with those of Hauck et al. (2016) in Austria/Germany and those of Filser et al. (2018) in Finland. We reduced the original five dimension FIBER model to three dimensions, namely identification of family members with the firm, emotional attachment, and renewal of family bonds through intrafamily succession.

A Far-Reaching Parental Love? Co-Governance of Intergenerational Succession and Innovation Activities in Chinese Family Firms

ABSTRACTMotivated by the research gap on intergenerational succession dynamics of family firms, this study examines the effects of initiating intergenerational succession on firms' innovation activities. We propose that initiation of intra-family succession can result in founder–successor co-governance that represents a strategic transition to the succession and incorporates the two conflicting yet complementary directions of change and continuity. Grounded in the theory of altruism, we suggest that co-governance will positively affect firms' innovation activities and that this positive link is contingent on the idiosyncratic intra-family relationships of kinship type, age difference, and gender difference between the founder and the successor. Furthermore, we posit that co-governance will lead to a flow of resources to low risk, rather than more inventive but higher risk, innovations. Based on the unbalanced panel data of 4,694 firm-year observations in our sample from listed Chinese family firms during the 2006–2015 period, empirical analysis supports our hypotheses and confirms that when examining family firms' innovation, there is a need to take the heterogeneity of the intra-family governance structure more fully into consideration.

Transgenerational Intent of Taiwanese Business Families in Brisbane, Australia

Abstract This study investigates the impact of immigrant context on continuity and success in Chinese family business. We conceptualize the immigrant context as exposure to country differences in family logic, arguing that the immigrant context influences transgenerational intent by affecting family practices and relations. Based on a multiple-case study of Taiwanese business families in Brisbane, Australia, we show that variations in three family practices – parental control, children’s filial piety, and parental role in children’s career development – play an important role in this matter. To explain why, we theorize that the extent to which Taiwanese immigrant business families continue with or depart from traditional Chinese family logic in terms of these three practices enables particular meaning of intrafamily succession to prevail in the family, which ultimately affects their transgenerational intent.

Meanings of Intrafamily Succession and Transgenerational Intent in Business Families

We offer guidelines regarding how business family parents who wish to pass the family business to the next generation may best generate transgenerational intent in their children. Our recommendations derive from making two distinctions that are implicit in studies on transgenerational intent. First, some predictors identified by scholars as having influence over children’s transgenerational intent cannot be manipulated by parents; some can. Second, there are two meanings to intrafamily succession in business families: personal choice and family obligation. Accounting for these two insights, we suggest that, given meaning context, certain parental tactics will be more practical and effective than others.

Internet Exposure and Desire for Family Control: Institutional Logics Perspective

While prior studies pinpoint that Internet can reduce communicational costs thus help expand potential markets, few studies have examined whether and how Internet would alter incumbent managerial routines and logics. The examination of family firms (FFs) presents an important agenda since they are known as reluctant to dilute controlling powers but also embrace the Internet technology that calls for opposite logics. To understand whether and how Internet influences the family’s desires for control, we invoked institutional logics theory and argue that the strength of the desires is a matter of balance between multiple institutional logics. Specifically, we proposed that FFs with greater Internet exposure should present relaxed desires for family control whereas the power of family logics manifested by the current (i.e. family ownership) and transgenerational (i.e. intention of intra-family succession) control should drag down the changes toward open logics. Based on a recent Chinese national survey data, we found strong supports for the hypotheses except the moderating effect of transgenerational control. Overall, the study contributes to the literature by pinpointing the additional effects of Internet exposure onto managerial routines while introducing additional antecedents of professionalization for FFs. It also presents new evidence of institutional logics pluralism by sketching the interactions between technological changes and family logic.

Family Firms and Innovation from Founder to Successor

Several empirical investigations indicate that family firms are more innovative under the founding generation’s leadership and become less innovative in later stages, while others state the opposite. Within this debate, limited attention has been devoted to understanding how intra-family succession might be an opportunity to maintain or improve family firms’ innovativeness. This paper aims to explore how family firms’ innovativeness may evolve from the first to the second generation and understand which conditions may favour or hamper this change. A qualitative approach based on a multiple case study was adopted, conducting seven face-to-face semi-structured interviews with founders and successors that formed the basis of four case studies. The results reveal four different dynamics that characterise how a first-generation family firm’s innovation capacities are or are not passed on to the second generation: decline, transformation, consolidation and preservation. Findings also show that these dynamics depend on the founders and successors’ approaches towards innovation. To better depict differences between them, we propose a typology of founders (lone innovator, collaborative innovator and orchestrator innovator) and successors (prodigal son, game changer, talent scout, faithful disciple) and explain how they influence the evolution of innovation from the founder generation to the next.

Intra-family succession in South African townships: women's account of the desirable attributes

Focused on women, this article investigates the qualities and attributes that family-owned businesses desire in a potential successor. This paper is the outcome of quantitative data that was solicited and collected from 120 participants using a semi-structured questionnaire. The Statistical Package for Social Sciences (SPSS) software was utilised to analyse that quantitative data and was complemented with the elements that were drawn from the qualitative data (open-ended questions). The results suggest that the incumbents prefer the potential successor to have management skills; leadership skills; ability to relate well with other members of the family; show interest in becoming a successor, possess greater aptitude than other members of the family; understands the business vision, be trustworthy; be committed to the business; has management experience; must be related by blood or law and able to harmonise the interests of the family with those of the business. Overall, this narrative highlights the woman's position in a male-dominated discourse, besides suggesting that an understanding of the attributes desired by the incumbent will positively impact on the succession process in South African townships.

Intra-family succession in South African townships: women's account of the desirable attributes

Focused on women, this article investigates the qualities and attributes that family-owned businesses desire in a potential successor. This paper is the outcome of quantitative data that was solicited and collected from 120 participants using a semi-structured questionnaire. The Statistical Package for Social Sciences (SPSS) software was utilised to analyse that quantitative data and was complemented with the elements that were drawn from the qualitative data (open-ended questions). The results suggest that the incumbents prefer the potential successor to have management skills; leadership skills; ability to relate well with other members of the family; show interest in becoming a successor, possess greater aptitude than other members of the family; understands the business vision, be trustworthy; be committed to the business; has management experience; must be related by blood or law and able to harmonise the interests of the family with those of the business. Overall, this narrative highlights the woman's position in a male-dominated discourse, besides suggesting that an understanding of the attributes desired by the incumbent will positively impact on the succession process in South African townships.