Factors which impact effective succession in small family-owned businesses: An empirical study

Family-owned businesses are associated with a low rate of survival. Statistically, less than three in ten will survive the first 50 years. The literature acknowledges that the issue of succession is critical for organizational development and continuity. Effective (successful) successors are defined in the literature as those persons who have the title and power of office and, in the long term, demonstrate the ability to create a positive trend of growth and profits for the business. The research consists primarily of quantitative analysis. The bulk of the research is predicated on 254 respondents, of which 181 are classified as effective successors and 73 as ineffective successors. Additionally, four in-depth interviews with successors were conducted and analyzed to verify the quantitative dimension and to lend breadth to the constraints of a survey questionnaire. The purpose of the research is to identify factors common to effective successors and ineffective successors. The data gathered centered on two topics: successor demographics, and successor attitudes relating to their families, themselves, and their businesses. The data show some interesting and clear differences between effective and ineffective successors. This information should be of interest to family-owned businesses, family therapists, business consultants, and academicians. The research is driven by six hypotheses. The results show three of the hypotheses to be consistent with the literature, while the remaining three uncover new information. The three hypotheses which coincide with contemporary researchers replicated that most successors: worked elsewhere before joining the family firm; willingly came into the business; and had positive outlooks on the businesses. The remaining three hypotheses uncover what appear to be new data about successors: that most successors are first exposed to the family business between 10 and 11 years of age; that there is a level of competition residing in the successor and aimed at the predecessor; and that 2nd-, 3rd- and 4th-generation successors generally work around 60 hours per week in order to get the job done. The study concludes by offering specific recommendations for further research. These recommendations were generated by the research findings, which present some new implications for research, theory, and practice