a case study on succession issues - CiteSeerX

Wolverhampton Business School Management Research Centre __________________________________________________________________________________________________

Pass the baton within the family – a case study on succession issues By Yong Wang Working Paper Series 2002

Number

WP003/02

ISSN Number

ISSN 1363-6839

Dr Yong Wang Post Doctoral Researcher University of Wolverhampton, UK

© University of Wolverhampton 2002 - All rights reserved

Pass the baton within the family – a case study on succession issues _________________________________________________________________________________________

Copyright ©

University of Wolverhampton 2002

All rights reserved. No part of this work may be reproduced, photocopied, recorded, stored in a retrieval system or transmitted, in any form or by any means, without the prior permission of the copyright holder.

The Management Research Centre is the co-ordinating centre for research activity within Wolverhampton Business School. This working paper series provides a forum for dissemination and discussion of research in progress within the School. For further information contact: Management Research Centre Wolverhampton Business School Telford, Shropshire TF2 9NT !01902 321772 Fax 01902 321777

2

Management Research Centre 2002


Abstract Family business is the most prevalent form of business organisation and accounts for about 70% of all companies in European countries (Donckels & Frohlich, 1991). Studies of this sector attract an unusually diverse group of researchers and practitioners. Family business literature reveals that most of the recent studies generally discuss succession issues, and they lack a firm empirical basis. The importance of this study is acknowledged by the fact that it describes an empirical succession experience in a traditional family controlled business. An in-depth interview was conducted with the incumbent manager and potential successor. The focus was mainly on the succession issues, such as succession planning, successor training and inter-generational relationship. The company’s present performance, development strategy and potential expansion were also generally illustrated. Suggestions for family business owners, managers and researchers are addressed.

3



The author Dr Yong Wang Dr Yong Wang is a Post Doctoral Researcher for the Centre for Enterprise Excellence at Wolverhampton University Business School. His research interests include family business succession issues.

Acknowledgement I would like to thank the managing directors of the family controlled business for their kind cooperation and support.

4



Pass the baton within the family – a case study on succession issues1 Introduction Studies of family business have attracted an unusually diverse group of researchers and practitioners, as it remains the prevalent form of business organisation. However, evidence suggests that family controlled companies find the strategic management of change and increasing competition, coupled with the complexities of managing family relationships, so insurmountable that their survival and transition into the next generation can be at risk. It is estimated that in Europe, only 30% of family businesses survive to the second generation, and only 15% make it to the third generation (Leach, 1994; Poutziouris & Chittenden, 1996). The succession of family controlled businesses constitutes the core of family business studies. Consequently, studies of succession in second and later generations of family businesses have dominated strategy-management research (Wortman, 1994). Succession planning, which defines the control of family businesses, obviously receives the major concern. However, it is not the only practice utilised by family businesses. Beyond this are practices that shape the daily operation of the businesses. These may include, but are not limited to, successor training and inter-generational relationships. This case study generally reviews the development of a well-managed medium sized2 family business. The focus of the case study is to present an assimilation of executive and managerial thinking that reflects the business succession experience/initiatives and the way the business runs. Hence, the case descriptions are largely embedded in the inner rather than outer context of the company.

Michael Stone Ltd Michael Stone Limited is a family controlled business, named after the founder, who established it in 1899. It is mainly involved in the wholesale of food, disposables and catering equipment. Following a 102-year entrepreneurial venturing, the company has evolved into one of the leading enterprises in its field. The business is based in a small town north of Manchester. Currently, it is jointly managed by family members of the third and fourth generation, Tom Hill and his two children. Start-up At the turn of the twentieth century in North Manchester, eighteen years old Michael Stone made the daunting decision to set up in business on his own. With a borrowed £100 he bought a horse and float and opened premises. There he supplied oils and fats to the fish frying trade in and around North Manchester. It soon became a ‘three horse-power’ business with Kitty, Dorrie and Flo delivering oak casks of South America neatsfoot, groundnut, cottonseed and soya bean oils on a horse drawn wagon. Together with American lard, beef dripping and ‘compound’ in wooden crates they comprised the basic frying essentials of the age. From the beginning, the company provided quality goods and an excellent service. The development of the business In 1936, Michael’s son-in-law, Peter Hill, joined the company. The difficult years after the Second World War left it still in trading business but in very poor shape. Michael’s death in 1950 was a severe blow but Peter struggled to develop the company through diversification. By the early sixties, with the business on the upturn, Peter’s son Tom left the teaching profession for the trade of fish frying that he had grown up with.

5



Lack of capital meant that expansion had to be gradual and the vehicles second-hand, though reliable. Tom believed in ‘backing Britain’ and persuaded his colleagues to go ‘solid Leyland’; the company has retained a Leyland fleet ever since, providing a high standard of distribution to the fish frying and catering trades. Manchester Corporation’s redevelopment programme, in the original town the business started with, reluctantly forced the company to move to their current premises in 1974. At least their proximity to the motorway network ensured fast and efficient distribution throughout the North West. Recently, the company has expanded its business into supplying a wide range of frozen goods. The list contains several varieties of frozen-at-sea fish, as well as sausages, burgers, chicken products, pies and pizza products. It aims to offer customers a ‘one stop’ supply of quality products at competitive prices. In fact, the fourth generation of management emulates the first. Today, this company has three depots, one in Blackpool, one in North Wales at Colwyn Bay, and the main depot and head office North of Manchester, all of which hold the Seafish Wholesaler Quality Award. Orders are now delivered in a 22-van fleet covering an area from the Lake District to mid Wales and across to the West Midlands. The management structure of the company Currently, the third and fourth generation family members jointly run this medium sized family business. However, Tom is already over sixty and the business is facing the third succession. His son, Richard is the managing director and the company secretary. His daughter Lisa is the financial and personnel director. Brian, one of Tom’s best friends, is mentoring and helping Lisa in accounting issues.

Succession issues in Michael Stone Ltd Succession planning Michael Stone Limited has experienced two ownership transitions, from Michael to Peter, and from Peter to Tom. The third formal succession is expected in two years time and currently the successors have already being involved in the daily affairs of managing the business. The literature on succession planning provides certain evidence for its importance. For example, Ward (1987) offers interesting statistics. Of the Fortune 500 companies, “since 1955, only 188 companies have kept their status on this list as independent concerns. More than 60 percent have been sold or acquired or have watched their sales decline significantly in the past thirty years” (Ward, 1987, pp.1-2). Correspondingly, it is revealed that from 1924 to 1984, eighty percent of two hundred successful manufacturers no longer survived, while only thirteen percent are still owned by the same family as in 1924 (Ward, 1987). The reasons for the demise of the family business are many; however, Ward indicates that an inability to plan strategically for the future of the firm is a major cause. Similarly, Davis and Tagiuri (1989) and Astrachan and Kolenko (1994) find that incumbents seldom plan the leadership succession. The reason for this, according to Lansberg (1988), is that most stakeholders in family businesses are ambivalent toward succession planning. Company founders encounter psychological deterrents to succession planning as it includes a letting go of power. In addition, there is a concern of losing the central role within the family. Family members avoid succession planning for fear of loss of identity, loss of family harmony, and loss of privacy. Senior managers, having worked along with founders long term, are reluctant to transfer from a personal relationship with the founder to a more formal one with the successor. Successors, as indicated by Harvey and Evans (1995), on the other hand, have to prepare themselves to handle the residual conflicts and stress subsequent to succession.

6



Probably because of the business’s long history and sufficient experience accumulated through the previous successions, Tom did make a general scheme for his two children, though no formal written one existing. This includes a professional training plan which gets both of the children involved in the business management far before Tom’s retirement to acquire enough business skills and a shareholding rearrangement scheme. This tends to be exceptional and can be considered as one of the reasons why this family controlled business can survive for such a long time and remain healthy in the meantime. Apart from this, Tom proposed to make Richard the Chairman of the business in the next two years and retire from the business step by step. The most distinctive action undertaken by Tom is that he finished the shareholding redistribution in 1995. In the updated ownership system, Tom is no longer the shareholder, while both of his children have been pushed to the front stage, each holding 39.8% of the shares of the company (Figure 1 & 2)3. This was considered beneficial to the two children in developing their confidence and dignity in front of the staff to make sure the transfer of the business goes smoothly. In fact, the two children have already commenced building their own younger management team within the business. They are on the edge of the succession position. To be honest, Tom really loves the empire developed through three generation’s effort and is quite reluctant to give up the central role in the family business. He declared, “I really enjoy the business and would rather stay here longer, but only as long as I can make a worthwhile contribution.” OWNERSHIP

MANAGEMENT B. Frank 0.1%

T. Hill 79.6% E. M. Hill 3.6% A. M. Hill 16.7%

FAMILY Figure 1. The family business management system (before 1999)

OWNERSHIP

MANAGEMENT B. Frank 0.1%

R. Hill 39.8% L. Hill 39.8% E. M. Hill 3.6% A. M. Hill 16.7%

FAMILY Figure 2. The family business management system (after 1999)

However, though he is preparing for the impending succession, Tom is not a ‘xenophobic’ attitude holder and is not so keen to keep the total control within the family. He repeatedly expressed, “the business must come first. The business has to justify its existence to benefit everybody. It should get the right managers in the right places to ensure the company is running in the proper way.” 7



Successor training Successors in this business are all well educated. Both Richard and Lisa went to universities and, afterwards, gained work experience outside the family business for a few years. Richard was a professional lawyer working in London for about ten years before joining the business. After becoming engaged, and fed up with life in London, Richard showed an interest in running the family business. Through seven years effort, he has proven to his father and all the staff in the company that he is capable of running this business. In Tom’s words, “he is much better than I was [at his age], especially when facing up to the difficult decisions.” Lisa’s situation is slightly different. After obtaining a PhD degree in English literature, she first worked as a tutor and then expressed the aspiration of joining the company to deal with the accounting issues. Tom worried since her education had nothing to do with business management. Later, Richard tentatively recruited Lisa during Tom’s grand holiday in China. When he came back, Tom was taken aback, hating this kind of nepotism, but he had to accept this decision. This was partly because Tom himself had kept warning Richard “to find somebody you can trust specifically is the top criteria for a family business. You need to build up your own management team yourself,” while Richard firmly believed the most trustworthy and intelligent person around him was his sister. After querying this with his closest friend in the business, Brian, the financial manager, who gave a positive answer, Tom finally conceded. However, he re-emphasised his main business principle to Richard, “the business itself is not mine. It is an entity, an entity of living for staff, customers and family members. You need to make sure at every time, it is all right.” Furthermore, he set up a condition for his daughter in front of Brian, “do not think you are my daughter and superior to the other staff. If you cannot tackle it, you are out.” From that point, Brian held Lisa’s hand and mentored her with detailed financial help. Studies on successor training in the family business have received concern in the academic field. Fiegener, Brown, Prince and File (1994) notice that family firms favour more personal, direct, relationship-centred approaches to successor development, while non-family firms rely more on formalised, detached, task-centred approaches. Lansberg and Astrachan (1994) indicate that successor training is mediated by the family’s commitment to the business and the quality of the relationship between the owner-manager and the successor. Interestingly, Ambrose (1983) finds that children with higher education have less interest in succeeding to the business and they believe a successful transfer of business to the next generation is unimportant. One reason, he argues, may be that owners spend more time working and less time on family relationship development. Moreover, education opens new options for children, making the commitment to the family business less attractive. Contrary to Ambrose’s (1983) theory, the two children in this family business, both with high education, do show sound interests in running the business. This is probably because Tom, once a tutor himself, knew quite well how to educate children. In fact, this kind of education started from when Richard and Lisa were very young; and Tom successfully created a business appealing to the potential successors. However, Tom’s education for his children is not constricted to the ‘keep it in the family’ tradition, since Tom firmly believes the business is an entity, an entity for everybody, not just for the family. He taught his children, “you have no deserved rights to have this business. If you want to be a successor, firstly you need to be good enough to be considered and; secondly you really desire to join the business.” This message continued even after the two children graduated from the universities, developing their careers in a professional way, rather than serving in the family controlled business. Lisa entered academia and Richard was a good lawyer. Tom realised this fact and said to them: “I do not care what you do. It is totally your choice. However, whatever you do, you should do it properly.” Fortunately, after a medium term of professional careers outside the family business, the two children both showed aspirations to return to the family business. After being successfully recruited, Tom 8



reminded them: “the relationship in this business between employees and employers is partnership. It is far better if you can build up your own management team with our internal staff.” Presently, the two key successors of the family business are both under training regarding the business’s day-to-day management. Richard is trained by Tom himself. They meet every day and discuss every major issue of the business. Tom is sharing his experience with Richard, but encourages Richard to make his own decisions. Lisa is educated by Brian dealing with the chartered accounting issues. Tom repeatedly said to Brian, “I need a clone of you and you are the best trainer.” The training method is just as Fiegener et al (1994) described - personal, direct, relationship-centred approach. In addition, Richard has been enrolled on various courses. The best one, in Tom’s impression, is the Leadership Trust, which was recommended by his colleagues. Lisa was sent on CIMA (Chartered Institute of Management Accountants) course and finally obtained a certificate. Tom commented, “you cannot sing a song without the knowledge of the language. Training itself is only a part of the whole process. The main theme is being involved in business, and being capable and active in the business.” Inter-generational relationship No business can escape family influence; even the decisions of the CEO of a publicly held and professionally managed business are sometimes influenced by their spouse and children (Sharma, Chrisman & Chua, 1996). The relationship between the owner-manager and members of the next generation is vital because successors in family firms are exceptionally trained using a personal and direct approach. The experience will be excellent if the leader-successor relationship is healthy and affirming (Sharma et al 1996); otherwise, the successor may experience difficulties assimilating the lessons of the incumbent. Dyer (1986) and Fox, Nilakant and Hamilton (1996), in studies of how to manage the succession in family businesses, indicate that the nature of family relationships during the transition period is related to a successful succession process and suggest the need to initiate the constructive dialogue between incumbent and successor (Fox et al 1996). Similar conclusion has been reached by Seymour (1993), with respect, understanding, and complementary behaviour between the next generation family member and the organisational leader being critical to an effective succession. Generally speaking, the relationship between Tom and his two children was quite good, although it experienced certain tensions when Lisa was recruited into the business. “We certainly have different opinions upon the business issues, however we respect each other and carefully address the direction the business should go,” Tom said. Responding to the high competition, the business is currently making a transfer from traditional vansales to tele-sales, committed by Richard and Lisa. It is a quite radical change, which is driven by the new technology and by the general requirement of more efficiency in stock control. In his ‘business book’, Tom kicks against the modern practice. He firmly believes business is about people and the core of running a business is to build relationships around the people. “In this business, for some of customers, we have got a 30-40 years’ relationship,” Tom stated, “my grandfather’s customers filled in my father’s customer groups. My father’s customers still filled in my customer groups. To a certain degree, I do not agree with their (Richard and Lisa’s) business strategy. However, it could be balanced and Richard and Lisa need opportunities to practice.” Tom was quite pleased to see his children can manage, rather than saying van-sales was right and tele-sales was wrong. This is the kind of ‘respect and understanding’ described by Seymour (1993) and is considered as the spiritual pillar for the business development.

9



The relationship between business succession issues and business performance Effective succession is one of the main streams Handler (1994) summarised in the recent family business succession studies. Succession is not simply a single transfer of the baton; it is a multistaged process consuming time with most starting before heirs even enter the business. The effectiveness of succession is not limited to whether a president has been designated, but includes the ongoing health of the firm, quality of life, and family dynamics (Handler, 1994). Similar to the themes discussed in this study, Morris, Williams, Allen and Avila (1997) in an empirical study propose three sets of determinants deemed to influence an effective succession. These determinants include the preparation level of the heirs, the nature of relationships among family members, and the types of planning and control activities engaged in by the management of the family business (Figure 3). Furthermore, Morris et al (1997) conclude that “family business transitions do occur more smoothly when successors are better prepared, when relationships among family members are more affable, and when family businesses engage in more planning for wealth-transfer purposes” (p.386). However, the study also indicates that smoother transitions may not necessarily result in better posttransition performance. Preparation of heirs Nature of family and business relationships

Characteristics of the transition

Post-transition performance

Planning and control activities Figure 3. The conceptual model from Morris et al (1997)

Goldberg’s (1996) conclusion is similar to that of Morris et al (1997). He firmly suggests a correlation exists between successor effectiveness4 and incumbent’s mentoring. In other words, there exists a correlation between incumbent’s mentoring and business promotion in terms of revenues and profits. In this case, as described in the early sections, Tom does have plans for the near succession, e.g. professional training for his two children, ownership transfer and assumed succession time. Both successors are well educated and have sufficient working experience outside the family business. Furthermore, the relationship between Tom and his two children is quite good. In fact, the pleasant relationship is not restricted to the family domain, but extended to the whole business. According to Goldberg (1996) and Morris et al (1997), these positive issues may lead to a healthy performance. In the interview, Tom also supported this view to a certain degree. Table 1 generally describes the financial performance of this company for the recent five years. Data are available in FAME (Financial Analysis Made Easy) database. Based on the table, it is obvious that in these five years the performance of Michael Stone Limited is quite good. In fact, from 1995 to 1998 the business profit making increased steadily. However, in 1999 a substantial decline in operating profit was observed. According to Tom, this is because the business invested massively in 1999 for the headquarters’ refurbishment and the extension of the depot in Blackpool. The depot in Blackpool was actually double sized to match customers’ increasing requirements. Table 1. The financial performance of Michael Stone Ltd 1995-1999

Return on capital employed (%)

1995

1996

1997

1998

1999

8.45

12.54

15.04

16.14

5.77

10



Return on total assets (%)

6.99

10.31

12.74

13.54

4.97

Profit growth (%)

34.46

56.00

35.86

23.19

-62.58

Gearing (%)

11.28

9.38

7.38

7.18

6.67

72

72

66

69

70

Number of employees Source: FAME database

The ownership transfer itself did not affect the business performance. In 1995, Tom transferred his shares to his two children and all happened peacefully. Excitingly, after the ownership transfer, the business operating profit kept going up until 1999 and this led to the depot extension. Meantime, the profitability ratios - return on capital employed and return on total assets were maintained at a healthy level, reflecting the effective business management. Only a minor fluctuation is observed for the business employment during 1995-1999. Many nonfamily employees quite enjoy the working environment in the business and are willing to serve there longer. It is quite normal that in this family controlled business the average non-family staff have a long service history, some even up to 30 or 40 years. This is certainly attributed to the doctrine of this family business - “the business is an entity of living for staff, customers and family members.” The business owners fully realise the importance of the staff’s loyalty to the business and always make an effort to balance the relationship between family and non-family members. The actual relationship between family and non-family members is a ‘partnership’, rather than the normal employer and employee relation. Furthermore, the gearing ratio remains at a comparatively low level, reflecting the firm’s conservative view towards borrowing money. It also indicates that the business tries to avoid any risk-taking propensity. This is probably due to the business experience accumulated through the empirical practice. Tom admitted himself, “I am not a risk taker.” He is fully aware that any decision made by him will have an impact on his staff and the business. Therefore, he always keeps an eye on the borrowing money, asking himself, “whether I have gone too far? What can happen next? Will the market turn against me?”

The situation in the field and future development Though medium sized, the family business is, if not at the top, at least near the top in the food and beverages wholesale field. This is mainly based on the comments continuously made by business customers, suppliers, and competitors. We are looked upon as John Lewis, not the Kwiksave in the wholesaler area. That is a fair assessment. However, it is very difficult when you are near the front or at the front, people behind are always peeping to take over your position’, Tom stated, ‘we keep asking customers actively. How are we doing? Are we looking after you properly? I also exhort our van drivers ‘you are ambassadors for this marketing channel. The customers are the major resources for the company and they are directly connecting with you. You need to build up and maintain the business image. The business benefits not only from its detailed customer care but also from the constant effort in innovation. “We are always innovative from my grandfather’s day,” Tom said. His grandfather, in the early 1900’s, saw that most customers bought plain flour, baking powder, mixing them together to make batter flour. He wondered how they could ensure an even disposal of plain flour and baking powder. It is the family legend that, in 1924, he finally got a recipe from his uncle for making batter flour with premixing baking powder and plain flour in a dry state. The company thus gained respect and reputation for this recipe. ‘Stone’ gravy is another recipe of Michael Stone and the business makes quite a lot profits at present time with selling it massively 16-18 tons per month. As to the future development, the business has decided to operate nationally. Tom has four potential co-operators, one in Peterborough, one in Swindon, one in Scotland and one in the North East area. 11



These five original companies will form a network and get involved in national distribution. Through the network, a process of national distribution can be established and many spin-offs can be fed into each individual company. Five companies will cover separate parts of the country and Michael Stone Limited will be responsible for the North West area. More market-oriented initiatives are further generated, such as the strategic change from van-sales to tele-sales committed by Richard and Lisa. Through generations, the business keeps making effort in innovating products, in educating the customers and helping them to produce better products and in adapting to the evolution of the environment and technology. As a repayment, it maintains to be flexible and competitive in the market. Importantly, although various of strategic adjustments have been adopted, the business has not moved away from its essentials - delivering service with high quality. With the constant growth of the business, the Hill family has recognised that lack of professionals with managerial expertise may impede business development further, particularly the lack of marketing specialists. This could possibly weaken the business potential since the business definitely needs a good and straightforward channel to communicate with the customers. Based on this, one of the key business suppliers has been recruited as the marketing representative of the company. Meanwhile, the two children are forming their own management team and more professionals, such as IT and financial specialists, are being sought to maintain the business competitiveness. However, such recruitment inevitably means an involvement of external personnel at the senior management level, which may relinquish family control. How to strike a balance between control and professionalism is becoming a new topic for the new successors to address.

Implications for managers and researchers This study contributes to the concern of succession issues in three distinctive paradigms. Firstly, the case study indicates that succession planning plays an important role in the succession process. Succession planning is almost essential when business grows up to a certain stage since its structure normally becomes more hierarchical and its requirements more multifaceted. All these definitely deserve more planning work. The main point emanating from this case study is that to enable a smooth generational transition, the previous business owner (Tom Hill) transferred all his shares, which was 79.6% of the company, to his two children in 1999. This was considered beneficial to the two children in building up their confidence and dignity in front of the staff. The shareholding redistribution demonstrated to be an effective preliminary phase for the succession and the two children were actively involved in the business management. Currently, they are considering implementing a more market-oriented strategy, a dramatic change from traditional van-sales to tele-sales. The shareholding redistribution was also imperative. This was because not only Tom was near the age of retirement, but also the ownership transfer itself helped the business maintain stability. The term succession planning typically refers to the process of developing a business strategy providing prescriptions about how business generational transition can be implemented effectively. It is designed to create insights into the company and environment in which the company operates. It is suggested that succession planning address five issues: i) why is the family committed to perpetuating the business? ii) who should participate in the business transition preparation, when should they be prepared and what are the contingency issues in planning; iii) how will the family resolve various conflicts, both on the family and the business side? iv) how about the structuring of wills, the use and constitution of boards of director and the potential roles of family business consultants; v) how does the family see itself and the company in the future?5 In terms of benefits, succession planning is believed to prevent family businesses from ‘undershooting’ their strategic potential, encourage commitment from family members as a part of the process and provide a clear portrait for business owners to know where the business is directed 12



towards, and assure themselves that the business is retaining sufficient resources for a solid future. As a result, this issue is definitely worth pondering for all family business owners. Secondly, the case study indicates that successor training is an essential variable in business transitions. It seems that business owners’ priority should lie in developing a strategic training system for the next generation. Systematic training for the successor represents a strategic dimension within the business, and a potential source of competitive advantage. As a result, it should be managed strategically. One possible approach is to develop a ‘training charter’6 that provides a framework for the accomplishment of the possible training. Such a charter could include: i) identification of strengths and weakness of the potential successor; ii) identification of opportunities and threats in the family business; iii) definition of training needs and expectations; iv) development of programmes for fostering and improving the successor’s managerial ability; v) periodic and irregular measurement of training performance; and vi) acceptance and recognition mechanisms. Finally, existing evidence shows that the inter-generational relationship is a significant dimension in the succession process. The quality of the relationship is crucial for the business development. Lansberg and Astrachan (1994) observe that the quality of the relationship between the ownermanager and the successor would affect the degree to which the successor would be trained to take over the owner-manager’s responsibilities. Quite often, senior non-family managers play a critical role in the mentoring and training of the successor. However, if the relationship between the ownermanager and the successor is troubled, it is unlikely that these managers would want to be involved with training. In addition, non-family managers are likely to doubt the owner-manager’s commitment to the choice of successor and hence view training as being of no consequence. Therefore, for the family controlled business, a certain concern on the inter-generational relationship is recommended. This study has identified that succession issues have three underlying dimensions and these issues are related to business performance. Any future study can be extended in two general ways, theoretically and methodologically. Theoretically, the future study could consist of the refinement of the themes proposed in this study. In addition, another critical issue requiring further research involves the causes of failure and success in descendants-controlled family businesses. Are there identifiable failure factors, and to what extent are these related to family versus non-family issues? Methodologically, a longitudinal study can be considered. Pettigrew (1985) notes, the more researchers look at present-day events, the easier it is to identify change; the longer researchers stay with an emergent process and the further back they go to disentangle its origin, the more likely they are to identify continuities. Longitudinal study is a vital element of the research design. It will generally help researchers to obtain deeper insights of the succession process and to observe the change of view on succession dimensions. Certainly, more work is required before one can hope to develop domain-specific theories concerning family business succession issues and business performance.

Notes 1. 2. 3. 4. 5. 6.

This is part of the authors PhD research programme – Family Business Succession Issues – sponsored by Southampton Institute. According to the Managing Director, the family business currently has 76 employees. Another 20.3%shares of the business are still held by relatives unchanged and 0.1% by Brian – Tom’s best friend. Effective successors in Goldberg’s (1996)research are defined as those who have demonstrated financial competence by increasing revenues and profits during the five year period of 1989-1993. This reflects Morris et al (1997) and Ward’s (1988) discussion on succession planning. This reflects Morris et al (1997) discussion on the family ‘relationship charter’.

References Ambrose, D. M. (1983) Transfer of the family-owned business Journal of Small Business Management 21(1) pp. 49-56. Astrachan, J. H. & Kolenko, T. A. (1994) A neglected factor explaining family business success: human resource practices Family Business Review 7(3) pp. 251-262. 13



Davis, J. A. & Tagiuri, R. (1989) The influence of life-stage on father-son work relationship in family companies Family Business Review 2(1) pp. 47-74. Donckels, R. & Frohlick, E. (1991) Are family business really different? European experiences from STRATOS Family Business Review 4(2) pp.149-160. Dyer, W. G. Jr. (1986) Cultural change in family firms: understanding and managing business and family transitions (San Francisco: Jossey-Bass). Fiegener, M. K., Brown, B. M., Prince, R. A. & File, K. M. (1994) A comparison of successor development in family and non-family businesses Family Business Review 7(4) pp. 313-329. Fox, M., Nilakant, V. & Hamilton, R. T. (1996) Managing succession in family-owned businesses International Small Business Journal 15(1) pp.15-25. Goldberg, S. D. (1996) Research note - effective successors in family-owned businesses: significant elements Family Business Review 9(2) pp.185-197. Handler, W. C. (1994) Succession in family business: a review of the research Family Business Review 7(2) pp.133-157. Harvey, M. & Evans, R. E. (1995) Life after succession in the family business: is it really the end of problem? Family Business Review 8(1) pp.3-16. Lansberg, I. S. (1988) The succession conspiracy Family Business Review 1(2) pp.119-143. Lansberg, I. S. & Astrachan, J. H. (1994) Influence of family relationships on succession planning and training: the importance of mediating factors Family Business Review 7(1) pp.39-59. Leach, P. (1994) The Stoy Hayward Guide to the Family Business (London: Kogan Page). Morris, M. H., Williams, R.O., Allen, J. A. & Avila, R. A. (1997) Correlates of success in family business transitions Journal of Business Venturing 12 pp. 385-401. Pettigrew, A. M. (1985) The awakening giant: continuity and change in ICI (Oxford: Blackwell). Poutziouris, P. & Chittenden, F. (1996) Family business or business families (Leeds: Institute for Small Business Affairs Publication). Seymour, K. C. (1993) Inter-generational relationships in the family firm: the effect on leadership succession Family Business Review 6(3) pp. 263-281. Sharma, P., Chrisman, J. J. & Chua, J. H. (1996) A review and annotated bibliography of family business studies (London: Kluwer Academic Publishers). Ward, J. L. (1987) Keeping the family business healthy (San Francisco: Jossey-Bass). Ward, J. L. (1988) The special role of strategic planning for family businesses Family Business Review 1(2) pp. 105-117. Wortman, Jr. M. S. (1994) Theoretical foundations for family-owned business: a conceptual and research based paradigm Family Business Review 7(1) pp.3-27.

14


a case study on succession issues - CiteSeerX

a case study on succession issues - CiteSeerX

Suggest Documents

Succession Issues among Family Entrepreneurs in ... - CiteSeerX

a case study - CiteSeerX

Semantic interoperability issues from a case study in ... - CiteSeerX

Issues in implementing ERP: A case study - CiteSeerX

a case study - CiteSeerX

a Case Study - CiteSeerX

A Case Study - CiteSeerX

A Case Study - CiteSeerX

A Case Study - CiteSeerX

A Case Study - CiteSeerX

A Case-Control Study - CiteSeerX

A Case in Case Study Methodology - CiteSeerX

A Study on the Design Issues of Memetic Algorithm - CiteSeerX

TQM implementation issues: review and case study - CiteSeerX

Case study : Schmeiser case - CiteSeerX

A study on factors affecting succession planning in ...

a case study on Albania

Preliminary study of necrophagous Diptera succession on a dog ...

Inimitable Issues of Construction Workers: Case Study

TQM implementation issues: review and case study

Case Study on Belgrade Bryophytes - CiteSeerX

Succession of bee communities on fallows - CiteSeerX

Shenzhen case study - CiteSeerX

Debugging Memory Issues In Embedded Linux: A Case Study - arXiv