Content area
Full text
1.
Introduction
Researchers have long stressed the importance of succession planning in the sustainability of family businesses (Boyd et al. , 2015; Motwani et al. , 2006; Sharma et al. , 2003); it is the key to the success of the family business (Ghee et al. , 2015). Planning is rather crucial in many areas of a corporation. According to Ghee et al. (2015), the success of a family-owned business is based on several integrated factors - from the founder's business management skills, including the formation of a solid foundation for successors, to the successor transition process. Unfortunately, many family-owned firms have failed to appreciate succession planning in their business (Mandl, 2004). Succession planning is about the pooling of talented people who can contribute their specific skills and abilities to the success of the corporation by striving to achieve the short-term and long-term goals of the corporation (Carlock and Ward, 2005). An ineffective succession process has serious implications not only on family members and business partners but also on the economic development of the country (Buang et al. , 2013).
Succession planning in large companies is quite different from that in small family-owned businesses. In large firms, the selection of successors is much wider compared to that in small family-owned firms as the candidacy in a family business is confined merely to family members (Tatoglu et al. , 2008). Family-owned firms are organized around a set of emotionally charged interpersonal relationships that can result in positive or negative consequences. There is a need for family businesses to develop business practices and philosophy while balancing the relationship between family and business in order to succeed (Wee and Ibrahim, 2012). Although generally there seem to be abundant efforts for starting SMEs and their subsequent growth, the last stage, which involves ownership life cycle, is given insufficient attention by the business owners, especially in developing countries (Magasi, 2016). Challenges of continuity after establishment are a major concern, with many family-owned businesses failing along the way.
The Succession Planning (n.d.) stated that only about 30 percent of family businesses survive to the second generation and merely 12 percent survive after the company's transition to the third generation. These family-owned businesses are looking at only a 3 percent survival rate...