A REVIEW OF THE LITERATURE AND AN IN-DEPTH ANALYSIS OF THE ISSUE OF GENERATIONAL SUCCESSION IN FAMILY-OWNED FIRMS
This research presents a review of the literature and an in-depth analysis of the issue of generational succession in family-owned business. Some analysts contend that generational succession in family-owned business firms tend to fail because business governance in such firms tends to be unstable across generations. Martin (2001) stated, however, that stable governance across generations is feasible in family businesses. This review and analysis considers the issues related to generational succession affecting governance in family-owned firms.
With respect to generational transitions in family-owned businesses, the first decision that must be made is whether generational succession should be sought. Such successions require transitions that typically are associated with emotional costs. Most people who start family businesses and achieve success tend to be reluctant plan for an end to their source of success, pride, income, and self-esteem. Even when such decisions are made, the transitions that follow are difficult both for the participants and the businesses. Many founders of small businesses look upon succession planning as a form of funeral planning (Poza, 1998). As a consequence, it tends to be a rare event when generational transitions, especially from the first to the second generation, occur prior to the death of the leader of the earlier generation. Resistance to generational transitions comes from the owner, that person's spouse, the children รน the next generation leaders, other key, non-family members of the business, suppliers, key customers, and friends (Poza, 1998).
The issue that must be decided is whether the next generation should assume control of the business. There are many reasons why family businesses do not always successfully pass down the generations. Some of the more important...