SUCCESSION PLANNING AND STRATEGIES IN FAMILY BUSINESS: A MULTIPLE CASE STUDY
Our colleagues from the University of Beira Interior have just published a multiple case study that was conducted as part of SPRING's activities in the International Journal of Entrepreneurship.
The main objective of this study, as part of the SPRING project, is to analyse the nature of succession processes in Portuguese Family Business (FB), exploring critical events, factors linked to continuity of FB and preparatory actions for successors. Through a methodology based on a Focus group, the study shows that FB’s have characteristics that distinguish them from other firms, presenting experiences and obstacles that can call their continuity into question, particularly the matter of succession.
More specifically, empirical evidences has shown that the successors’ willingness to take over the business, the proximity to the company founder (or predecessor) are factors that influence the succession process, as well as the success of the business. As for critical events for FBs, besides factors such as family members entering the firm in management posts, the business-people highlighted strategic decisions that let them define new directions for the FBs, for example, investment in new infrastructure, new branches and, key partnerships. All these factors contribute to FBs’ continuity and longevity.
Another interesting fact discovered is related to the investments of the family business, which are conditioned and dependent on the continuity of their children in the company. These companies decide the types of investments, their size and capital invested through their children's interest and guarantee of continuity in prolonging the family legacy. This is especially true of investments in new infrastructures, technologies, production equipments and, entry into new business areas, etc.
In addition, the interviewees have prepared certain actions with regard to business continuity. The senior elements mention that to this end they seek to involve potential successors in the business from an early age, encouraging and preparing them and passing on the central knowledge and skills to lead the firm in the future. They also seek to transfer principles, work methods and above all the firm’s philosophy and values. As for the junior members, they mention the importance of academic training, especially in the area of business science, to ensure business continuity, the incentives and gradual transfer of responsibility from their parents.