An evaluation of key determinants preventing intra-family business succession

Abstract

Purpose

The purpose of this study is to identify the key determinants which inhibit intra-family business succession. The study also explores the effects these determinants have on preventing intra-family business succession. Finally, the study explores the probability that intra-family business succession does not take place based upon the effects of the identified determinants.

Design/methodology/approach

A total of 250 surveys were mailed to family business owners across the United States, yielding 68 usable responses (27.2% response rate). Factor analysis was used to determine the most influential factors which inhibit intra-family business succession, and Bayesian Networks were constructed to determine the probability that intra-family business succession does not occur based on these factors.

Findings

The study results indicate that there are four key constructs comprised of 23 variables which have the most influence on deterring intra-family business successions. The results also suggest managerial actions that can be taken to improve the probability of intra-family business succession.

Research limitations/implications

A possible research limitation is that the survey respondents may not represent the entire cross-section of family-owned business in the United States. Additionally, the impact of company size, age, industry, and other demographic factors were not considered in the analysis of results. Finally, the selection of the key determinants was made based upon the highest value extracted from the principle components analysis. Combining these variables with other relatively high values may lead to different results.

Originality/value

The empirical findings contained in this study demonstrate that process, context, and governance factors have the largest effect on increasing the probability that intra-family succession does not take place. Additionally, the results of this study suggest several managerial actions that can be taken to improve the probability of intra-family business succession. Thus, the results of this study can be used by practitioners to assist them in intra-family business successions. The results can also be used by researchers as a basis for conducting additional empirical studies in this area.

Citation

Lockamy, A., Carson, C.M. and Lohrke, F.T. (2016), "An evaluation of key determinants preventing intra-family business succession", Journal of Family Business Management, Vol. 6 No. 1. https://doi.org/10.1108/JFBM-01-2015-0002