Successor selection in family business using theory of planned behaviour and cognitive dimension of social capital theory: evidence from Ghana

Abstract

Purpose

Succession of family enterprises has been an issue of concern to a number of researchers, and extensive studies have been conducted on this. Transfer of family business from one generation to next has resulted in collapse of most family business in both developed and developing economies. This study looked at succession in family enterprise in Ghana using theory of planned behaviour (Ajzen, 1991) and cognitive dimension of social capital theory to know the intention of founder/incumbent to hand over the family business to an internal successor.

Design/methodology/approach

Our target population for this study is family businesses run in Ghana, Western region. Ghana is not having statistical database on family businesses; therefore, the study relied on the database of registered SMEs which was gotten from Registrar General's Department, Ghana. This is the government department that is in charge of registering business in Ghana. A sample of 596 was used and received a response rate of 60%. The study used structural equation model to find out how the variables correlate to discover the intention of the founder/successor on internal succession.

Findings

It was discovered that intention of founder/incumbent to hand over to an internal successor is predominantly determined by attitude, subjective norm, perceived behavioural control and cognitive dimension of the social capital. Trust does not influence the intention of founder/incumbent but attitude; this rejects the findings of most researchers.

Research limitations/implications

Most family enterprises were not registered, which made it difficult to reach out to all family businesses. This limited the authors approach to only the registered family enterprises.

Practical implications

Family firms are the backbone of any economy, which comprise mostly of SMEs. Therefore, the understanding of succession by incumbents/founders as well as policymakers enhances firms' value and continuity.

Originality/value

The study was conducted in Africa, Ghana in particular, owing to the limited studies in this region.

Citation

Wu, M., Coleman, M., Abdul Rahaman, A.R. and Edziah, B.K. (2020), "Successor selection in family business using theory of planned behaviour and cognitive dimension of social capital theory: evidence from Ghana", Journal of Small Business and Enterprise Development, Vol. 27 No. 6, pp. 905-926. https://doi.org/10.1108/JSBED-05-2019-0152