Family Business Succession of SMEs and Post-Transition Business Performance

Abstract

This study aimed at identifying the relationship between the success factors of succession in terms of preparation of heirs, the relationship between family and business as well as planning and control activities to smooth transition process. In addition, the smoothness of the transition process was also studied to determine its relationship with post-transition performance. This study included 70 of the successors of family business around Kuala Terengganu which are selected as study samples. Data was analyzed using SPSS 18.0. Contingency coefficient test, Pearson r correlation and Spearman rho is used to measure the relationship between the variables of the study. The results showed the entry-level position and the relationship between family and business have significant influence on the smoothness of the transition process. While the planning and control has no significant relationship with the smoothness of the transition process. The study also shows the smooth process of transition has no significant influence on post-transition performance. The study is expected to help SMEs family business implement an effective succession process to develop future heirs and sustain the business in the market for a long time

The Difference Pattern of Succession Between Second Generation and Thrid Generation Family Business in Indonesia (A Review of the Medium-Size Family Business)

“…Ineffective succession process has serious implications, not only for the family members and business partners, but also for the country's economic development (Buang et al, 2013). Kim and Gao (2012) identified that the interaction between family, business, and family members creates systemic conditions and constituencies that affect the performance of the family business in the long run (Kim and Gao, 2012).…”

“…An effective process of succession is crucial in determining the continuity of the family business (Buang et al, 2013;Carlock & Ward, 2005) and problems related to succession becomes the key factor and continue to be a threat towards the success and the continuity of the family business (Brenes et al, 2011;Buang et al, 2013;Norita et al, 2010). According to Carlock and Ward (2005), planning a succession is about pooling talented people who can contribute their special skills and abilities towards the business' success, by trying to achieve the company's short-term and long-term goals.…”

“…According to Carlock and Ward (2005), planning a succession is about pooling talented people who can contribute their special skills and abilities towards the business' success, by trying to achieve the company's short-term and long-term goals. Ineffective process of succession may bring serious implications, not only for the family members and business partners, but also for the country's economic development (Buang et al, 2013).…”

“…Furthermore, Buang et al (2013) stated that family businesses also face internal conflicts between the family members. Strategic decisions, standard controls, and operation management activities are often handled only by the owner, so their perspective on the level of professionalism, interest on risk, and achievement of growth often do not meet the professional standards as well as business management standard in general (Jayaram et al, 2014).…”

Moderating Effects of Family Characteristics on Financial Literacy and the Growth of Family Businesses in Kenya

“…Family businesses have dominated the economic landscape around the world (Liu, Yang &Zhang, 2010 andWee &Ibrahim, 2012), contribute an average of 75% of the GDP (Prior, 2012 andBuang, Ganefri &Sidek, 2013) and are widely seen as the backbone of the economy (Schwass, 2013). Family businesses, particularly the small-to-medium sized, are the grassroots of the global economy (Wallace, 2010), and are clearly the majority of all the businesses in the world (Buang et al, 2013). By their very nature, most SMEs are family businesses (Maalu, MacCormick, K"Obobyo & Machuki, 2013).…”