Succession Education and Family-Owned Businesses in Small and Medium-Scale Enterprises: An Empirical Review

Abstract

Family-owned businesses (FOBs) play significant roles in the growth and development of economies across the globe. Extant literature has noted that clearly defined structures for leadership succession as well as wealth transfer are indispensable building blocks for the sustainable family business. However, a significant challenge facing family-owned enterprises in developing countries, particularly Nigeria, is lack of understanding of succession education as only about 20 percent have a plan for leadership succession and a tiny 3 per cent have a laid down strategy for wealth transfer. This study focuses on the review of extant studies on succession education of family-owned businesses (FOBs) in small and medium-scale enterprises (SMEs) in Nigeria. The research adopted a review of extant literature on succession education. The study found that succession education can form effective resilience to address the challenge of family business succession. Similarly, the paper recommends that the potential successors should be exposed to learning the business early to enable them to acquire adequate on-the-job training for a smooth transfer of ownership and entrepreneurship which is intended to enhance sustainability among Nigerian family-owned businesses.

Sustaining Family Businesses through Business Incubation: An Africa-Focused Review

“…Furthermore, family businesses struggle to deal with leadership succession issues, which occur when senior family business leaders either pass on or leave the business space earlier than expected, owing to the ever-changing business environment that requires a new perspective and stamina (Awosanya 2019). As a result, it is claimed that few family firms plan for leadership succession (LeCounte 2022), especially in Nigeria, where it leads to the demise of many family-run businesses (Okoh et al 2022). The authors further revealed that globally, 70% of family businesses do not survive after the retirement and or death of first-generation owners, and 90% will not make it to the third generation, underlining the effect of succession issues on business performance.…”

“…About 89% of the surveyed family enterprises needed a clear mission and vision statement, 87.5% had not received formal training, and 77% had no knowledge or access to government policies to bolster entrepreneurship. Succession planning issues affect post-succession performance (Vincent and Zakkariya 2021b) and breed conflicts leading to family business closures (Okoh et al 2022). Related research also delved into the significance of extended family in mobilising start-up capital to support family businesses (Bednarz et al 2017) and the implementation of the Nigerian Business Incubation Programme (NBIP) as a government policy initiative to support entrepreneurs (Obaji et al 2014).…”

“…Firstly, they stated that a family business is not synonymous with being a small business. Secondly, in tandem with Okoh et al (2022), they stressed that its priority is generational continuity instead of growth objectives simulated through incubation. Importantly, family business mobilisation secures lifelong resource support from stakeholder communities through relationship management.…”