Factors Influencing Succession Planning for Continuity of Family-owned Businesses in the Wa Municipality, Ghana

Abstract

The literature generally indicates that succession in family businesses takes the form of transfer from one generation to another, but succession planning appears to be left to chance by many firms. This neglect of succession planning and the emotions generated by the process make owners ill-prepared for succession. The objective of this study was to explore the factors that influence succession planning in family-owned businesses and their importance in ensuring the continuity and prosperity of businesses in the Wa Municipality, Ghana. A random sample of 205 out of 440 family businesses was systematically drawn, and an interview schedule was used to collect data which were analysed using descriptive and inferential statistics. The findings indicate that higher level of education of founders and communication of the succession decision, comprising the transfer date, and post-succession roles to all key stakeholders affect the succession process and the success of the transfer. When the founder's level of education is relatively high, there is the likelihood of succession planning in the business, but trust seems to be limited with respect to female owners. It is therefore recommended that family-owned businesses in the municipality should be encouraged by supervisory or oversight agencies like the registrar general or National Board for Small Scale Industries to improve their educational level, build trust, and set dates for transfer of responsibilities, specify post-succession roles of incumbents and communicate the succession decision to all key stakeholders in order to improve the succession process and ensure the continuity of the businesses.

Interrelationships Between Non-Family Business Members, Nepotism and Pride in Family Business Succession

“…The current leadership team must determine the various aspects of the proposed planning and who or which group will manage each part of the process. In research conducted by Saan, Enu-Kwesi, & Nyewie (2018), the results of this study indicate that education plays an important role in succession planning. Research results from Bathija & Priyadarshini (2018) show that succession planning is influenced by personal factors such as the expertise of the prospective successor, the ability of management, gender, knowledge, qualifications, religion and family beliefs, as well as strategic factors such as economic conditions, the type of industry and the size of the business.…”

Knowledge transfer for innovativeness in family businesses

“…Through a process of a formal education successors gain concepts and generic skills which can be applied to most business contexts and enable to develop analytical skills and abilities crucial for decision making. Being part of formal education programs enables successors to get to know new ideas and trends in management and technology (Sardeshmukh & Corbett, 2011). Research findings demonstrate that educational level has a significant impact on performance level of the next generation (Morris et al, 1997;Cabrera-Suárez et al, 2001).…”

“…Namely, the survival and development of a FB after the transfer to the next family generation depends not only on the readiness of the next generation to take over the leadership. Good communication is needed to build trust and this affects the success of the transfer (Saan et al, 2018). "The new generation has to add new knowledge and offer new perspectives for the sustainability of the family firm across generations" (Chirico, 2008).…”

“…Several authors (e.g., Ward 1987;Cabrera-Suárez et al, 2001;Chirico, 2008) suggest that successors should get experiences and skills by working outside a FB since they give them "a more detached perspective over how to run and how to introduce changes and innovations in the business" (Chirico, 2008). Successors should work outside a FB before they enter the business for full time as this enables them to develop specific abilities and to get different view on how to do business (Le Breton-Miller et al, 2004;Sardeshmukh & Corbett, 2011) as well as to be prepared for a wide range of problems that may confront their FB (Ganzaroli et al, 2006). Training and working experiences gained outside FB are of crucial importance for successors innovativeness as they offer "... exposure to new ideas and situations" (Sardeshmukh & Corbett, 2011) and provide "... access to new bodies of knowledge that are relevant for the future development of firm's innovation capacity" (Ganzaroli et al, 2006).…”

“…Training and working experiences gained outside FB are of crucial importance for successors innovativeness as they offer "... exposure to new ideas and situations" (Sardeshmukh & Corbett, 2011) and provide "... access to new bodies of knowledge that are relevant for the future development of firm's innovation capacity" (Ganzaroli et al, 2006). Such experiences play a crucial role in creativity and innovation processes (Litz & Kleysen, 2001); enable successor(s) to lead the FB in a new direction (Sardeshmukh & Corbett, 2011) and to avoid conservatism and closeness (Ganzaroli et al, 2006). Based on these findings the following two hypotheses were developed:…”