Clearing the Hurdles for Succession. Female Successors in Family Businesses


Master's Thesis, 2018
66 Pages, Grade: 3

Excerpt

Table of Contents

List of Tables

List of Figures

1. Introduction
1.1. Problem Definition and Research Question
1.2. Aims and Structure
1.3. Methodology
1.3.1. Research Method
1.3.2. Data Collection Method
1.4. Definitions
1.4.1. Family Business
1.4.2. Succession

2. Literature Review
2.1. Succession in Family Businesses
2.1.1. The Stages of Succession
2.1.2. The Predecessor and Successor
2.2. Women in Family Businesses
2.2.1. The Role of Women
2.2.2. Women as Successors

3. Empirical Approach
3.1. Data Collection
3.2. Sampling
3.3. Access to the Field
3.4. Data Gathering
3.5. Willingness to Participate
3.6. Analysis Procedure

4. Results
4.1. Emotional Connection between the Family and the Business
4.2. Succession as a Long-Term Process
4.3. Transferring Control and Power to the Next Generation
4.4. Personal Challenges
4.5. Successors Need to Find Their Way
4.6. Empathy and Communication
4.7. External Consultants and Workshops

5. Discussion
5.1. Unplanned Succession versus Planned Succession
5.2. Biases towards Female Successors

6. Conclusion

7. Critical Reflection and Future Outlook

References

Appendix A: Definitions Family Business

Appendix B: Interview Guideline and Declaration of Consent

Appendix C: Interview Analysis

Acknowledgement

I would like to thank everyone that went through this journey with me.

Especially, thank you very much to Dr. Gabriela Leiß for supervising me!

I would, in particular, like to thank my parents. Thank you Mama and Papa for always being there for me, having my back, supporting me in everything I do and believe in me no matter what. Thank you for being a role model to me and for teaching me to never give up and follow my dreams!

I also want to thank my boyfriend for always being there for me, especially during the last few rather stressful months. Thank you for cheering me up, giving me hugs and kisses when I desperately needed them and going through all of this together with me, even though I was certainly not always easy to handle during this time.

Last but not least, many thanks to my friends and flatmates for being there when I needed you most, having a glass of wine with me when there was the urgent need for it, cheering me up, distracting me in a very positive way, and motivating me to keep going.

Thank you so much everyone!

Abstract

Family businesses are important to many economies. They follow their own patterns and have some specialties they need to cope with, such as the succession to the next generation. This step can be seen as one of the most challenging ones for many family businesses and includes finding the right successor. Female successors are still often neglected as such potential successor. The aim of this master thesis is to give a guideline to potential female successors on what factors there might be that influence successful succession in order to make them cope with it accordingly. A qualitative research in the form of narrative interviews with six female successor or potential successors was used for the purpose of this study.

The most important findings include the emotional attachment of the family in the business, the timing, and steps of succession as a process, the need for preparation and planning, as well as the requirement to find the right way to deal with such challenges accordingly. In conclusion, female successors should be aware of the mentioned factors and deal with them at the right time and in the right manner to influence their succession positively. (193 words)

Keywords: succession, family business, female successors

List of Tables

Table 1. Definitions Family Business

Table 2. Interview Guideline

Table 3. Central Categories Synopsis

Table 4. Interview Participants

List of Figures

Figure 1. The Three-Circle Model of Family Business

Figure 2. The Three-Dimensional Developmental Model

Figure 3. Mutual Role Adjustment of Predecessor and Successor

1. Introduction

Family businesses represent the majority of organizational forms in many countries and play an important role for numerous economies all around the world (Gersick, Davis, Hampton, & Lansberg, 1997, p. 2). A study from Germany shows that 95% of the businesses within the country are family businesses (Bundesministerium für Wirtschaft und Energie, 2014, p. 5). Moreover, as another important country in terms of the density of family businesses, 90% of Austrian companies are defined as family businesses, including individual entrepreneurs (Haushofer, 2013, p. 3). Consequently, the stability as well as performance of family businesses can be seen as highly important for the economic success and development countries such as Austria or Germany (Kellermanns, Eddleston, Barnett, & Pearson, 2008, p. 1; Smallbone & Cumming, 2015, p. 9; Zahra, Hayton, & Salvato, 2004, p. 363). Most of the family businesses within Germany and Austria are characterised as so-called small and medium-sized enterprises (Bundesministerium für Wirtschaft und Energie, 2014, p. 4; Haubl & Daser, 2006, p. 9; Haushofer, 2013, p. 4). Small and medium-sized enterprises are particularly important within Europe and are even described as “the backbone of the EU’s economy” (Muller et al., 2017, p. 6).

Furthermore, family businesses have some unique characteristics, where one of these can be seen as the orientation towards long-term success, rather than short-term wins (Bundesministerium für Wirtschaft und Energie, 2014, p. 4; Haushofer, 2013, p. 4). In order to achieve such a long-term success it is likely that any family business will eventually have to face the challenge of succession. The succession from one generation to the next one can often be seen as a dilemma, not only within the usual business context but also on the family side (Brenes, Madrigal, & Molina-Navarro, 2006, p. 372). Succession can, therefore, be seen as “one of the most important and critical events in the life cycle of any family firm” (Molly, Laveren, & Deloof, 2010, p. 142).

1.1. Problem Definition and Research Question

There is much research on family businesses and the succession to the next generation. Succession to the next generation is seen as a vital step for family businesses, however, a study shows that while 67% of family businesses reach the second generation, only 32% the third and a minority of 16% the fourth generation within the family business existence (Haubl & Daser, 2006, p. 12). These statistics show that succession can be seen as a complex, yet crucial development during the life cycle of a family business (Bjuggren & Sund, 2001, p. 11; Ibrahim, Soufani, & Lam, 2001, p. 24; Molly et al., 2010, p. 142). Moreover, succession should not be considered as a short-term project but succession to the next generation "is not an accident nor an event but a sophisticated process occurring over a very long period of time” (Le Breton-Miller, Miller, & Steier, 2004, p. 324). The fact that succession can be identified as a long-term process makes it even more strategically importance for family businesses (Longenecker & Schoen, 1978, p. 6).

A lot of research has been conducted in connection to succession in a family business context. One of the main topics of many studies relating to this are is the first stage of succession or the plan before succession is even taking place (Bigliardi & Dormio, 2009, p. 2009; Morris, Williams, Allen, & Avila, 1997, p. 398; Sharma, Chua, & Chrisman, 2000, p. 237; Tatoglu, Kula, & Glaister, 2008, p. 173). Furthermore, another very important aspect for the success of succession within a business can be seen as the selection of the right and most suitable successor, respectively (Chrisman, Chua, & Sharma, 1998, p. 29). A study by Chrisman, Chua, and Sharma (1998) also clearly highlights “that in contemporary family businesses, gender and birth order do not appear valid as criteria for selecting a successor“ (p. 29). On the other hand, Wang (2010) states in his research that “in family businesses, succession is very much biased by gender and daughters are almost always excluded as candidates” (p. 475). The pool of potential successors is, therefore, limited, as soon as women are excluded (Griffeth, Allen, & Barrett, 2006, p. 500). These conflicting statements show a potential for conflicts when it comes to succession within a family business and highlights that female successors are still often completely excluded, even though “overlooking the potential of daughters for family business leadership can produce sub-optimal choices of successors” (Wang, 2010, p. 482).

Some studies clearly state that they are focusing on the father-son successions, although they also mention that this model may also apply to female constellations (Longenecker & Schoen, 1978, p. 2-4). Wang (2010) also highlights that even though a lot of research has been done about succession there is lack of research about female successors because often they are just being ignored as potential successors (p. 481). Nevertheless, the female successor perspective was examined in terms of what kind of family constellation is recurring or what kind of characteristics successful female successor often show (Haubl & Daser, 2006, pp. 8–9). Consequently, considering the current state of the research, there seems to be a research gap in terms of what factors influence specifically potential women successor when it comes to succession and how they might be able to handle these accordingly.

From a managerial point of view, the topic of succession in family businesses is also highly relevant. As already highlighted above “a unique strategic issue shared by all family firms is succession” (Ibrahim et al., 2001, p. 245). Even though other stakeholders might be involved in this process it should be considered that “the two key stakeholders in succession are the incumbent and the successor” (Sharma, Chrisman, Pablo, & Chua, 2001, p. 24). It should be noted that especially the successor and his or her attitudes and personal influences, as well as the relationship towards the predecessor, play a crucial role for successful succession (Morris et al., 1997, p. 398; Venter, Boshoff, & Maas, 2005, p. 297).

The planning for succession can be regarded as very complex and both parties need to be involved appropriately to deal with it accordingly (Bjuggren & Sund, 2001, p. 11). It is also important to notice that even once the ownership and respective power has been taken over to the successor, this does not automatically mean that the actual leadership role has been handed over from the predecessor (Longenecker & Schoen, 1978, p. 5). The complexity of the whole succession process and the handover to the next generation is likely to confront both parties with various challenges and hurdles that need to be overcome (Dyck, Mauws, Starke, & Mischke, 2002, p. 155).

Overall, this master thesis should answer the following research question: What factors influence succession of potential female successors in a family business?

1.2. Aims and Structure

The overall objective of this master thesis is to create a guideline for female successors on the factors that influence them when it comes to succession in order to deal with them accordingly. In more detail, this focuses on comparing different forms of succession and its respective consequences for the successors and also identifying potential gender biases. This master thesis furthermore, focuses on the German-speaking area and Small and medium-sized enterprise family businesses in order to limit the scope of this research and increase the focus. This master thesis does not aim to give any suggestions for the most suitable leadership style when it comes to succession, neither from the predecessor nor the female successor side. Furthermore, the aim is not to give a guideline for making the decision between male or female potential successors, therefore, not to determine the best successor purely on a gender-specific base.

The structure of this master thesis is divided into various main parts. The introduction part includes the problem definition and the research question, the aims and structure, a short summary of the methodology and the most important definitions. This follows a literature review, which is divided into two main topics, namely, succession in the family business, and women in the family business. These main topics are then structured in various sub-topics in order to build an understanding of the relevant existing literature, topics, and models. The next step is the empirical approach, which should give a detailed description of the research method, including the data collection, sampling, access to the field, data gathering, willingness to participate, and analysis procedure. Moreover, the results part is structured in sub-heading highlighting the most important findings of this study. These findings are then connected to the literature analysed in the literature review and discussed in the respective discussion part. Finally, a conclusion is drawn and a critical reflection as well as a future outlook for potential future research is given.

1.3. Methodology

1.3.1. Research Method

As an empirical research, a qualitative research is chosen for the purpose of this master thesis. The aim is to use this method in order to understand the researched topic in more detail and connect it to the existing literature in order to answer the research question accordingly. A qualitative approach is chosen to get a deeper understanding of the underlying meaning and, therefore, understand what people really mean when they talk about their previous experiences or situations (Hesse-Biber, 2017, p. 57). In addition, qualitative research follows certain principles, which can be described as a higher level of subjectivity, a higher likelihood of the reference to the real world as well as the analysis and respective judgment of the given results (Mayring, 2002, p. 19). Qualitative research is known for leaving a lot of room for interpretation, which usually forms due to human interaction with each other. It is, therefore, not regarded objective or used for making general assumptions, but rather to identify underlying structures and patterns (Helfferich, 2011, p. 22). The qualitative interviews follow certain ground rules, which are namely communication, openness, trust, and unfamiliarity, as well as reflexivity (Helfferich, 2011, p. 24).

1.3.2. Data Collection Method

In order to obtain relevant data for this research, interviews are conducted. This form of qualitative research is an often used and also accepted method (Hesse-Biber & Leavy, 2006, p. 119; Strauss & Corbin, 1996, p. 3). Narrative interviews are used to get the best fitting results from this research,. Narrative interviews are based on the assumption of being able to freely and spontaneously tell a story or talk about experiences (Küsters, 2009, p. 17). As the aim of this research is to gain a deeper inside into the experiences of female successors, this method seems to be most suitable to collect valuable results and ultimately answer the research question.

The empirical approach consists of interviews with six female successors from small and medium-sized enterprise family businesses within the Germany-speaking area, who have different backgrounds and, therefore, show distinctive perspectives. Most of these female successors have already overtaken the business and, therefore, have already experienced the succession and are most likely to be able to reflect upon it. In one case both, the current female manager and the female successor of a family business were interviewed.

1.4. Definitions

1.4.1. Family Business

The family business can be seen as an organization with a special nature and its own rules and processes (Gersick et al., 1997, p. 4). As highlighted by Handler (1989), “defining the family firm is the first and most obvious challenge facing family business researchers” (p. 258). The definition of family businesses varies widely between different sources and even though it can be assumed that most people have an understanding of what a family business is in their view, the scope and clarity of this understanding might differ a lot (Chua, Chrisman, & Sharma, 1999, p. 22; Lansberg, Perrow, & Rogolsky, 1988, p. 1). This variety of definitions is summed up in table 1 of Appendix A and is divided into various categories. Some researchers refer to the concept of ownership or management in order to define the term family business. They define family businesses as such, where one or more family members have control or ownership to a certain extent over the business (Barnes & Hershon, 1989, p. 106; Dyer, 1986, p. XIV; Lansberg et al., 1988, p. 2).

Another approach is to see the family business as a system with various subsystems, which are interdependent. These subsystems usually differentiate between the family and business aspect, while others also add further aspects such as ownership or the founder (Beckhard & Dyer, 1983, p. 6; Davis, 1983, p. 47; Gersick et al., 1997, pp. 5–6). Also connected to the sub-system view is the so-called F-PEC power subscale model, which refers to the “three important dimensions of family influence that should be considered: power, experience, and culture” (Astrachan, Klein, & Smyrnios, 2002). The most important characteristic of the subsystem view is that all system have their own behaviour and work independently to some extent, yet, interrelate and influence each other and develop own rules and behaviours (Astrachan et al., 2002; Beckhard & Dyer, 1983; Davis, 1983; Gersick et al., 1997).

Furthermore, there is also the possibility to focus on the condition of a transfer between generations, when defining family businesses. A special focus is given to the succession to the next generation within the family (Churchill & Hatten, 1987; Ward, 2011). Finally, a couple of researchers take into consideration more than one conditions that need to be true in order to define a business as a family business. While this is also true for the interdependent subsystem definitions, these definitions especially account for the influence of the family within the business but also the operations or the management within the business on a daily basis (Donnelley, 1988, p. 428; Handler, 1989, p. 262).

For the purpose of this master thesis, the focus of the definition is explained using the three-circle model, as illustrated in Figure 1. This model helps to understand the overall system of a family business in more detail, by dividing it into three sub-systems. The model was developed by Tagiuri and Davis (1996, p. 200) and highlights the overlap of the dimensions of family, ownership, and business within a family business. The bivalent attributes, which occur in the overlap areas between the three dimensions, are described as “ the unique, inherent features of these firms and are the source of advantages and disadvantages of this type of organization” (Tagiuri & Davis, 1996, p. 201). It is important to mention that all of these attributes follow their own momentum, however, at the same time they influence and are influenced by the other two attributes (Wimmer, Torsten, & Simon, 2004, p. 5). This means that it is only possible to analyse the family business as a whole by first looking at the overall picture that includes all attributes, but at the same time identify, how the systems influence each other and are interdependent (Distelberg & Sorenson, 2009, p. 66). The model “is a very useful tool for understanding the source of interpersonal conflicts, role dilemmas, priorities, and boundaries in family firms” (Gersick et al., 1997, p. 7).

Figure 1. The Three-Circle Model of Family Business

Abbildung in dieser Leseprobe nicht enthalten

Figure 1. The family business is shown on a three-dimensional level including the independent but interrelated systems family, ownership, and business. Retrieved from “Generation to Generation: Life Cycles of the Family Business” by K. Gersick, J. Davis, M. Hampton, I. Lansberg, 1997, p. 6

Moreover, as already highlighted in the introduction, the importance of small and medium-sized enterprise family businesses within the Europe is significant (Muller et al., 2017, p. 6). In order to narrow this research further, the focus is put on this special form of family businesses. The definition of small and medium-sized enterprises for the purpose of this master thesis is in line with the definition of the European Commission (2018) and, therefore, includes a business that employs less than 250 people and at the same time has a turnover of EUR 50 million or less per year or a balance sheet total that does not exceed EUR 43 million. The significance of small and medium-sized enterprises can be seen as very high, as they are a leading driver of economic growth for many European economies (Bundesministerium für Wirtschaft und Energie, 2014, p. 3; Muller et al., 2015, p. 9, 2017, p. 6; Pérez-Cabañero, González-Cruz, & Cruz-Ros, 2012, p. 116).

Considering the variety of definitions and the purpose of this master thesis, a family business in this regard is defined as a business, where the governance or majority of the management lies in the hands of one or more family members. At the same time, one or more family members should dominate the ownership of the company and the potential for sustainable continuation and, therefore, succession to the next generation should be given. This definition is in line with other researchers’ definitions of a family business (Chua et al., 1999, p. 25; Litz, 1995, p. 102; Lussier & Sonfield, 2010, p. 416; Zahra et al., 2004, p. 369). It also links back to the three-circle model by Tagiuri and Davis (1996, p. 200), as well as the F-PEC model by Astrachan, Klein, and Smyrnios (2002, p. 47–48).

1.4.2. Succession

Succession can be seen as one of the most discussed topics in the field of family businesses. Many researchers agree that it can be considered as one of the most challenging situations that a family business usually needs to face (Barnes & Hershon, 1994, p. 377; Blumentritt, Mathews, & Marchisio, 2013, p. 51; Handler, 1994, p. 133; Lansberg, 1988, p. 25; Longenecker & Schoen, 1978, p. 1). Succession is such an important topic for family businesses that Ward (2011) even defined a family business according to its potential for succession as followed: “we define a family business as one that will be passed on for the family’s next generation to manage and control” (p. 273).

Furthermore, succession is often described as a process that can generally be regarded as rather time consuming and includes various stages (Cadieux, Lorrain, & Hugron, 2002, p. 18; Churchill & Hatten, 1987, p. 51; Handler, 1994, p. 134; Longenecker & Schoen, 1978, p. 4). It is also connected to different roles that the predecessor and successor take throughout the process, which implies different behaviours and role adjustments (Cadieux et al., 2002, p. 18; Handler, 1990, p. 43, 1994, p. 134; Longenecker & Schoen, 1978, p. 4). Another important aspect is the transfer of leadership or ownership towards the next generation (Barnes & Hershon, p. 187, 1989; Cadieux et al., 2002, p. 18; Churchill & Hatten, 1987, p. 52; Le Breton-Miller et al., 2004, p. 305).

The most suitable definition of succession within a family business for this master thesis corresponds with the definition of Cadieux, Lorrain, and Hugron (2002):

By definition, succession is a dynamic process during which the roles and duties of the two main groups of individuals involved, i.e. the predecessor and the successor, evolve interdependently and overlap, with the ultimate goal being to transfer both the management and ownership of the business to the next generation. (p. 18)

It is also important to mention that this master thesis focuses on the succession to the next generation within a family and excludes the succession to external third parties. This is also in line with various definitions of a family business and implies that the family business remains in control of a particular family and its next generation (Barnes & Hershon, 1989, p. 106; Churchill & Hatten, 1987, p. 52; Dyer, 1986, p. XIV; Lansberg, 1988, p. 2).

2. Literature Review

2.1. Succession in Family Businesses

“One of the most agonizing experiences that any business faces is the moving from one generation of top management to the next” (Barnes & Hershon, 1994, p. 377). Especially family businesses face the biggest challenges in succession, as they are often concerned not only about the business but also about the family (Barnes & Hershon, 1994, p. 377; Bjuggren & Sund, 2001, p. 11; Gersick et al., 1997, p. 7; Longenecker & Schoen, 1978, p. 1). Especially the succession from the first to the second generation is particularly challenging for the otherwise rather stable environment of a family business (Barnes & Hershon, 1989, p. 187; Morris et al., 1997, p. 389; Pfannenschwarz, 2006, p. 319). The founder is often strongly connected to the company and, therefore, also the culture and respective heritage is highly linked to the founder’s personally (Pfannenschwarz, 2006, p. 320). This is also highlighted by the experience succession curve by Astrachan, Klein, and Smyrnios (2002, p. 49), which shows a considerably higher altitude of the value of experience from the first to the second generation than for the following generations.

Most researchers agree that succession implies the transfer of ownership, as well as management towards the next generation (Bjuggren & Sund, 2001, p. 12; Cadieux et al., 2002, p. 18; Churchill & Hatten, 1987, p. 52; Le Breton-Miller et al., 2004, p. 305). Referring to the three-circle model by Tagiuri and Davis (1996, p. 200) as illustrated in Figure 1, handing over to the next generation is likely to take place in all three areas, namely, family, ownership and business. As already mentioned above, this is particularly important when it comes to succession in a family business, as all three parts are likely to be affected by such a change. It can be said that “family and business combine to produce a joint system operating according to rules derived from the needs of the separate parts but adapted to the needs of the whole” (Davis, 1983, p. 48). One of the unique features of a family business is the movement of people from one of the three sectors towards others such as the business or ownership and the respective change (Gersick et al., 1997, p. 16).

Building on the basis of the three-circle model, Figure 2 shows the three-dimensional developmental model, highlighting the different stages of the three dimensions. As Ward (2011) highlights: “successful family businesses pass through evolutionary stages of development” (p. 22). A key factor when it comes to these dimensions is the development over time and the respective change in the sub-systems, which is likely to have a high impact on the business overall (Gersick et al., 1997, p. 18). Figure 2 illustrates in the areas ownership, family and business within the family business. Firstly, the ownership developmental dimension starts with the controlling owner, which can usually be seen as the founder of the family business. It should be mentioned that the family business can take any form of ownership and change over time into other directions. This dimension is particularly helpful to highlight the development of a family business and, therefore, also the potential growth and change in the number of people in the ownership role (Gersick et al., 1997, pp. 18–19). It also highlights the distinctive, challenging step from the movement of the first generation towards the second generation, as connected to a potential change in the organisational ownership form (Barnes & Hershon, 1989, p. 187; Pfannenschwarz, 2006, p. 319).

Furthermore, the family developmental dimension “captures the structural and interpersonal development of the family, through such issues as marriage, parenthood, adult sibling relationship, in-laws, communication pattern, and family roles” (Gersick et al., 1997, p. 19). This dimension becomes particularly helpful when it comes to succession in a family business, as it gives a framework for the stages that a family member is most likely to go through during the succession process (Cadieux et al., 2002, p. 18; Gersick et al., 1997, pp. 20–22; Longenecker & Schoen, 1978, p. 4). The final dimension, namely, the business development dimension refers to the business itself and highlights the different stages any business is likely to go through, from a start-up business to expansion and finally towards maturity (Gersick et al., 1997, pp. 22–23). Moving along this dimension usually requires more complexity within the business, as well as the need for more employees and, therefore, also a different style of management (Ward, 2011, p. 30).

Figure 2. The Three-Dimensional Developmental Model

Abbildung in dieser Leseprobe nicht enthalten

Figure 2. Describes the family business in three dimensions, namely the business, family, and ownership dimension, including various stages within them. Retrieved from “Generation to Generation: Life Cycles of the Family Business” by K. Gersick, J. Davis, M. Hampton, I. Lansberg, 1997, p. 17

2.1.1. The Stages of Succession

Succession can be seen as a long-lasting and complicated process (Cabrera-Suarez, Saa-Perez, & Garcia-Almeida, 2001, p. 40; Cadieux et al., 2002, p. 18; Sharma et al., 2000, p. 233). Due to its timeframe and also complexity, succession can be divided into three basic stages. This involves the first stage, which takes places even before the successors joins the company and can be seen as the planning or initial phase, followed by the second stage, where the successor enters the business, usually as an employee. Finally, the third stage happens where the successor takes over the ownership and management of the business and the predecessors retires (Cadieux et al., 2002, p. 18; Handler, 1990, p. 43; Ibrahim et al., 2001, pp. 245–246; Longenecker & Schoen, 1978, p. 4; Stavrou & Swiercz, 1998, p. 22). However, these basic steps can be expanded by various intermediate stages. As Cadieux, Lorrain, and Hugron (2002) state, “the process begins well before the successor is brought into the business and ends when the predecessor retires” (p. 18).

Gersick, Davis, Hampton, and Lansberg (1997, p. 17) describe these stages in their three-dimensional developmental model, as shown in Figure 2 , as the young business family, entering the business, working together and finally passing the baton. This model focuses highly on the business family itself but also includes the basic succession steps. This is comparable to a model by Stavrou and Swiercz (1998) including the pre-entry level, the entry level and finally the actual succession level (p. 22). Taking these two models as a basis, the young business family can be compared to the pre-entry level. Within this stage, the family member potential future successor is not yet involved in the family business but more concerned about the personal life and respective achievements. It usually includes education, a career outside of the family business, starting a family and a rather passive attitude towards the family business. During this time the predecessor has usually full control and ownership of the family business, yet might already plan for future succession (Cabrera-Suarez et al., 2001, p. 42; Cadieux et al., 2002, p. 18; Gersick et al., 1997, p. 20; Longenecker & Schoen, 1978, p. 4; Stavrou & Swiercz, 1998, p. 22). This phase might also include the first active contact with the family business, for example through summer jobs within the business (Cadieux et al., 2002, p. 18). During this time also the so-called training and development of the next generation usually takes place, as the potential successors might be integrated more into the family business and are informed about this by their parents, even in private settings or receive initial contacts within the business itself (Churchill & Hatten, 1987, p. 57)

Furthermore, this next step within the succession process is described as the entering the business stage or entry level. At this point in time, the potential successor is supposed to decide, whether to join the family business or to follow another career path (Gersick et al., 1997, p. 21; Longenecker & Schoen, 1978, p. 4). If the potential successor decides to enter the business, this is the stage where a full-time employment in the business usually takes place. This official entry into the family business can be seen as an important step (Handler, 1990, p. 45; Longenecker & Schoen, 1978, pp. 4–5; Stavrou & Swiercz, 1998, p. 22). Both parties, the successor, and the predecessor usually work together now side-by-side and the first responsibilities are likely to be transferred to the successor from this early stage on (Cadieux et al., 2002, p. 18; Gersick et al., 1997, p. 21; Handler, 1990, pp. 45–46). Often during this stage, the goal might already be to achieve a shared and somehow equal partnership between the two parties (Churchill & Hatten, 1987, p. 57).

Finally, the passing the baton stages implies the control and responsibility shift of the management and ownership to the successor, while the predecessor withdraws from the respective positions (Churchill & Hatten, 1987, p. 58; Gersick et al., 1997, pp. 21–22; Handler, 1990, pp. 47–48; Longenecker & Schoen, 1978, p. 5). This stage can be seen as another moment of truth during the succession process (Longenecker & Schoen, 1978, pp. 4–5; Osborne, 1991, p. 45). Particularly this stage and especially the resignation of the predecessor and the respective giving up of power can be seen as a real challenge (Barnes & Hershon, 1989, p. 192; Dyck et al., 2002, p. 155; Handler, 1990, p. 48).

2.1.2. The Predecessor and Successor

According to Lansberg (1999) “succession, however, is about more than the evolution of systems and structures. It is also about the continuous process of change in people’s lives, the development and maturation of individuals as they move through life” (p. 4). During the succession stages, there are adjustments between various roles within the business. Arguably the two main parties in the succession process are the predecessor and the successor (Barnes & Hershon, 1989, p. 187; Osborne, 1991, p. 42; Sharma et al., 2001, p. 24). In this context the model by Handler (1990, p. 43) as shown in Figure 3, illustrates the role adjustment over time between the predecessor and the successor. The model shows how the roles change and how the predecessor initially functions as a leading power. This power should shift towards the successor during the succession, until the predecessor is only acting as a consultant in the end (Handler, 1990, p. 43). Referring to this development, “succession is considered a multistage process that involves, in the ideal case, a growing involvement of the successor in the business” (Cabrera-Suarez et al., 2001, p. 40).

Figure 3. Mutual Role Adjustment of Predecessor and Successor

Abbildung in dieser Leseprobe nicht enthalten

Figure 3. The mutual role adjustment between the predecessor and the next generation family member(s) in a family business succession context. Retrieved from “Succession in family firms: A mutual role adjustment between entrepreneur and family members” by W. Handler, 1990, Entrepreneurship: Theory & Practice, 15, p. 43

The model by Handler (1990), as illustrated in Figure 3, also highlights that while the predecessor is supposed to give up control and power, the next generation family member should take over these respective roles and positions (p. 43). During the first stage, the predecessor is seen as the sole operator, while the successor has no respective role during this time. This step can also be connected to the pre-entry stage of the model by Stavrou and Swiercz (1998, p. 22). The potential successor is either not yet actively involved in the family business or only takes minor parts, such as part-time jobs or internships, which can be seen as useful to gain a first insight into the processes of the family business (Cabrera-Suarez et al., 2001, p. 42; Longenecker & Schoen, 1978, p. 5). There is also an argument that “throughout childhood, adolescence, and adult years, successors are prepared in many ways, formally and informally, to accept the mantle of leadership at some time in the future” (Longenecker & Schoen, 1978, p. 1). At the same time during this stage the next generation forms the perception about the parents’ competence in terms of leadership, which is later on likely to either motivate or demotivate the potential successor to take over the family business or not (Matthews, Moore, & Fialko, 1999, pp. 165–166).

The next stage according to Handler (1990) is when the predecessor takes the role of the monarch, while the potential successors move towards the role of a helper (p. 43). It can be said that the successor now enters the functional stage, meaning working on a full-time basis, yet with no managerial roles or tasks (Longenecker & Schoen, 1978, pp. 4–5). This stage can also be called the mid-life and managing entry stage as described by Lansberg (1999). In his model about the developmental stages of business families, where he focuses particularly on the connection towards the increasing age of the participants and the respective succession step (p. 153). During this stage the first signs and the need for letting go from the predecessor’s side can be identified (Gersick et al., 1997, p. 21).

Moreover, the third stage of the mutual role adjustment model as shown in Figure 3 is characterised by the next generation moving towards the management role, while the predecessor is supposed to step back to become the overseer or delegator (Handler, 1990, p. 43). This can be seen as a key development within the succession process and can be compared to the advanced functional stage or the early succession stages as described by the model of Longenecker and Schoen (1978, pp. 4). The predecessor is supposed to step back and only work as an overseer or helper at this stage, leaving room for further development of the managerial roles of the successor (Handler, 1990, p. 46; Longenecker & Schoen, 1978, p. 5).

Responsibilities and tasks for the predecessor are growing during this phase. The successor, and predecessor work side by side and should see each other as partners at eye level. First managerial responsibilities and policy-making should be given to the successor, while the predecessor gives up the control over the company step by step towards the next generation (Churchill & Hatten, 1987, p. 57). To put it into other words, “the predecessor and the successor work side by side, thereby ensuring a transfer of responsibilities and authority until the successor is able to make business decisions on his or her own” (Cadieux et al., 2002, p. 18). For the both parties, predecessor and successor, this stage is particularly important, as it strongly shapes the potential success of a succession. Handler (1990) highlights that “it is often not until the owner has progressed into the role of overseer and delegator that the level of challenge, responsibility, and task complexity for the next-generation family member can increase” (p. 46). The importance of the predecessor letting go, while the successor is ready and able to take on more responsibilities is therefore crucial during this stage. Lansberg (1999) describes this working together phase of his model as “the last opportunity the parents will have to install in their children the skills, values, and attitudes necessary for family business continuity” (p. 153).

Finally, the last stage according to Handler (1990) takes place when the next-generation family member moves to become the leader or chief decision maker and the predecessor hands over all the responsibilities, while moving to the role of a consultant for the successor (p. 43). This final stage can be seen as the most important event within the succession process, as it is the final point where the owner needs to let go of the control and power and hand it over to the next generation. This is described as being absolutely crucial for the next generation to actually becoming the leader or chief decision-maker. It can be seen as the actual shift of control from the predecessor to the successor also in terms of operational responsibilities and tasks, as well as the final retirement of the predecessor from the family business (Churchill & Hatten, 1987, p. 58; Handler, 1990, p. 47). Lansberg (1999) describes “the Letting Go stage poses the final test for seniors” (p. 154).

Overall, it can be said that the succession process and the respective adjustment of the roles can be described as rather complex on different levels (Handler, 1990, p. 43). The predecessor and successor need to adjust to their respective roles constantly and as Longenecker and Schoen (1978) point out the “management succession in the family-owned business involves a lengthy, almost life-long period of development” (pp. 5-6). The overall succession can be seen as one of the most important steps when it comes to the existence of any family business, yet, there is a reasonably high chance that it is also going to lead to severe problems (Pfannenschwarz, 2006, p. 319; Wimmer, Domayer, Oswald, & Vater, 1996, p. 253).

2.2. Women in Family Businesses

Women in family businesses seem to play a special role. Often, women in family business are expected to fit into certain roles. These positions in the business are usually connected with certain stereotypes and might not even be actually defined for the purpose of business operations (Cole, 1997, p. 366; Dumas, 1992, p. 47). Moreover, women working in a family business environment are regularly seen in a more traditional way than if they would work for a non-family business. This is particularly true if the women are part of the family that runs the business (Lyman, 1988, p. 396). This expectation can arguably be seen as a disadvantage for women in this setting, as their skills might be underrated by internal as well as external parties (Cole, 1997, pp. 365–366).

It can be said that women, who work in a family business environment might experience a different working setting than women, who work elsewhere. The personal connection towards the family business as well as other factors is likely to impact especially women during their professional, as well as personal life (Lyman, 1988, p. 383). Working together with the family, especially with close relatives is sometimes described as challenging for women in family business. They might not feel equally treated, especially if they operate in shared roles with relatives in the same field or business, respectively (Lyman, 1988, p. 393).

[...]

Excerpt out of 66 pages

Details

Title
Clearing the Hurdles for Succession. Female Successors in Family Businesses
College
Management Center Innsbruck  (Business & Management)
Grade
3
Author
Year
2018
Pages
66
Catalog Number
V455771
ISBN (eBook)
9783668895379
ISBN (Book)
9783668895386
Language
English
Tags
female successor, successor, family business, succession, female successors
Quote paper
BA Janina Berkmann (Author), 2018, Clearing the Hurdles for Succession. Female Successors in Family Businesses, Munich, GRIN Verlag, https://www.grin.com/document/455771

Comments

  • No comments yet.
Read the ebook
Title: Clearing the Hurdles for Succession. Female Successors in Family Businesses


Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free