Research Article

Effect of Succession Planning on the Sustainability of Family Owned Businesses Evidence From Plateau State, Nigeria

Authors

  • Habila Bako Dekom Department of Business Education, Federal University of Education, Pankshin Plateau State, Nigeria
  • Dauda Emmanuel Jingak Department of Business Education, Federal University of Education, Pankshin Plateau State, Nigeria
  • Silas Gontur Department of Business Education, Federal University of Education, Pankshin Plateau State, Nigeria

    sgontur@gmail.com

Abstract

The study examines the impact of succession planning (SP) on the sustainability of family-owned businesses (FOBs) within Plateau State, Nigeria. A quantitative research methodology was employed utilizing a survey design. Data were gathered from 293 FOBs in Plateau State through structured questionnaires. Multiple regression analysis was used to examine the variables and validate the hypotheses. The findings indicated that the engagement of successors in business management (β = .378, t = 2.081, p = 0.038), the training of successors (β = .378, t = 3.520, p = 0.001), and organizational culture (β = .367, t = 3.813, p = 0.000) exhibit a positive association with the sustainability of FOBs. Conversely, internal recruitment (β = .024, t = .213, p = .813) and the successor's work fit (β = - .089, t = - 801, p = .424) do not show a significant positive relationship with the sustainability of FOBs. This research contributes to the existing body of literature by providing empirical evidence regarding the efficacy of succession planning in promoting the sustainability of FOBs in Nigeria through the frameworks of generational theory and socio-emotional wealth theories. The results substantiate the generational theory's assertion that family enterprises prioritize legacy and continuity across generations. Additionally, the socio-emotional wealth theory is supported, as FOBs value non-economic aims, encompassing family harmony and the integrity of their business reputation.

Keywords:

Family-Owned Businesses Generational Theory Socio-Emotional Wealth Theory Succession Planning Sustainability

Article information

Journal

Journal of Economics, Business, and Commerce

Volume (Issue)

1(2), (2024)

Pages

23-36

Published

22-10-2024

How to Cite

Dekom, H. B., Jingak, D. E., & Gontur, S. (2024). Effect of Succession Planning on the Sustainability of Family Owned Businesses Evidence From Plateau State, Nigeria. Journal of Economics, Business, and Commerce, 1(2), 23-36. https://doi.org/10.69739/jebc.v1i2.145

References

Akani, V. C. (2015). Management succession planning and corporate survival in Nigeria. A study of Banks in Port Harcourt. Management. 7(27), 12-21

Akpan, P. L., & Ukpai, K. A. (2017). Succession Planning and Survival of Small Scal e Businesses in Benue State. International Journal of Scientific and Research Publications, 7(2), 408-411.

Alfred, S. B., & Ross-Davis, A. (2011). The drop off and pick up method. An approach to reduce non response bias in natural resources surveys. Small Scale Forestry, 10(3), 305-318. https://doi.org/10.1007/s11842-010-9150-y

Ali, Z., & Mehreen, A. (2018). Understanding succession planning as a combating strategy turnover intentions. Journal of Advances in Management Research, 9(2018), 43-55.

Anderson, R. C., &Releb, D. W. (2003). Founding family ownership and firm performance. Evidence from the 50 to 5000. Journal of Finance, 58(3), 1301-1328.

Arham, A. F., Moriza, N. S., Norizan, M. N., & Yossof, F. M. (2019). How succession planning initiatives may affect the growth of SMEs in Malaysia. A conceptual risk. International Journal of Recent Technology and Engineering 8(4), 4635-4639.

Arora, N. (2019). Succession planning in leadership in Polytechnic institutes for stability and operational resilience. A Ph.D thesis submitted faculty of post graduate studies, University of Althabasea.

Assoratagoon, W., & Kantabutra, S. (2023). Towards a sustainability organizational culture model. Journal of Cleaner Production, 400, 136666. https://doi.org/10.1016/j.jclepro.2023.136666

Astakhova, M. N., & Porter, G. (2015). Understanding the work passion performance relationship. The mediating role of organizational identification and moderating role of fit at work. Human Relation, 68(8), 1315-1346.

Awosanya, M. O. (2019). Challenges of leadership in FOBs in Lagos, Nigeria. A Ph.D Thesis University of Walden

Ayobami, A. O., Odey, O. D., Olanireti, A. M., & Babarinde, K. P. (2018). Family business and innovation in Nigeria: problems and prospects. Covenant Journal of Entrepreneurship, 2(1), 26 -33. https://journals.covenantuniversity.edu.ng/index.php/cjoe/article/view/967

Baltazar, J. B., Fernandez, C. I., Ramadani, V., & Hughes, M. (2023). Family business succession and systematic literature review. Review of Management Science, 17(8), 2897-2920. https://doi.org/10.1007/s11846-022-00607-8

Berrone, P., Cruz, C., & Gomez-Mejia, L. R. (2010). Socioemotional Wealth in Family Firms: Theoretical Dimensions, Assessment Approaches, and Agenda for Future Research. Family Business Review, 23(3), 230–299. https://doi.org/10.1177/0894486511435355

Bocatto, E., Gispert, C., & Rialp, J. (2010). Family‐Owned Business Succession: The Influence of Pre‐performance in the Nomination of Family and Nonfamily Members: Evidence from Spanish Firms. Journal of Small Business, 48(4), 497-523. https://doi.org/10.1111/j.1540-627X.2010.00306.x

Bokhari, I. H., Muhammad, A. B., & Zakaria, N. (2020). Succession planning, strategic flexibility as predictors of business sustainability in family-owned SMEs: Moderating Role of Organization Improvisation. Pakistan Journal of Commerce and Social Sciences 14(1), 368-387.

Bozer, G., Levin, L., & Santora, J. C. (2017). Succession in family business: multi-source perspectives. Journal of Small Business and Enterprise Development, 24(4), 753-774. https://doi.org/10.1108/JSBED-10-2016-0163

Charles, O. (2016). Succession planning and management in Kenya: A case study of quantity surveying firms. Handle.net. http://hdl.handle.net/11295/99454

Chrisman, J. J., Sharma, P., & Yoder, T, R. (2019). Guiding family business through the succession process: A step by step guide for CPA advisors. The CPA Journal; New York, 79(6), 48-51.

Chun, J. H., Chrisman, J. J., & Sharma, F. (1999). Defining the family business by behavior. Entrepreneurship Theory and Practice 23(4), 19–39. https://doi.org/10.1177/104225879902300402

Cochran, W. G. (1977). Sampling Techniques (3 Ed.). New York: John Wiley & Sons Inc.

Creswell, W. J. (2012). Research design, research qualitative and quantitative and mixed methods. Approaches (3ed edition). Thousand Oaks Sage Publisher.

Damer, L. (2020). Succession talented management strategies business leadership use to improve succession planning. A Ph.D thesis University of Walden.

Davis, J. A., & Stern, I. (2016). The succession management process in family firms. A research agenda in family business models (pp. 179-191) Palgrave Macmillan Cham.

Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. The Academy of Management Review, 22(1), 20-47. https://doi.org/10.2307/259223

Denison, D. R. (1990). Corporate culture and organizational effectiveness. Wiley and Sons.

Dyer, W. G., & Handler, W. C. (1994). Entrepreneurship and family business: Exploring the corrections. Entrepreneurship Theory and Practices, 19(1), 71-83.

Eisenhart, K. M. (1989). Agency theory: An assessment and review. The Academy of Management Review, 14(1), 57-74. https://doi.org/10.2307/258191

Ernst-Young & University of St Gallen Family Index (2023). How the largest family enterprises are outstripping global economic growth. USA: Ernst and Young Global Ltf.

Fauzan, R. (2023). The influence of job fit towards job satisfaction organizational commitment and organizational citizenship behavior. Riwayet Educational Journal and History and Humanities, 6(1), 181-195. https://doi.org/10.24815/jr.v6i1.29553

Ferrari, F. (2019). In the mother’s shadow exploring power dynamics in family business succession. Gender in Management: An International Journal, 34(2), 121-139. https://doi.org/10.1108/GM-07-2017-0091

Gabriel, A., & Bitsch, V. (2019). Impacts of succession in family business: A systemic approach for understanding dynamic effects in horticultural retail companies in Germany. Journal of Small Business and Enterprise Development, 26(3), 304-324. https://doi.org/10.1108/JSBED-01-2018-0030

Gal, H. C. (2023). Person skill fit, why a new form of employee fit is required. Academy of Management Perspectives, 37(2), 117-137. https://doi.org/10.5465/amp.2022.0024

Gersick, K. E., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to generation life cycles of the family business: Boston. Harvard Business School Press.

Gomez-Mejia, L. R., Larraza-Kitanna, M., & Markri, M. (2007). The determinants of executive compensation in family controlled public corporations. Academy of Management Journal, 50(6), 1469-1489. https://doi.org/10.5465/30040616

Gontur, S., Goyit, M. G., & Vem L. J. (2023). The impact of entrepreneurial marketing dimensions on competitive advantage of small and medium scale enterprises in Plateau State, North Central Nigeria. Journal of Production, Operations, Management and Economics, 3(1), 1-2. https://doi.org/10.55529/jpome.31.1.12

Haanes, K. (2016). Why all businesses should embrace sustainability. International Institute for Management Development. https://www.imd.org/research retrieved on the 1st June, 2023.

Habash, N., & Baidoun, S. (2023). How to win the succession race, empirical analysis of Palestine family businesses. Journal of Entrepreneurship in Emerging Economies, 16(4), 1043-1064. https://doi.org/10.1108/JEEE-07-2022-0209

Handler, W. C. (1990). Succession in Family Firms: A Mutual Role Adjustment between Entrepreneur and Next-generation Family Members. Entrepreneurship Theory and Practice, 15(1), 37-52. https://doi.org/10.1177/104225879001500105

Hauser, H. E. (2005). A qualitative definition of SME. Paper presented at the SBS expert meeting, Paris, November 3–4.

Hiebi, M. R. W. (2015). Family involvement and organizational ambidexterity in later generation family businesses: A framework for further Studies. Management Decision, 53(5), 161-170.

Howe, N., & Strauss, W. (2000). Millennial rising: The Next Great Generation. Vintage.

Ijaz, H., Armanurah, B., & Nazlin, Z. (2020). Succession planning, Strategic flexibility as predictors of business sustainability in family owned SMEs: Moderating role of organization improvisation. Pakistan Journal of Commerce and Social Sciences, 14 (1), 368-387.

Isensee, C., Teuteberg, F., Griese, K. M., & Topi, C. (2020). The relationship between organizational culture, sustainability, and digitalization in SMEs: A systematic review. Journal of Cleaner Production, 275, 122944. https://doi.org/10.1016/j.jclepro.2020.122944

Istipliler, B., Ahrens, J. P., Hauer, A., Steininger, D., & Woywode, M. (2020). Heroes of green room – how able successors revitalize and reinvent family firms. Journal of Small Business Management, 62(3), 1604-1651. https://doi.org/10.1080/00472778.2022.2161554

Iyke-Ofoedu, M. I., Egwuatu, K., Ogbonna, K. E., & Ugwo, C. E. (2024). Succession planning strategies and sustainability of FOBs in South East Nigeria. Journal of Multidisciplinary Research and Growth Evaluation, 5(2), 694-702.

Jayasundara, J., Rajapaksha, P., Prasanna, R., Naradda, G., Kumara, S., Ekanayake, E., & Abeyrathane, G. (2019). The nature of sustainability challenge in small and medium enterprises and its management. Munich Personal Repec Archive MPRA Paper Number 98418. https://mpra.ub-uni-muenchen.de/98418/on 2nd June, 2023

Jideofor, N. H., Okeke, M. M. N., & Okeke, C. O. (2023). Succession planning and family business sustainability in medium and large scale enterprises in Anambra State. Africa Journal of Business and Economic Development, 3(1), 1-24.

Junod, A. N., & Jacquet, J. B. (2023). Insights for the drop-off/pick-up method to improve data collection. Society & Natural Resources, 36(1), 76-88. https://doi.org/10.1080/08941920.2022.2146821

Krejcie, V., & Morgan, D. W. (1970). Determining sample size for research activities. Educational and Psychological measurement, 30(3), 607–610. https://doi.org/10.1177/001316447003000308

Kristof-Brown, A., & Guay, R. P. (2011). Person-environment fit in S. Zedeck (ed). APA handbook of industrial and organizational psychology Volume 3: Maintaining expanding and contracting the organization (pp. 3-50). American Psychological Association. https://psycnet.apa.org/doi/10.1037/12171-000

Landau, S., & Everitt, B. (2004). A handbook of statistical analyses using SPSS (Vol. 1). Boca Raton, FL: Chapman & Hall/CRC.

LeCounte, J. F., (2020). Founder CEOs: Succession planning for the growth and legacy of Family firms. Journal of Small Business Management. 60(3), 616-663. https://doi.org/10.1080/00472778.2020.1725814

Liu, S. (2017). Bioprocess engineering: Kinetics, Sustainability and Reactor Design (2nd Ed). Elsevier. https://doi.org/10.1016/C2015-0-04891-2

Magasi, C. (2020). The effect of succession planning on the survival of family owned manufacturing firms in Dar-Es-Salaam region. A Ph.D thesis of the Department of marketing and entrepreneurship. Open University of Tanzania.

Marega, E. S., Maxwell, O. A., Oyo-Ita, D., Ezebor, O. M., Chukwu, C. P., Obembe, C. O. Odeloye, O. F. & Osibanjo, A. O. (2020). Effect of Succession planning on business performance of private universities in Ogun State, Nigeria. Academy of Entrepreneurship Journal, 26(4), 8-26.

Mikusova, M., Friedrich, V., & Linhart, O. (2024). Are the values of family members consistent with the qrganizational culture of their business? Sage Open, 14(2), 1-21. https://doi.org/10.1177/21582440241253563

Miranda-Wolff, A. (2022). Cultures of Belonging: Building Inclusive Organizations that Last. Harper Collins Leadership.

Mokhber, M., Gi Gi, T., Abdul Rasid, S. Z., Vakilbashi, A., Mohd Zamil, N., & Woon Seng, Y. (2017). Succession planning and family business performance in SMEs. Journal of Management Development, 36(3), 330–347. https://doi.org/10.1108/JMD-12- 2015-0171

Monyei, F. E., Ukpere, N. I., Agbueze, E. K., Omonoma, S., Kelvin-Iloafu, L. E., & Obi–Anike, H. Z., (2021). The impact of succession management on small and medium enterprises. Sustainability in Lagos State, Nigeria. Sustainability, 13(23), 13489. https://doi.org/10.3390su132313489

Muriithi, S. M. (2021). Organizational culture, the root of sustainable competitive advantage. International Journal of Business and Management Invention (IJBMI), 10(2), 68-72.

Nnabuife, E. N., Nwogwugwu, O. E., & Okoli, I. E. (2019). Polygamous and family owned business succession in Nigeria. International Journal of Management Excellence, 13(1), 1891-1897. https://doi.org/10.17722/ijme.v13i1.1092

Okoh, E. E., Worlu, R. E., Oyewunnmi, O. A., & Falola, H. O. (2021). The moderating effect of succession planning on inheritance culture and business survival of selected family owned business schools in South West, Nigeria. Academy of Entrepreneurship Journal, 27(4), 1-15.

Olu, O., & Chima, C. (2020). Succession planning and sustainability of family-Owned private schools in Rivers State. EPRA International Journal of Environmental Economics, Commerce and Educational Management, 7(4), 9-19. https://doi.org/10.36713/epra0414

Olubiyi, O., Lawal, A. T., & Adeoye, O. O. (2022). Succession planning and family business continuity, perspectives from Lagos State, Nigeria. Organization and Human Capital Development, 1(1), 40-52. https://journalofbusiness.org/index.php/GJMBR/article/view/102240

Onuoha, B. C. (2013). Poor succession planning by entrepreneurs: The bane of generational enterprises in South-East, Nigeria. International Journal of Artsand Humanities Bahir Dar, Ethiopia, 2(2), 270-281.

Onyeukwu, P., & Jekelle, H. E. (2019). Leadership succession and sustainability of small family owned businesses in South East, Nigeria. Open Journal of Business and Management, 7(3), 12070. https://doi.org/10.4236/ojbm.2019.73085

Osibanjo, O. A., Abiodun, J., & Kolade, O. J. (2011). Succession planning and organizational survival: Empirical study on Nigerian private tertiary institutions. Serbian Journal of Management, 6(2), 231-246. https://doi.org/10.5937/sjm1102231A

Osita, F. C., Kekoacha, M. E., & Ojimba, C. O. (2020). Succession planning and sustaining of small and medium enterprises (SMEs) in South East, Nigeria. International Journal of Research and Innovation in Applied Science, 5(5), 36-39.

Paco, A., Fernandes, C., Nave, E., Alves, H., Ferreira, J. J. & Raposo, M. (2021). Succession planning and strategies in Family business. A multiple case. International Journal of Entrepreneurship, 25(1), 1-12.

PwC. (2018). Family business survey 2018 (Nigeria). https:/www.pwc.com/ng/en/assets/pdf/nigeria-family-business-survey-2018.pdf..

Ringim, K. J., & Sabo, B. (2013). Radical transformation of small and medium financial institutions: The effect of change management factors on organization performance. International Journal of Academic Research in Business and Social Sciences, 3(12), 303-327 http://dx.doi.org/10.6007/IJARBSS/v3-i12/435

Risman, K. L., Ericksen, R. J., & Dienfendoeff, J. M. (2016). The impact of person–organization fit on nurse job satisfaction and patient care. Applied Nursing Research, 31, 121-125. https://doi.org/10.1016/j.apnr.2016.01.007

Rothwell, W. J. (2002). Putting success into your succession planning. Journal of Business Strategy, 23(3), 32-37. https://doi.org/10.1108/eb040249

Rothwell, W. J. (2010). Effective Succession Planning: Ensuring Leadership Continuity and Review. Pontifical Catholic University of Peru.

Saan, R., Enu-Kwesi, F., & Remy, F. N. (2018). Succession Planning and Continuity of Family-Owned Business: Perception of Owners in the WA Municipality, Ghana. IOSR Journal of Business and Management, 20(6), 24-34. https://doi.org/10.9790/487X-2006032434

Schein, E. H. (1992). Organizational Culture and Leadership. Jossey Bass.

Sharma, P., Chrisman, J. T., & Chua, J. H. (2003). Predictors of satisfaction with the succession process in the firms. Journal of Business Venturing, 18(5), 667-687. https://doi.org/10.1016/S0883-9026(03)00015-6

SMEDAN. (2019). National survey of micro, small and medium scale enterprises (MSMEs), Abuja: SMEDAN. NBS Publication Nigeria.

Smith, A. D. (2022). Corporate succession planning, accident or part of the strategic benchmarking process? International Journal of Process Management and Benchmarking, 12(6), 695–729. https://doi.org/10.1504/IJPMB.2022.125841

Somboonvechakarn, C., Taiphapoon, T., Anuntavoranic, P. & Sinthupinyo, S. (2022). Communicating innovation and sustainability in family businesses through successions. Heliyon, 8(12), 1-15. https://doi.org/10.1016/j.heliyon.2022.e11760

Spicka, J., & Berg, S. (2022). The impact of human values on the chance of farming continuity. International Journal of Agricultural Sustainability, 20(6), 1058-1078. https://doi.org/10.1080/14735903.2022.2047469

Srisathan, W. A., Ketkaew, C., & Narvetharadhol, P. (2020). Intervention of organizational sustainability in the effect of organizational culture an open innovation performance. A case of Thai and Chinese SMEs. Cogent Business and Management, 7(1), 1717408. https://doi.org/10.1080/23311975.2020.1717408

Strauss, W., & Howe, N. (1991). Generations: The history of American’s future 1584 to 2069. Haper Perennial.

Streefkerk, R. (2024). APA 7th edition (2020). The 17 most notable changes. Scribbr. https://www.scibbr.com/apa-seventh-changes.

Sudamani, B. A., Yaya, R. (2021). Factors influencing financial accountability in Ciamis regency. Advances in Economics, Business and Management Research, 201, 99-107. https://doi.org/10.2991/aebmr.k.211225.016

Van Der Post, W. Z., De Coning, T. J., Smit, E. V. D. M. (1997). An instrument to measure organizational culture. South African Journal of Business Management, 28(4), 147-168. https://doi.org/10.4102/sajbm.v28i4.800

Vecch, A. M., Della–Plan, B., Feola, R., & Crudele, C. (2021). Talent management, processes and outcomes in virtual organization. Business Process Management Journal, 27(7), 1937-1965. https://doi.org/101108/BPMJ-06-2019-0227

Wajid, F. A., Saeed, M., Baig, M. D & Dawar, P. N. R. (2023). Impact of leadership on effective succession planning of public and private organizations. International Journal of Social Science and Entrepreneurship, 3(1), 161-170.

Woodman, J. M. (2017). 2 Agency Theory, Behavioral Agency Model & Stewardship Theory and their Relationship with Succession in Family Firms: A Literature Review. http://dx.doi.org/10.13140/RG.2.1.2284.1848

World Economic Outlook (2022). Countering the cost of living crisis world economic outlook reports October, 2022.

Yadav, S. S., & Shankar, R. (2017). Succession planning; some lessons. Journal of Advances in Management Research, 14(4), 406- 407. https://doi.org/10.1108/JAMR-07-2017-0081

Yates, V. A., Vardaman, J, M., & Chrisman, J. J. (2023). Social network in the family business literature. Areview and integration. Small Business Economics, 60(4), 1323-1345. https://doi.org/10.1007/s11187-022-00665-y

Zellweiger, T. M., Kekermana, F. W., Chrisman, J. J. & Chuan, J. H. (2012). Family control and family firm valuation by family CEOs. The importance of intentions for trans-generational control. Organizational Science, 23(3), 850-868. https://doi.org/10.1287/orsc.1110.0665

Zellweiger, T. M., Kimberly, A. E., & Kellermanns, F. W. (2010). Exploring the concept of familness, introducing family identity. Journal of Family Business Strategy, 1(1), 54–63. https://doi.org/10.1016/j.jfbs.2009.12.003

Zhu, S. (2020). The influence of incumbent- and successor-related factors on succession process in family firms: Exploring the role of values in family business succession. A Ph.D Dissertation submitted to department of Business Administration and Management. Singapore Management University. https://ink.library.smu.edu.sg/etd_coll/324/

Downloads

Views

96

Downloads

68