There is increasing public (and academic) concern regarding family owned businesses (FOBs) largely because they represent 50 to 90% of the GDP in all free market economies, and as such they are the most prevalent form of business in the world. The body of knowledge developed rapidly by authors on FOBs shows that they are important, perform well economically, and contribute consistently to employment and economic growth. That same knowledge highlights a number of specific challenges that FOBs have to face in order to survive; among them, the first and perhaps most important is succession. In this paper, using evidence from a comparative case study of 13 FOBs, we suggest that the strategic planning process and strategic plans can be specific actions that can offer an idiosyncratic contribution to FOB succession, especially during the first years after next generation family members enter the company. This is of particular importance as the 2002 Raymond Institute study of over 1,000 U.S. FOBs found that in 84.5% of businesses a family member was expected to be the next leader. The benefits of strategic planning have to do with providing for the systematic transfer of crucial, and often tacit, business knowledge and skill, the facilitation of interpersonal working relationships between incumbent and next generation, and allowing family members and non family executives and directors to evaluate next generation job performance.
Strategic Planning Process as a Training Tool in Family Business Succession
MAZZOLA, PIETRO;MARCHISIO, GAIA;ASTRACHAN, J.A.
2006
Abstract
There is increasing public (and academic) concern regarding family owned businesses (FOBs) largely because they represent 50 to 90% of the GDP in all free market economies, and as such they are the most prevalent form of business in the world. The body of knowledge developed rapidly by authors on FOBs shows that they are important, perform well economically, and contribute consistently to employment and economic growth. That same knowledge highlights a number of specific challenges that FOBs have to face in order to survive; among them, the first and perhaps most important is succession. In this paper, using evidence from a comparative case study of 13 FOBs, we suggest that the strategic planning process and strategic plans can be specific actions that can offer an idiosyncratic contribution to FOB succession, especially during the first years after next generation family members enter the company. This is of particular importance as the 2002 Raymond Institute study of over 1,000 U.S. FOBs found that in 84.5% of businesses a family member was expected to be the next leader. The benefits of strategic planning have to do with providing for the systematic transfer of crucial, and often tacit, business knowledge and skill, the facilitation of interpersonal working relationships between incumbent and next generation, and allowing family members and non family executives and directors to evaluate next generation job performance.
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