MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE DEPARTMENT OF BUSINESS MANAGEMENT

PROJECT TITLE:
AN ASSESSMENT OF EFFECTIVENESS OF SUCCESSION PLANNING IN
ENHANCING BUSINESS CONTINUITY: - A CASE STUDY OF FAMILY-OWNED
BUSINESSES IN MASVINGO URBAN.

BY
FORTUNE NGUVO
R1917098M

SUPERVISOR: MR. DZINGIRAI

.
 CHAPTER ONE

GENERAL INTRODUCTION

1.0 Introduction
Chapter one of this study serves as the introductory chapter whereby the study is put into
context and its relevance is emphasized. The chapter starts by giving an introductory
background to the issue of Family-Owned Business. Objectives, research question and
justification of the study are outlined. Definition of terms is also included in this chapter
where key terms are explained. The chapter concludes by addressing limitations and
delimitations of the study.

1.1 Back ground of the study

Family businesses represent an important pillar of the global economy (Eddleston et al.,
2012; Gagné et al., 2014; Massis et al., 2018), as well as employers or as economic growth
engines (Bjuggren et al., 2011). These entities are dominating among small, medium, and
large businesses (Dos Santos et al., 2020). About 70 to 90 percent of the world’s GDP is
generated by family businesses, which subsequently help in wealth creation, generating
employment, and bringing prosperity to most of the countries. Beginning in the 1980s,
academic interest in family firms increased significantly (Pieper, 2010). Despite the major
contributions of family- owned business to GDP, they are facing a plethora of acute
succession planning challenges (Ortiz, 2007).

According to the family enterprise Survey United States of America (USA) 2011, the United
States has about 5.5 million family businesses which contribute 57 percent of GDP and
employing 63 percent of the workforce (Tharawat Magazine, 2014) and 78 percent of all new
jobs (Astrachan and Schanker, 2003). A substantial number of American companies that have
family-owned business origins are in existence today and have grown and spread across
continents. These include Nike, Oracle, Facebook and Wal-Mart, to name a few. The 2014
Family-Owned Business Institute survey with a sample of 690 family businesses found a
typical age of a family business in West Michigan to be 50 years. Eleven per cent of the
businesses were 100 years and over with an impeccable history of social responsibility and
job creation (Family Owned Business Institute, 2019).
In South Africa, family businesses account for 50% of the economic growth (Fishman, 2009).
The rapid growth in family businesses in South Africa can be attributed to the rationalization
process taking place in many large organizations, as well as to a growing inability of the
informal sector to create new jobs (Van der Merwe et al., 2011). Poverty continues to wreak
havoc in most developing countries and hence the contribution of family businesses to
national employment and poverty alleviation cannot be underplayed. Family-owned
businesses play an important role in the economic development of a nation and hence their
survival and growth issues warrant in-depth research and analysis (Van der Merwe, 2012).
Family businesses can wield enormous economic power and hence the survival of the family
business will have an impact on poverty reduction on the majority of the People in Africa.
However, the family-owned business in South Africa is also facing succession planning
challenges (Van der Merwe et al., 2009).

Zimbabwe has its share of successful companies that started as family businesses
transforming over the years to become giant corporates. For instance, the Meikles family
business empire is the oldest in Zimbabwe to have successfully grown to become a listed
counter on the Zimbabwe Stock Exchange (Meikles Africa Limited, 2002). Other examples
of the companies that started as family-run businesses include Econet Wireless Zimbabwe,
Nyaradzo Funeral Services, Moonlight Funeral Services, and Peace Security Company, to
name but just a few. However, for most family-owned businesses, their longevity and
sustainability through generations remain a significant cause for concern. Family businesses
can wield enormous economic power (Venter, 2007).

Eighty percent of businesses in Zimbabwe are family-owned and are predominantly small to
medium-sized, thriving under the guidance of the founding member (Nyoni, 2019). The SME
sector has gained a substantial foothold of the Zimbabwean economy where it employs sixty
percent of the workforce and contributes an estimated fifty percent of the country’s GDP,
creating scope for relevant authorities to give attention to the sector (Government of
Zimbabwe, 2015). So far literature on family-owned businesses in Zimbabwe Indicates that
approximately eighty percent of small to medium size businesses are family owned (Dzansi
et al., 2019) and the research mainly deals with issues of corporate governance and does not
go further into the family business dynamics relating to survival and growth as has been the
case elsewhere. Up to now there is no knowledge sharing platform in the form of a Family-
Owned Business Forum or Association where families can discuss issues of mutual interest
pertaining to their businesses. The knowledge gap in the dynamics of family-owned
businesses in Zimbabwe deserve to be studied in more detail as it will reveal issues which
will help in coming up with intervention mechanisms which will enhance the survival,
growth and continuity of family-owned businesses.

Table 1.1 DECLINE OF FAMILY-OWNED BUSINESSES IN MASVINGO URBAN

FROM 2015 TO 2021

YEAR NUMBER OF FAMILY-OWNED BUSINESSES

2015 84

2016 82

2017 81

2018 80

2019 80

2020 78

2021 78

Source: ZIMSTATS (2022)

According to the above statistics it is revealed that in 2015 there were 84 family-owned
businesses operating in Masvingo urban which declined over the years to 78 family-owned
businesses in 2021. This implies that in a period of 7 years 8 family-owned businesses
liquidated.

1.2 Statement of the Problem

The specific business problem is that some family businesses are being shutdown at an
alarming rate. The number of liquidated family-owned businesses decreased from 84 in 2015
to 78 in 2021. This issue could be attributed to succession planning issues that are hindering
business continuity. Family owned businesses in Masvingo are bedeviled by lack of
continuity, as submitted 84 family owned businesses from 2015 to 2021. Therefore, this study
assesses the effectiveness of succession planning in enhancing business continuity.

1.3 Research Objectives

This study is driven by four objectives. These are the quest:

1.3.1 To determine the succession strategies implemented by family-owned businesses in

Masvingo urban.

1.3.2 To assess the effectiveness of succession planning strategies implemented by family

business in Masvingo urban.

1.3.3 To establish the benefits of succession plan in family-owned business.

1.3.4 To ascertain the challenges associated with establishing succession plan in family-
owned business.

1.4 Research Questions

The interrogative questions that are poised to guide this study are the following:

1.4.1 Do family-owned businesses in Masvingo urban develop succession plan?

1.4.2 How effective are succession planning strategies that have been implemented in family
owned businesses in Masvingo urban?

1.4.3 What are the benefits of succession planning to family-owned business?

1.4.4 What are the challenges associated with development of succession planning?

1.5 Significance of the study

1.5.1 Theoretical significance

The knowledge gap in the dynamics of family-owned businesses in Zimbabwe deserve to be

studied in more detail as it will help in identifying the intervention model for the survival of
family businesses and also reveal the necessary key success factors. Despite increased
attention on family businesses in developed economies, management and entrepreneurial
scholars in general seem to have ignored emerging economies in Africa and have not
adequately addressed the dominant form of business in this region that is, the family business
(Khavul et al., 2009). The dominant literature on family business has used the family firm in
North America and Western Europe as its reference point. The concept of a family in Africa
is very different from the concept of a family in North America and Western Europe.
1.5.2 Practical significance

1.5.2.1 Importance of the study to policy makers

The study is also essential to policy makers that include different government ministries
captains of industry and commerce. The findings of this research will enhance policy
formulation and assist policy makers to create an enabling economic environment for FOBs
which will enhance their performance and growth prospects. Success of FOBs will have a
positive impact on poverty reduction particularly in the rural areas where the majority of
Zimbabweans (about 70%) live. It can be used by the University as a basis for future studies
and research in this area. For the researcher this research is important in giving insight into
the success and continuity of family owned businesses in Masvingo.

1.5.2.2 Importance of the study to the industry

The organizations can use the project as a reference manual when devising succession plan
programs that are aimed at invoking continuity of family-owned businesses. It is expected
that the study will inform the management of the organizations in which the research will be
carried on the effective programs that can be implemented in order to attain continuity and
growth of the business. The study findings and recommendations shall be important to FOBs
operators in that it would enhance their understanding on the challenges that are prevalent in
the sector and be in a position to comprehensively address them in order to improve their
succession plans of the businesses

1.5.2.3 Importance of the study to the management of family-owned businesses

The management of family-owned business can use the project to devise succession plan for
the future managers of the business and to implement succession planning and development
in the business.

1.6 Delimitation of Study

1.6.1 Theoretical

The subject of this research is the study of intergenerational family businesses in Masvingo
urban of Zimbabwe with a view to establishing the impediments to the survival of these
businesses, establish the key success factors and coming up with recommendations to
enhance their survival and growth prospects. The study will focus on those businesses where
members of senior and next generation are actively involved.
1.6.2 Geographical

The choice of Masvingo urban for this research is based on following factors of the size of its
population, the centrality of Masvingo urban to the researcher and the unique resources in the
form of tourist attractions, cattle ranching pastures and biggest irrigation scheme in the
Lowveld.

1.6.3 Time frame

The businesses to be studied will have been operating for at least 7 years and will focus on 6
industry categories that is, retail, manufacturing, wholesale distribution, transport,
agriculture, and construction.

1.7 Limitations

1.8 Assumptions of the study

The assumptions are that:

 The participants will respond to the questions accurately and honestly

 The participants are going to take part in the study.

 Data collection methods used provided correct and accurate information for the
research.

 The business operating environment remains highly unstable over the period of study.

1.9 Definition of terms

Economic growth: it refers to constantly increasing volume of production in a country, or an

increase in gross domestic product as the main quantitative indicators of production for a
period of one-year (Ivic, 2015).

Family-owned business Miller et al. (2003) defines family-owned business as a firm in

which multiple members of the same family are involved as major owners or managers,
either contemporaneously or over time.
Succession is an event that confronts virtually all viable organisations (Gephart, 1978), but in
situations where the incumbent dies, retires or resigns, succession is forced upon the
organisation, while in instances like firing or internal relocation of the incumbent, such as
transfer, promotion or demotion, succession is a decision over which an organization’s
decision-makers do have some control.

Succession Planning is a process for identifying, recruiting, training and mentoring high-
performing employees with leadership potential, preparing them to step into senior or
executive positions when vacancies occur. It ensures a company can continue to run smoothly
during planned or unplanned leadership changes (Dyck et al., 2002).

1.10 Acronyms

GDP Gross Domestic Product

FOB Family-Owned Business

SME Small and Medium Enterprises

1.11 Chapter Summary

The chapter presented the introduction of the study which comprised of the background of the
study and its importance. Delimitations, limitations and assumptions pertaining to the
research were also covered. In the next chapter relevant contributions by different authors on
the subject of research are going to be explored.
 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter examines literature on family-owned businesses and also seeks to explore and
assess the effectiveness of succession planning in enhancing family business continuity. This
chapter tries to investigate the succession strategies, the effectiveness, the benefits and the
challenges associated with establishing succession plan in family-owned business. The
literature review process allows the researcher to critically read, extract, and synthesize text
from relevant sources (Alsaleh, 2020).

2.1 Succession planning

The succession planning process has many varying definitions and applications within an
organization. The definitions can range from identifying a potential successor candidate to
employee retention and development (Okwakpam, 2019). Planning succession is a deliberate
and systematic effort by an organization to ensure leadership continuity in key positions,
retain and develop intellectual and knowledge capital for the future and encourage individual
advancement. Okoh et al. (2021) defines succession planning as a process of identifying and
preparing suitable candidates, family members, or other business associates to take higher
responsibilities in the organization. In other words,succession planning is viewed as a
positive attempt to ensure a smooth transition of a business from owner to a successor
through practical manpower training which will ensure long life and sustainability of the
business.

Succession and inheritance rights are established procedures of transferring economic, social,
and political powers in any given human society. However, succession has become the
greatest challenge to the long-term survival of family-owned businesses, this is due to lack of
effective planning for the transfer of the business to the next generation by the founders when
they die. Ashraf et al. (2019) posit that succession planning in a family business is critical to
the survival of the family business as it is associated with the transfer of ownership of the
business to the next generation. The concept of succession planning focuses on demonstrating
preparation of a successor for business operations.

2.1.1 FOBs and Succession Planning

In Zimbabwe, Sikomwe et al. (2012) looked at critical perspectives on succession planning in

the commuter transport sector in Zimbabwe and found out that business failure is caused by
failure to plan for succession. Nyoni (2019) analysed succession planning in Zimbabwean
polygamous family businesses and found out that succession planning in polygamous
families is haphazard and a source of disputes. The Author also analysed succession planning
and found out that lack of communication, lack of appropriateness & preparedness of
succession candidates, dysfunctional conflicts in families and the monolithic primogeniture
were chief among challenges that surround succession planning in family businesses.

The Zimbabwean culture generally expects the eldest son of the owner to inherit his father’s
fortune. Nowadays, a girl child can also inherit her father’s fortune. However, as noted by
Haynes (2021), the African culture posits that when the daughter gets married, she is no
longer part of the family so the founder prefers giving the inheritance to the male child
regardless of whether he is able to run the business or not. According to Porfirio et al. (2020),
the success of the family business succession planning is achieved if the children are brought
into the business at early stages of life of the business to learn and develop business interest
in order to take over the business after the retirement or death of the owner. Entrepreneurial
orientation affects the survival of FOBs after death or retirement of first generation
entrepreneur.

The general concept of entrepreneurial orientation has been briefly discussed by Nyoni
(2019),most FOBs in Zimbabwe lack the much needed entrepreneurial orientation and this is
a stumbling block to effective succession planning.Family successors should gradually be
prepared for leadership through lifelong learning experiences which span many years and
cover several successive positions that is informal involvement over functional roles of a
successor to early and mature succession, it is indicated that families do not have the requisite
management skills to undertake a new job as a potential successor. This is a clear testimony
to the fact that a plethora of FOBs employees usually family members of the owner in
Zimbabwe are not adequately educated or trained to become potential successors, hence
making the future of the FOBs to be vulnerable to failure and or closure beyond the first
generation or even past it. Although attention is increasing on the debate of family business,
contributions in literature are focusing on other faculties of these businesses other than on
succession planning and continuity. Family businesses are credited the world over for their
potential to nurture cross generational entrepreneurial talent. These forms of businesses
continue to dominate the world block of enterprises despite being under researched. The
issues of succession in the family business have received little attention or have not yet been
explored at length in research. Of recent, succession planning has become a revived area of
attention by researchers.

Sango (2021) opined that the essence of succession planning is crucial in family businesses as
it is in the stockholding companies to avoid setbacks for continuity and sustainability in the
dynamic business landscape. Zimbabwe is abounded with these forms of businesses, is not
exceptional to this. The family business is believed to be a major contributor to the economy
and for that reason their continuance remains a worry to any government (Gamble, 2021).
Continuity of these businesses is critically important for the economic emancipation of any
nation, thus the need to study on how they can continue to operate in the face of
environmental dynamism characterising the current and future business environment. Family
businesses have been the effectively powerful entities since ancient economies.

Family business function in an amazing way in the development of enterprises through

nurturing and developing future generation entrepreneurs despite the fact that that
development is underpinned by ability to plan for succession. Succession planning is the
lynchpin for continuity of enterprises despite form. From inception of the business, one
should think about succession, as it is inevitably unavoidable. Ali et al. (2019) argued that
succession planning has a positive relationship with performance of the firm which
guarantees its continuity. On the other hand, Nyoni (2019) posits that most family-owned
enterprises fail to continue after the first-generation entrepreneur because of lack of
succession planning. Without an effective succession plan, there can be chaos in the
ownership and management of family businesses. Succession is one of the most important
strategic aspects for continuance of family businesses.

Although it is of strategic importance, it is equally one such difficult aspect of family

business to handle in a reconciled manner. Succession is inevitable event in the life of the
founding entrepreneur of a family business. Nnabuife et al. (2019) pointed out that family
business succession planning is a process not a one event based on series of decisions and
computations. To succeed in this difficult exercise there is need for implementation of
thorough communication in the organisation. Sango (2021) are of the opinion that succession
planning in family-owned businesses requires articulate and clear flow of communication to
raffle out conflict in the process. One of the major ingredients of succession planning is the
inclusion of conversation. In support, Nnabuife (2019) argued that succession could not be
planned without recourse to conversations in which different voices are heard. Inclusion of
conversation and communication in family business over the matter of succession remains
complex concern on family members on how to make conversation concerning succession
fruitful.

Succession process is only complete when the next generation of entrepreneur has gained
legitimacy of ownership and control of the business entity, (Drewniak, 2020). In the process
of succession, it is difficult to downplay the role of the founding entrepreneur’s influence.
Schell (2020) argues that founder’s concept of business influences the plan they design to
appoint successor in the game of succession. Those who are favoured are seen as potential
heirs to the ownership and management are preferred to join the firm at young age so that
they develop interest and gain experience. The short of it all is that family businesses are
facing challenges in the process of succession planning. Buckman et al. (2020) gave the
opinion that succession planning is deliberately done in a systematic way by founding
entrepreneurs to ensure continuity of the enterprise through transfer of leadership to the next
generation. However, that deliberate and systematic effort to transfer leadership to the next
generation of entrepreneurs is significant test to the majority of family-owned enterprises.

2.2.0 Theoretical framework

The supporting theories for this research work are Agency Theory of the family business
management and Dynamic capability theory

2.2.0.1 The Agency Theory

Agency theory stems from the original work of Berle and Means 1932/1991, who first
established the concern between the different motivations of the corporation owners and
directors, the theory which tailored its context to the firm model where ownership and
management are separated. According to Dong (2021), the agency theory is based on the
assumption that separation of ownership and management in businesses leads to a principal-
agent relationship and managers (agents) thereby enhancing decision making that are in the
best interest of owners (principals). Within a transgenerational succession process, the
presumption of agency theory is both principle and agent share the same motives (Muckridge,
2021). However, the motivations may not align depending on the size of the family firm. The
successor may have alternative considerations such as firm performance rather than SEW.
Understanding those differences could provide insights into succession planning strategies
employed by other predecessors.

Critics of the theory Mitnick (2019), narrow its focus on outcomes as the only value of
transactions and interactions and its ignorance of the many and important social aspects of
relationships. Also, critics suggested that agency costs in private family firms may be a non-
issue since ownership and control are united (Olalekan and Bienose,2021). The agency theory
is used in explaining family business management given that it provides some historical
framework to the study of family business succession.

2.2.0.2 The Dynamic Capabilities Theory

The dynamic capabilities theory was established by Teece et al. 1997. This was an extension
of the resource-based view theory of the firm (Miller, 2019). The theory examines how firms
integrate, build, and reconfigure their internal and external firm-specific competencies into
new competencies that match their turbulent environment (Arokodare et al.,2019).Soluk and
Kammerlander (2021) postulates that the Dynamic capabilities are defined as the portfolio of
specific and distinguishable processes or routines that reflect those enabling adaptations to
external environments characterized by rapid or discontinuous change. Regarding family
firms and SMEs, research shows that size constraints in particular might imply idiosyncratic
(dynamic) capabilities.On the positive side, family firms possess idiosyncratic dynamic
capabilities such as a veto power in decision-making processes and the capability of
“interiorizing and reinterpreting past knowledge” found that dynamic capabilities labelled as
“imprinting” and “fraternisation” can help a family firm acquire and transfer knowledge in a
context of collaboration with business partners. On the negative side, emotional ties to
existing assets and rigid mental models in family firms can impede the development of
(dynamic) capabilities associated with the transformation of existing assets Furthermore,
family firms’ reluctance to adopt externally generated technologies implies struggles with
developing dynamic capabilities associated with collaboration and strategic partnerships. In
general, their resource scarcity might constrain family firms in the development of important
dynamic capabilities.
.

The aim of the theory is to understand how firms use dynamic capabilities to create and
sustain a competitive advantage over other firms by responding to and creating environmental
changes (Fainshmidt et al. 2019). This theory is relevant to this study in that it provides
clarity on management succession that will adapt to the environmental changes. However, it
will prove useful to this study in identifying the strategy for managing business continuity
which is crucial in preventing business death. Soluk and Kammerlander (2021) have shown
their critics by expressed concern about the defining dynamic capabilities as a certain ability,
capability, capacity, or competence for family business. Shan et al. (2021) argued that
capabilities are the source of competitive advantage while resources are the source of
capabilities. Panda and Sangle (2020) adopted a similar position and suggested that resources
do not contribute to sustained competitive advantages for a firm, but its capabilities do.

2.2.1 Family Firms Succession Strategies

The succession process is a long-term process rather than just a single event (Buckman et al.,
2020). The succession planning process within a family firm focuses mainly on the chief
executive position (CEP) in transgenerational succession planning (Ahrens et al., 2019). The
CEP is the highest management position within the family firm, which could have been
president, chief executive officer, chairman, or other authority or control positions. Although
other positions within the family firm may benefit from a formal succession process, the
predecessor’s dominant role creates a focus on the CEP as the position usually has
ownership, authority, or both.

The predecessor’s readiness to plan for succession is the starting point to the succession
process (Bertschi-Michel et al., 2020). A predecessor’s readiness could be a desire to change
roles, to leave the family business, to pursue other business interests, to retire, or to plan their
estate (Osnes et al., 2019). Bertschi-Michel et al. (2020) found that the family members may
need to push the predecessor into the succession process due to other factors such as age or
health-related concerns. Löhde et al. (2020) determined predecessors of family firms may
select the successor due to their relationship, the successor’s concern for the family SEW, and
family legacy. The selection of the successor is one of the phases of the overall succession
process model (Buckman et al., 2020).
Muckridge (2021) develop a four-phase succession process model covering control,
authority, and ownership. The first phase should establish the succession planning process
rules, visions for the family firm in the future, needs of the family firm, and timeline. In the
second phase, the predecessor or a succession team selects a pool of successor candidates and
determines the development needs of each successor candidate. The development process
would fit within the timeline established in phase one and be a factor in the selection process
in phase three. For phase three, the predecessor would select the successor to the CEP. Lastly,
the fourth phase would be the transition between the predecessor and successor of control,
authority, and ownership. Family firm succession focuses on the four parts of the succession
process model developed by Le Breton-Miller et al. 2004. The four-phase model is the
framework for an exploration of successful strategies employed by predecessors of family
firms in the current study. Also, the four-phase process model has different points of social
exchange between the predecessor and the successor.

2.2.1.1 Establishing the Process for Succession

A base assumption for successful succession strategies is the willingness of the predecessor
to plan for the eventuality of a change in leadership (Giménez and Novo, 2020). The
willingness of the predecessor to plan for and prepare for succession can have an impact on
the overall process (Buckman et al., 2020). The predecessor’s willingness to succeed may
vary due to the number of children, family ownership structure, and the family firm’s
economic performance. Other factors such as length of ownership and amount of control may
harm the willingness to pass the family firm on to a successor (Mariotti et al., 2019).

Bertschi-Michel et al. (2020) found some family firm leaders and members need to employ
an external advisor to help the predecessors to start the succession process. The predecessor
may not have the will or ability to see the need for succession planning, in other situations,
the predecessor may not be mentally or physically able to initiate the process. The
willingness of the predecessor to establish a formal or informal process can influence the
success of the succession process (Giménez and Novo, 2020). Family members both inside
and outside the firm can impact the way change of management happens within the firm,
other roles within the family firm may change due to the appointment of the successor to the
CEP, the lack of a governance model, set expectations, or rules for the succession process
may create issues with the family (Kotlar and Chrisman, 2019). Matias and Franco (2020)
found that the lack of an established family protocol before and after the succession process
could lead to conflicts with family members inside and outside the family firm. The lack of
governance within a family firm may lead to conflicts with other family shareholders and
managers, the predecessor impeded by conflicts and no governance model may delay
succession planning to avoid additional conflict (Huang et al., 2020).

According to Carter et al. (2019) the establishment of a succession planning process may be
dependent on the predecessor in the absence of a governance model or a formal institutional
practice, the leadership style of the predecessor may have an impact on the development of
the succession plan and the ability to establish governance. In other cases, a predecessor may
have the initial thoughts about a succession plan but does not discuss or start the formation of
a plan, The delay by the predecessor could be due to the lack of knowledge, long-term
strategies, or management skills (Gabriel and Bitsch, 2019), saw the strength of the
governance model as a factor of firm performance by developing a structure around family
management appointments such as a successor. Leaders may use a governance model to
establish the needs of the business, criteria for selecting a successor pool, the timing of the
succession process, and transfer of authority in later stages (Combs et al., 2021).

Gabriel and Bitsch (2019) observed how governance models could help to manage other
organizational changes related to succession. Family firm leaders can use the governance
model to manage conflict, the appointment of family members, and mitigate issues with
nonfamily member employees. The impact nonfamily managers may have on governance and
firm performance within a family firm. The external managers bring experience to the family
firm gained from working outside of the firm. Furthermore, an external manager can provide
a nonfamily influence in the decision-making process of the succession plan. Umans et al.
(2020) posit that family firms with boards comprised of only family members or dominated
by family member may decrease the likelihood to have transgenerational succession plans.
The addition of nonfamily members to the board can help to develop the governance model
for the succession process.

Astrachan et al. (2020) examined the criteria for selecting the successor based on the
potential successor’s skills, resources to support the transition, and needs of the business at
the time of selection. The successor pool can expand beyond the family to include nonfamily
candidates. Gimenez and Novo (2020) found the criteria for selecting a successor pool
included factors of trust, honesty, and relationship with the predecessor. The relationship with
the predecessor can impact other phases of the succession process and the preparedness of the
successor. Osnes et al. (2019) examined an alternative to the selection of a single successor
and migrating the family business to a cluster of businesses with a successor for each
business. The appointment of a successor at each business could increase the successor pool,
reduce conflicts, allow for a shift in the predecessor’s role, and address successor resource
needs.

By establishing the ground rules for the succession process, a predecessor may be more likely
to complete the succession plan, rules on nepotism, conflict resolution, successor selection
criteria, the firm’s future strategy, and firm control are part of the ground rules for the success
process (Bertschi-Michel et al., 2020). The establishment of the intention to plan a succession
process, establishing ground rules, and creating governance is a starting point for succession.
The next phase of the succession process is the selection of the successor candidates,
developing their skills, and knowledge transfer.

However, factors affecting succession planning such as personal factors like the skill set of
the potential successor, the management skills, the gender, knowledge, and qualifications, as
well as strategic factors like the economy, the industry, and the size of the business, all play a
crucial role in determining who would succeed the business. We can infer from these criteria
what the owners value in their successors. Since families run the bulk of the businesses in our
nation, family businesses are extremely important. Finding a suitable successor to assure the
continuation and sustainability of the business is their biggest challenge.

2.2.1.2 Successor Willingness

The successor’s willingness to succeed is part of the second phase of the succession process
(Bertolozzi-Caredio et al., 2020). Although the predecessors of family firms determine the
criteria for selecting and preparing a pool of successor candidates, the potential pool of
successors should have a willingness for the role. Garcia et al. (2019) postulate that the
predecessor’s relationship before the succession process with potential successors can impact
the overall succession process. The predecessor’s willingness to allow potential successors to
work in the family firm, providing internal knowledge transfer and encouraging external
experience are considerations in developing the successor pool. However, the willingness and
ability to succeed are not always present in the successor (Schell et al., 2020).

The continuation of family members controlling the family firm remain high when family
members are willing to succeed or join the family business, although the predecessor has the
option to sell the firm or to hire a professional manager, the family influence and the SEW of
the family may be factors in the succession decision(Umans et al., 2021). Rau et al. (2019)
explored the intentions of the family members willing to be the successor may be a
consideration in the predecessor’s selection in the successor pool. Family members may
indicate their interest in being the successor over an extended period, family members who
are not willing to be the successor or reluctant to take the role may perform worse. In some
cases, the predecessor may have a presumption about who the successor is among the family
members, when a potential successor assumes or knows they are the intended successor, their
willingness to participate in knowledge transfer or to gain additional education may be less
(Schell et al., 2020). However, even a willing successor who works in the family firm with
the predecessor may not be as willing and still requiring additional knowledge transfer and
education (Ashraf et al.,2019).

In some cases, predecessors may choose the successor due to their willingness to succeed
rather than their capabilities, Successors may not have the necessary skills, experiences, or
knowledge to be ready to succeed the predecessor (Schell et al., 2020). He and Yu (2019)
propound that thepredecessors may invest and cultivate the successor’s skills and motivations
to be ready to be the successor. The predecessor may want to develop the successor for the
CEP role despite the successor’s desire to do something else. However, a presumed successor
willing to be the CEP may be more open to a knowledge transfer process. Le Breton-Miller
and Miller (2020) examined the successor’s willingness based on the successor’s drive to
take accountability for the CEP role. The successor would shift away from external pressures
such as the predecessor, family members, short-term goals, and financial rewards towards
more individualistic drivers for personal accountability. Garcia et al. (2019) examined the
role of the parents of the successor and their influence on the successor’s willingness. The
parents can have a direct or indirect influence on the successor early in the successor’s career
ambition, such influences could be educations, working in the family business, working for
others, and training.

The successor’s commitment to the CEP could be one of four types which include, affective,
normative, calculative, and imperative varies with the original list of Garcia et al. 2019 by
separating continuancecommitment into calculative and imperative.Chan et al. (2020) posits
that affective commitment is the successor’s attachment to the business due to issues such as
legacy, shared interests, or desire to add value. Normative commitment is an obligation or
loyalty to the family business and the family’s history and legacy, calculative commitment is
the extrinsic reward of wealth, position and notoriety, imperative commitment is the absence
of other options for the successor to choose for a career. The successor commitment and the
parental influences can impact the predecessor’s decision on the successor.

Hidayati et al. (2019), Successors may consider their alignment with the requirements of the
CEP, expectations of the predecessor, and obligations the CEP has within the family, they
also examined four themes related to successor willingness to take the CEP, which included
autonomous motivation, intense relationship, personality traits, and shared vision.
Autonomous motivation and personality traits are part of the successor with some external
influence, whereas intense relationships and shared vision can have a more significant
external influence from the predecessor and family members. According to Garcia et al.
(2019) the relationship with the predecessor can influence the successor’s willingness to
succeed as well as their performance after succession as CEP. According to Hidayati et al.
(2019) a relationship based on mutual trust and open communication can impact other phases
of the succession process. The successor may view areas of mentorship, training, and
knowledge transfer based on the overall relationship with the predecessor or other family
members. As the successor moves to the next phase of the succession process, the
relationship with the predecessor can impact more parts of the succession process (Drewniak
et al., 2020).

On the other hand, Atwood (2020) posit that the time of succession planning is not when
someone exits the organisation. But it is when the new person comes in, from the first day a
new employee arrives, that employee should be observed and coached to determine if they
are a potential leadership candidate and to discover the areas they need to develop to fulfil
that potential. Succession planning ensures that an employee has been developed and is ready
to step into leadership role when opportunity arises. To make that happen, critical positions
are identified and the carefully analysed to determine what competencies they require.

2.2.1.3 Knowledge Transfer

Chandran and Alammari (2021) found a linkage between the readiness of the successor to
succeed and to participate in the knowledge transfer process. A period of knowledge transfer,
education, or acquisition of external experience could be necessary for all members of the
successor candidate pool. Puspani and Suyono (2019); Lohde et al. (2020) posits that
knowledge transfer can be from the predecessor and other intergenerational family members
in the family firm. The knowledge transfer could be from more members of the family as the
different family members may hold specific roles. Formal knowledge transfer and successor
development may help the successor be in a better position to assume the role of the
predecessor (Hasanet al., 2020).

Gimenez and Novo (2020) postulate that knowledge transfer is more than an internal process
but also an external process as well, Predecessors can prepare a formal process both
internally and externally to the family firm, which includes education, working for another
firm, or accessing members of their business network. The predecessor and successor can
create an exchange of knowledge and access to other parts of the family firm network, the
external knowledge transfer may be the experience of working at another firm or connecting
with the social and business network of the predecessor, on the other hand Martinez-Sanchis
et al. (2020) suggests that a successor may not be able to acquire additional knowledge in a
family firm with little external influences. The addition of nonfamily managers or employees
can bring external knowledge and experiences. Successors may acquire additional knowledge
or experience, either by education or by experience outside the family firm (Giménez and
Novo, 2020).

Eddlestonet al. (2019) proposed that the successor’s willingness to acquire additional
knowledge may be an indicator for the predecessor of their readiness, and it also determined
the usage of a social network of advisors, suppliers, and customers can provide an amount of
knowledge transfer to a successor. The social networks of the predecessor and the successor
rely on the social capital within their network. The predecessor can also have the successor
seek postsecondary education to gain additional knowledge. The education of the next
generation of family managers may bring additional skills to meet the needs of future
strategic plans (Tang and Hussin, 2020).

In the post succession phase, successors may gain additional knowledge from the
predecessor, other family managers, nonfamily employees, or the social network of the
family firm (Lohde et al., 2020). A successor may see additional support from the
predecessor in the form of knowledge transfer through a form of mentorship. In the post
succession phase, the predecessor may be an advisor, trouble shooter, or board member to
support the successor. The willingness of the successor to be an active part of the knowledge
transfer may support their efforts post succession (LeCounte, 2022).

2.2.1.4 Successor Selection Factors

Significant changes such as succession may impact the relationships of the family members
in and out of the family firm. The family structure may face new obstacles related to trust,
communication, and security. The succession process touches all family members because
the successor will assume the CEP and may create a new social dynamic, although family
members may agree with the succession process plan, the actual dynamics within the family
structure and family firm may shift after the succession (Lohde et al., 2020). Schell et al.
(2020), found benefit in family members maintaining current communication methods to help
family members adjust to the changes after significant family events. In most cases, the
predecessors of family firms determine the criteria for selecting a successor. The absence of a
governance model allows a predecessor to choose the successor at their discretion. The
selection criteria for the successor may include primogeniture, gender, and the successor’s
capabilities. Other criteria may include the relationship with the predecessor, other family
members, and external stakeholders, may influence the decision-making process.

Camfield and Franco (2019) observed the shift towards skills to lead the family firm in a
modern method as the criteria for successor selection. A predecessor may face the challenge
of not finding a skilled family member to assume the CEP. Consideration of a nonfamily
manager as a successor may be necessary to meet the strategic needs of the family firm,
Predecessors may want the family firm to continue to operate in the future, and, therefore, the
successor’s capabilities are increasing in importance (Nandi et al., 2019). The choice of a
nonfamily candidate may be more about the successor candidate’s skills and experiences.

Criticism of family firm succession is the high rate of nepotism and the associated negative
firm performance after succession. A predecessor may favour a less capable family member
rather than a more capable nonfamily member as a successor (Schmid and Sender, 2021).
Although the predecessor has the option to sell the firm or to hire a professional manager, the
family influence and the SEW of the family are still factors in the succession decision
(Umans et al., 2021). A predecessor may select to appoint a family team as a successor,
thereby utilizing the skills of all members of a successor pool. Although not as expected, the
succession team is an alternative to appointing a sole successor. A successor team may need a
governance model to manage conflict, agree on leadership style, define roles, establish
authority, and divide ownership.

The relationship between predecessor and successor can have an impact on the succession
plan in family firms and nonfamily firms. Schell et al. (2019) found the intentions of the
family members willing to be the successor play a role in the predecessor’s selection.
Houshmand et al. (2020) posit thata family member working in the family business since
adolescence may be considered as a potential successor. Although the percentage varies
between developing and developed countries, not all family members will work in the family
firm during adolescence, the addition of a family member at a young age provides an
opportunity for the predecessor to develop a relationship with a potential successor and
initiate knowledge transfer.

The predecessor may choose the family member to succeed with a possible bias towards an
individual, Predecessors of family firms may exhibit gender bias in the transgenerational
successor selection. The practice of selecting the first-born male child remains a default
option in family succession planning. The relationship of the father, predecessor, and son,
successor can influence the predecessor’s selection of successor, found a mother,
predecessor, and daughter, successor, and the relationship did not have the same influence on
the selection of a daughter over a son. A female predecessor may still choose a son as a
successor over a daughter (Ferrari, 2019).

The selection of a daughter as a successor is still relatively rare in comparison to a male

sibling. Ferrari(2019) explored the selection of daughter successors and daughters’
willingness to succeed, which accounts for part of the lower rate of female successors.
Hossainet al. (2022) found no correlation between family firm performance and the gender of
the successor. However, Meroño-Cerdán (2022) found the appointment of a daughter as a
successor increased the survival rate and performance of the family firm. Gender bias in
successor selection is prevalent in both family members and nonfamily members. Hossainet
al. (2022) found in some cases, the shift towards being more open to a female successor is
starting to happen.

The last phase of the succession process starts at the appointment of the successor. The
timing of the selection may vary due to the predecessor’s needs, business context, or situation
within the family firm (Botella-Carrubi& González-Cruz, 2019). The transition between the
predecessor and successor can span over a short or extended period. Other issues, such as
transfer of authority, control, or ownership, may take longer to finalize.

2.2.1.5 Transfer of Authority and Ownership Phase

The transition between the successor and predecessor includes more than just the
appointment of the successor to the CEP (Schellet al., 2020). The successor may need to
acquire additional knowledge, mentorship, or legitimacy to assume the CEP. The
transgenerational succession impacts the successor, family members, and the members of the
family firm as the role of the successor and predecessor change (Marques et al., 2022). The
successor may assume a new role, authority, and ownership of the family firm. Magasi
(2021) posits that support from other family members and managers may help the transition
and make succession a change event for the family firm. Family members may not
understand the importance or opportunity of the succession process and, therefore, not
support the successor in the new CEP.

The transfer of authority and ownership may either happen at the time of succession or a later
period (Porfírio et al., 2020). A factor related to the timing of transfer may be the
appointment of a nonfamily successor. Polat (2021) found that the control and authority may
remain with the family or limited authority given to the nonfamily successor. Muckridge
(2021) propounds that for some family member successors, the predecessor may retain
ownership and authority until death. In other cases, the successor may have to prove their
ability to lead the family firm before being transferred full authority or their ownership
portion from the predecessor. Some predecessors will establish an independent plan for
retirement using external advisors, who may dictate the transfer of ownership over a period,
the retirement plan could be communicated among all family members both in and out of the
family business (Bertschi-Michel et al., 2020). The communication of the plan can reduce
future issues between family members (Zehrer and Leib, 2020). The retirement plan could
form the basis of an informal or formal family protocol that separates authority and
ownership (Matias and Franco, 2020).

In some cases, the predecessor may choose to sell the family firm to an outside investor and
retain some of the ownership or authority in the family firm. Selling to an outside investor
may still be contingent on some strategic initiatives, family employment, or other SEW
considerations (Muckridge,2021). In other cases, the family member successor may need to
buy out the predecessor to assume ownership. Although the successor may not pay the fair
market value for the predecessor’s ownership, the transaction provides the successor with
ownership (Pöschl and Freiling, 2020). The concentration of ownership in a family firm
among the family members allows for decision-making to focus on nonfinancial aspects such
as SEW (Alayo et al., 2022). The concentration of ownership, especially at the predecessor
level, can have an impact on the strategic decision-making in family firms. Family ownership
allows for the family to influence the decisions on risk, innovation. Dilution of the ownership
in the family firm as an outcome of the transgenerational succession may impact the ability of
the successor to execute their strategies (Ltaief, 2022).
2.2.2 Effectiveness of succession planning strategies

Family businesses prepare heirs to perform the most critical traditions as a part of long-term
survival and continuity strategies (Basly and Saunier, 2020). It is important to select the right
chief executive, emphasizing that leaders play a crucial role in managing the organization’s
internal goals and ensuring the company meets external expectations (Johnson, 2020). The
planning for succession is a great opportunity for changing organizational strategy,
(Amanquah, 2021). In most cases, family members occupy leadership positions in family
firms (Bohren et al., 2019). A family firm chief executive officer (CEO) may be more risk-
averse, more likely to be concerned about long-term survival, and interested in reinvesting
profits back into the business compared to nonfamily counterparts (Gallizo and Moreno,
2019).

Succession planning constitutes a critical success factor in the performance of family

businesses and affects firms’ financial performance (Amanquah, 2021). Business leaders
must develop strategies to have an exit strategy in place to deal with eventful occurrences.
Even though succession strategies and continuity are crucial in family-owned businesses,
researchers have identified the lack of adequate understanding of succession planning as one
of the most crucial issues family businesses face. A well-executed, well-created succession
planning strategy may be beneficial for continuity and for dealing with complexities
associated with leadership transitions. The absence of a succession plan may pose severe
challenges to the business. Amanquah (2021) posits thatwithout a succession plan, a business
will encounter delays in replacing a departed CEO, Long delays in naming a successor may
impact shareholder reaction and firm performance when the new CEO is appointed.

Successors could fail when the transition occurs if they cannot restore control of the political
and cultural changes that manifested during a leadership transition, Successors who disrupt
their organization’s strategic goals can also contribute to the loss of financial stability or
competitive advantage (Barr, 2019). New leaders may use repressive strategies to try and
gain some domestic reputation when the transition process is not smooth, although family
succession planning is vital to family businesses, forty seven percent of the time, such
businesses fail to have a succession plan due to factors such as context, relationships, process,
and governance(Amanquah, 2021). The failure of successors to understand the expectations
of their board members and subordinate employees could play a crucial role in the decline of
an organization during succession (Barr, 2019). Failure to engage the next generation could
put family business continuity at risk (Garcia et al., 2019).

There is a strong relationship between succession planning and financial performance in

competitive markets. When leaders manage a CEO transition well, it may improve
organizational performance. The chance of a successor coming from the family could be
enhanced by having: (a) board of directors that includes family members, (b) formalized
succession process, (c) family business work experience, (d) potential successors develop
relationships with significant customers and suppliers, and (e) financial resources to support
effective succession Barr (2019). The active participation of family members in the
governance of the family firm leads to increased firm performance, Bohren et al. (2019). The
family belief systems underpin the management’s value system, which informs the
organization’s strategic behaviour (Oro and Lavarda, 2019).

When it comes to succession planning, a blend of appropriate strategies is advisable (Jindal

and Shaikh, 2020). The early stage of the succession planning process is vital because family
or nonfamily conflicts of interest arise early in the process (Williamson, 2021). A good
succession plan must be well-timed, communicated, involve the board of directors, flexible,
and ensure the new CEO receives respect from others.Sreih et al., (2019) posits thatfamily
business succession plans can involve activities such as identifying future leaders, change of
ownership, the transition of control and management, and the development of leaders. It is
importantat this early stage due to the impact of the team’s behavioural response to the new
leader.

An effective succession plan must include technical, political, and cultural components to
attract an executive who can influence all the dynamics needed to achieve successful
organizational performance (Barr, 2019). The selection process of a family business
successor is somewhat different from that of other businesses. Family members have a strong
influence on the operations of micro-family businesses (Amanquah, 2021). Family
governance mechanisms such as family councils, assemblies, offices, meetings, committees,
and family constitutions are necessary to regulate the relationship between the family and the
business (Amanquah,2021). A study into how nonfamily members are involved in family
firms indicated that family members would undermine nonfamily members who work in the
firm from being integrated successfully into the family firm. Restricted family relationships
are rare but may be helpful to enhance the formalisation of roles and responsibilities of
family members throughout the succession process (Gabriel and Bitsch, 2019).

The succession planning process in family businesses is often unstructured and begins with
assessing the organizational size, vision, and overall performance in the recent past
(Amanquah,2021). Selecting the right candidate is what matters most to management.
Leaders of family businesses who use formalized and informal knowledge transfer strategies
during succession over generations benefit from sustaining their competitive advantage
(Ferrari, 2020). The succession planning process involves assessing leadership competencies
in areas such as trust, hard work, accountability, mentoring, and leadership development. The
successor must have the ability to carry on the cherished and priced family heritage to the
next generation. West (2019)defined next-generation engagement as their intention to
actively contribute to the leadership and sustainability of their family business through
ownership, managerial, or governance roles. The family influences the choice of successor;
however, the family head has ultimate authority and must choose carefully to avoid
generational conflicts. The low family influence could be detrimental to high organizational
performance(Herrero and Hughes, 2019). Zhou et al. (2016) noted that family structures,
intrafamily regulation, and family control significantly impact succession in family
businesses. For example, the father plays different roles at different stages of the son’s
business knowledge development process by acting as an example, a supporter, a mentor, and
an advisor (Pham et al., 2018).

Various models proposed for succession planning include structured leadership and
mentoring training programs, forums, courses, motivation, a formal succession plan,
continuity policies, and family integration plans. To ensure continuity and transfer of
knowledge, some family business leaders rely on trusted advisors as to the most reliable
external source of advice and knowledge. Trusted advisors can influence the outcome of the
succession process in either a positive or a negative manner, depending on potential agency
conflicts (Egwakhe, 2022). The leader having the relevant higher education makes a positive
contribution to effective succession planning.Kubicek and Machek (2019) noted that family
culture, spousal support, and sibling rivalry are factors that could impact family business
succession

According to Amanquah (2021) developing a procedural approach for having succession

conversations can be helpful for family succession planning. For the next generation to be
successful, family businesses must ensure continuous growth and development, avoiding the
risk of over-admiring and instead combining the heritage with how they want to run the
company (Jameson, 2018). Families can control conflict through stewardship, control,
monitoring mechanisms, collaborations between generations, a flexible approach, and a
shared vision of future ownership and control, a good succession strategy goes beyond
corporate succession to include handling finances to ensure business continuation.

An essential tool that an incoming executive can utilize during the transition into a leadership
role is to evaluate the level of turmoil, assess the capabilities and hurdles to success, and seek
support for the new vision through a transformational type of leadership style(Barr,2019).
The family business founder wields much power in making critical decisions relevant to
ownership and beliefs in the business (Nandi et al., 2019). Horcickova and Stasiulis (2019)
asserted that a young person’s intention to work in a family business increases if they engage
in the business during their studies. Ljubotina and Vadnjal (2018) asserted that Family
members must generate and sustain the interest of young members in the business in the early
stages of their lives.

2.2.3 Benefits of succession planning in family business.

Succession planning is an essential part of doing business, no matter how certain the future of
the company appears. According to Wallen (2022), succession planning prepares the
company and the employee for future needs. Thus, matching that employee’s talents to
current needs and training them for future responsibilities creates a cycle of anticipated
growth and goals. A good succession plan maps out which employees are ready for new
leadership roles as they become available, and when one employee leaves or is promoted to
the next level, another employee is already trained and ready to step in where they are
needed. Managing the transition of a business from one generation to the next is a difficult
process to navigate. Succession planning has been identified in the literature as one of the
most important topics requiring the attention of business owners, and the single most
important lasting gift one generation can provide to the next (Umans, 2020)

Succession planning can help businesses avoid risk (Atwood, 2020), transfer knowledge that
can be a source of competitive advantage, ensure successors are prepared for their new
position, transfer relationships and strategic direction, provide family businesses with the
processes, knowledge, and structure for identifying internal capacity and provide an
opportunity for change.Many offices accomplish this on a small scale by job sharing and
cross training for every position. To them, a succession plan goes beyond planning for the
training of employees to assume more responsible roles, providing that training and assessing
each employee ‘s ability to step in when a position becomes available. Succession planning is
not just important for the company and its current employees, but also for investors,
customers, the community the employees and their families. Succession planning aims at
answering some of these questions, who is going to manage the business when the owner no
longer working for the business? How will ownership be transferred? Will the business even
carry on or will it be sold? Succession planning seeks to manage these issues, setting up a
smooth transition between the owner and the future owners of the business. Thus, generally
the two main reasons for succession planning are;

2.2.3.1 Continuity with prosperity

Entrepreneurs give their lives to building their businesses, it is one of the crowning
achievements of their lives, so they often have a deep-seated desire to see their businesses
continue and prosper after they retire. Thus, they feel a commitment to their customers, or
clients, to their community and even their suppliers. Without a clear succession plan many
businesses fail after the original owner retires, sells the business, or passes away (Karaki,
2022).

2.2.3.2 Avoiding a shortage of skilled and knowledgeable staff

According to Ali and Mehreen (2019) for larger companies firms it is critical to implement a
succession plan across a broad segment of the company, from lower supervisory roles to high
level managerial positions. This approach is more conducive to identifying, developing, and
keeping key leadership personnel. Other reasons also include the following;

2.2.3.3 Inability to plan for a disaster

Ritchie (2020) allude that No matter how good the firm‘s revenue projections or economic
predictions are no one can truly plan for disaster. Whether it is an unforeseen illness, a natural
disaster, or a CEO's decision to suddenly retire, the reasons for having a succession plan in
place before it is needed are endless. So, while one cannot plan for disaster, one can put into
place a series of contingencies that will help the company stay afloat if, in fact, catastrophe
occurs.
2.2.3.4 Company Review

Jackson and Dunn-Jensen (2021) posit that business practices have evolved over the years;
succession planning has also grown and changed. It is no longer a plan that can only be
accessed when leadership is going to change; a succession plan can be used before its "real"
intent is necessary. It can be used to build strong leadership, help a business survive the daily
changes in the marketplace, and force executives to review and examine the company's
current goals.

2.2.3.5 Succession planning gives other colleagues a voice

If one is running a family business, the process of succession planning will give family
members an opportunity to express their needs and concerns. Giving them that voice will also
help create a sense of responsibility throughout the organization, which is critical for
successful succession planning. Resist the temptation to solely carry the entire weight of
creating and then sustaining a plan (Atwood, 2020).

2.2.3.6 A succession plan can help sustain income and support expenses

Talking about money should be a priority. People generally do not want to work for free and
things don't pay for themselves. A succession plan can provide answers as to what the
company will need for future income, as well as what kinds of expenses that may incur once
the owner step out of the main leadership role. Succession planning helps answer questions
about the owner ‘s annual income and other benefits including health and dental insurance for
the owner and his/her dependents, life insurance premiums paid for by the company,
professional memberships, and other business-related expenses (Jackson and Dunn-Jensen,
2021)

2.2.3.7 Succession planning gives the owner a holistic picture

Atwood (2020) coined that some companies mistakenly focus solely on replacing high-level
executives. A good succession plan can go further, however, and force you to examine all
levels of employees. The people who do the day to- day work are the ones keeping the
business going. Neglecting to add them to the succession planning mix could have dire
consequences. As the firm develops the plan, it should incorporate all layers of management
and their direct reports.

2.2.3.8 Succession planning strengthens departmental relationships

When regular communication occurs between departments the company is more likely to
experience synergy, which breeds a culture of strength. Therefore, should be a link between
the succession planning activities with human resources management. By including human
resource management in succession planning, the firm can incorporate elements like the
employee evaluation process, which can help when deciding whether to fill vacancies with
internal candidates (Tucker, 2020).

2.2.3.9 Succession planning keeps the mood buoyant

Change is a major component of a succession plan it is exciting and can bring a company
unforeseen reward. Still, change can be a source of tremendous stress, especially when
people's livelihoods are at stake. As one puts a succession plan together, one must consider its
positive effects on the business. Planning for the future is exciting and, if done correctly, can
inspire the workers to stay involved and maintain company loyalty. It is true that a plan is
often put into place to avert catastrophe, but it is also a company's way of embracing the
future — a business strategy that is essential for survival (Ramadani et al., 2020).

2.2.4 Challenges associated with establishing succession plan in family-owned

business.

Calabro et al., (2021) also considered that family business benefits can quickly be turned into
liabilities or road blocks to the business and can create irreversible damage/conflict within the
family if not effectively managed. Typically, as the family business moves along its
generational timeline, more family members are actively involved in the business and more
family members have an interest in the activities of the business. Access to the broader family
provides many potential benefits, as identified above, but also brings with it many potential
challenges. Some of the more common challenges include: -

2.2.4.1 Emotional attachment to business

FOBs often have deep emotional ties to their businesses, which can complicate the decision-
making process for succession planning. Family members may be reluctant to relinquish
control or share power, or may struggle with the idea of one family member taking over from
another.

2.2.4.2 Lack of Planning

Succession planning requires planning and forethought, which may be difficult to achieve in
FOBs because families may not have a clear understanding of the potential consequences of
not having a succession plan, and may not have experience with business continuity planning.

2.2.4.3 Family dynamics and conflicts

Family dynamics play a critical role in the success or failure of a succession plan. Conflicts
among family members, such as competition for leadership positions, differing goals and
aspirations, or poor communication, can lead to a breakdown in the succession plan.

2.2.4.4 Financial considerations

The financial aspects of succession planning, such as valuation, taxation, financing, buyouts,
and governance, can be complicated and add additional layers of complexity to the process.
The family and business may have differing opinions and priorities regarding these issues,
which can create friction and hinder progress.

2.3 Research Gap

Many studies about family-owned business concentrated on motives for successful

succession plan, how to make family-owned business succeed through different family
generations and failure of family-owned business to survive into second and third family
generations (Aladejebi, 2021). There is a gap in assessing the effectiveness of succession
planning in enhancing continuity of family-owned businesses. To narrow the gap this study
tries to assess the effectiveness of succession planning in enhancing business continuity.

2.4 Chapter summary

This chapter highlighted what other scholars wrote about the concept of succession planning.
Succession planning focuses on the identification of a successor and the transfer of ownership
and management from one individual to another. An effective succession plan is crucial to
the survival of a family owned business (Ramadani et al., 2020). Magasi (2021) added that a
lack of succession planning is a major cause of the high mortality rate in family owned
businesses. The scholar also noted thatmost family owned businesses adopted the ‘do nothing
approach’ to succession. Therefore, for family business survival to be achieved, family
businesses should consider training successors, transferring ownership and managerial
responsibility in advance.
 Chapter 3

Research Methodology

3.0. Introduction
The chapter provides a discussion on the research design and methodology conducted during
the study. It describes the research methods that were used and explains why these methods
were selected to collate the information that was required to answer the research questions
which covers areas such as the research design, research population, research sample, data
collection tools, data presentation and analysis plan, validity and reliability and ethical
considerations.

3.1 Research Design

According to Hair et al. (2019), the research design serves as a master plan of the methods
and procedures that should be used to collect and analyse the data needed by the decision
maker. Reed et al. (2021) defined research design as a strategic framework or plan that guides
research activity to ensure that sound conclusions are reached.
In the research undertaken, descriptive type of research was used. Abbott and McKinney
(2017) defines research design as a research blueprint which shows how the study is going to
be conducted. Akhtar (2016) alludes that research design depends on understanding the topic
and the problem which in turn prompts the researcher to conduct the study to reach informed
conclusions. . Furthermore, there are several research designs and the choice of a research
design and several factors determine the choice of a research blueprint to be followed in any
study. To elucidate, Ritchie and Lewis (2013) identify exploratory research design,
descriptive research design and explanatory research design as some of the most common
research designs.

3.1.1 Justification of Descriptive Research Design

The research first established the descriptive information on the independent factors, and
then went on to identify the links between the succession planning (independent variables),
and business continuity (dependent variable). The descriptive technique of study was used to
examine the effectiveness of succession planning on company continuity over a period of
time. Since descriptive design is exploratory in nature, triangulations of several sources of
data are often employed to get deeper insight into the phenomena. According to Akhtar
(2016), descriptive research is a strong approach used by researchers to obtain information
about a certain group or phenomena. For example, the researcher was gathering information
from family-owned companies. It also gave a complete and accurate picture of the activities
and behaviours of family-owned company owners in terms of succession planning.

3.2 Target Population

According to Donthu et al. (2020), a population is a group of people who share one or more
traits that are important to the researcher. The specification of the population to which the
inquiry will be directed, influences the decisions that researchers must make regarding
sampling and resources because it is possible that the researcher will not be able to test every
member of a population due to the possibility that there may be a large number of them. The
family-owned businesses that are registered with the Zimbabwe Revenue Authority (ZIMRA)
were the study's target demographic.

Fig 3.2: Target Population per industry category

Respondents Population Size
Construction 10
Retailers 9
Wholesalers 15
Manufacturing 12
Transport 15
Agriculture 14
TOTAL 75
Source: ZIMSTATS 2023

3.2.1 Sample Size

A sample is a subset or a portion of a population from which population inferences are made,
according to Ishtiaq (2019). In order to be representative of the population from which it is
drawn, a sample must be taken from the whole. The population to be researched is chosen,
and a subset of that group is chosen to reflect the complete population. The sample was ideal
since it contained subjects that were interesting to study and shared traits, making it simple
for the researcher to engage with. The researcher's primary responders were the
owner/founder of the business to demonstrate how they are preparing for succession planning
and the hurdles experienced in developing the plan. Family businesses are the focus of the
study. In this research the sample used was 23 respondents from 6 industry category.

Table 3.2.1: Sample size

Respondents Population Size
Construction 5
Retailers 4
Wholesalers 2
Manufacturing 4
Transport 5
Agriculture 3
TOTAL 23

3.2.2 Sampling Techniques

The respondents were chosen by the researcher using a purposive sampling technique to
identify the registered family owned businesses in Masvingo urban. This means that the
research is going to use, Cluster and convenience Sampling Techniques. According to
Hinnink and Kaiser (2020), this sampling strategy will be employed because it enables the
creation of a more comprehensive image of the research facts and the choice of units that are
specifically related to the study's topic.

3.2.2.1 Justification of convenience sampling

Convenience sampling was used in this study to select the population that would participate
in the study. Convenience sampling is a non-probability sampling method in which units are
chosen for inclusion in the sample because they are the most easily accessible to the
researcher (Berndt, 2020). This could be because of geographical proximity, availability at a
specific time, or willingness to participate in the research. As previously stated, the researcher
conducted the research during workdays and chose a population of people who were
available and willing to participate when the study was conducted.

3.3 Data collection methods

Techniques utilized study must be in harmony with research approach. As a starting point, it
is important to note that there are no research procedures that can be defined as the best. The
methodologies chosen are impacted by factors like as available resources, the type of the
information required, and the accessibility of participants. Questionnaire was used to obtain
primary data since the study was employing quantitative approach. The study used both
primary and secondary data.

3.3.1 Semi-Structured Questionnaires

The researcher has developed a questionnaire which was used to collect important
information from the population. A self-administered questionnaire is the only way to elicit
self-report on people’s opinion, attitudes, beliefs and values (Patten, 2016). The questionnaire
contained both close ended and open ended questions. Primary data was collected using the
semi structured questionnaire .The questionnaire was administered using drop and pick
method. This gave the respondents time and free environment in which to respond. The study
employed the self-administered structured questionnaire as an instrument for data collection
due to its low cost and flexibility to collect large amounts of data in a shorter period
compared to the observation and interview methods. An online questionnaire was handed to
various to owners of the selected family owned businesses through emails and whatsapp.

3.3.2. Personal Interview

A personal interview is often a face-to-face encounter or two-way contact between the

recruiter and the applicant (Rahman, 2015). Recruiters often utilise personal interviews to
gauge how well a candidate will fit into the position and the organisation. Personal interviews
are great for researchers who wish to speak directly to people in order to address research
questions. Personal interviews were beneficial because they enabled the researcher to speak
directly with family held company owners on how succession planning improves business
continuity. These personal interviews aided in gaining additional information and insight
into the issue since they allowed the researcher to ask follow-up questions. The study had a
greater response rate due to the face-to-face encounter.
This research approach investigated responses of the respondents and gathered additional and
deeper information. An interviewer follows personal interview surveys of two sorts,
depending on the technique (Johnson et al, 2021). The researcher conducted door-to-door
interviews during the course of the study. In a door-to-door survey, the researcher went
straight to a respondent's business office on a predetermined day or time. This was beneficial
since it gave the researcher a better chance to observe the respondents' actions and attitudes.
It also allowed respondents to modify to queries if they did not grasp anything.

3.4 Types of Data

3.4.1. Secondary Data

Secondary data was also used for data collection in this study. Published documents such as
journals and textbooks were used. Johnston (2014) indicated that some of the strengths of
documents include being cost-effective, helping to broadly understand the topic and the
general background of the problem. Documents which were used also helped the researcher
to back up data collected using primary data collection techniques. Since the study was a
qualitative with open discussions through interviews, the use of secondary data helped to
improve the understanding of the problem and provided a basis for comparison for the data
was collected by the researcher.

3.4.2 Primary Data

Primary data is data created by the researcher himself or herself, such as surveys, interviews,
and experiments intended specifically to understand and solve the study topic at hand
(Thomas, 2015). Personal interviews and semi-structured questionnaires were used to obtain
primary data for this study. For the greatest effectiveness, primary and secondary data are
combined. Secondary data was inherited and served as a foundation, while primary data
offered newness, updates, and accuracy (Vuong & Nguyen, 2016). Since primary data is only
used for one study, the information acquired will precisely match the study that researchers
are carrying out. The researcher considered that the information collected from primary data
sources was reliable and accurate since it was gathered initially and in accordance with
content that was expressly planned.
3.5 Validity and Reliability

3.5.1 Validity
Kelly (2022) purports that “validity is a way to assess the quality of a research study."
Validity measures the degree to which the results of the study actually measure what they are
intended to measure hence the validity of the study is accurate. Pilot testing or pre-testing is a
small-scale trial run and in this case, of a questionnaire and assists researcher in determining
and eliminating potential errors in content, wording, order, form and layout of questionnaire
(Saunders, 2009). Pilot testing is also useful in training the researcher. It involves using a
small number of respondents (15 – 30 recommended) to test the appropriateness of the
questions and their comprehension. The sample selected for the pilot study should be similar
to the units to be included in the main study in terms of background, characteristics,
familiarity with topic, attitudes and behaviours of interest. Aspects to be evaluated in the
pilot-testing are reactions of respondents to different aspects of the research, availability of
study population, acceptability of questions asked and willingness of respondents to co-
operate in answering the self-administered questionnaires. In the study a subject expert was
consulted and a pre-test was done through conducting a pilot study on 15 respondents to
ensure validity of the research instrument

3.5.2 Reliability
Beck (2019) alluded to the fact that reliability refers to the consistency measurement of a
given concept. Kelly (2022) articulated that "reliability refers to the degree to which the
results of a given study can be repeated or replicated under the same conditions." A research
with high reliability produces consistent results each time it is conducted. Furthermore,
reliability is the only one way to determine whether we should trust and put more confidence
on the study's findings. A study with inconsistent results, where the result differs each time
the study is completed, indicates that the study has low reliability and isn't very useful. .
Results from the reliability test on the pilot study indicated that some questions in some of the
variables needed to be revised / eliminated. The revision was done on the questionnaire
before the main survey was launched.

3.6 Ethical Considerations

Research ethics are defined as the appropriateness of the researcher’s behavior towards the
subjects under study. Ethical issues are increasingly getting prominence in the research field.
Research ethics start from formulating and clarifying the research topic, designing, gaining
access, collecting data, processing, storing data, analyzing, and writing up morally and
responsibly (Saunders et al, 2009). General ethical issues include the privacy of participants,
voluntary participation, consent of participants, the confidentiality of data obtained from
participants, and maintenance of anonymity of the participants. The responses of participants
to the way data are collected should also be taken into account to ensure that the participants
are not subjected to discomfort, stress, pain, or harm.

Adherence to ethical requirements was ensured at each stage of the project. Informed consent
was obtained from each research participant ensuring that they voluntarily consented to
participate. The objective of the research was made clear to all participants to make them feel
comfortable and therefore respond freely. Privacy and confidentiality issues were respected
by ensuring that respondents understood that their inputs in the questionnaires were not going
to be used for any other purpose other than the study being conducted. The anonymity of
participants was also ensured.

3.7 Data Presentation and Analysis

The researcher used tables and charts to present data. Inductive theme analysis was used to
analyse the qualitative data gathered from the personal interviews and semi structured
questionnaires. Thematic analysis is ideal for capturing the nuances of meaning within a data
collection (Braun and Clarke, 2019). The researcher compared the viewpoints, descriptions,
and reflections of the study participants using thematic analysis, and discovered themes
within the data. A theme might be a pattern of explicit thoughts and observations discovered
in the data, or it can be interpretations of implicit characteristics of the topic under study
(Braun and Clarke, 2019). The themes serve as the foundation for the researcher's data
analysis and interpretation. The data analysis in this research includes a comparison of topic
frequencies, an evaluation of the interaction between themes, and the discovery of theme co-
occurrence (Sundler et al, 2019). Several themes were discarded throughout this process,
while others were blended with other themes into a new top-level theme, and a few wholly
new themes were introduced. This was followed by the writing up of results, subject by
theme, and the construction of a framework including the main variables and best practises
for effective design adaption in business.
3.8 Chapter Summary

This section managed to discuss the methodological issues which were utilized to assess the
impacts of corporate governance on financial performance in banking sector. Research
design, which is the blueprint of the study which was utilized in this study was first to be
discussed. The research approach, its characteristics, and justification for adopting it were
also discussed. Thereafter, the population of the study, sampling procedures, and sample size
were also discussed. Data analysis and ethical considerations which guided the researcher
throughout the study were also looked at. The next chapter is dedicated to presenting
findings.
 QUESTIONNAIRE

AN ASSESSMENT OF EFFECTIVENESS OF SUCCESSION PLANNING IN

ENHANCING BUSINESS CONTINUITY: - A CASE STUDY OF FAMILY-OWNED
BUSINESSES IN MASVINGO URBAN.

Dear valued respondent,

My name is Fortune Nguvo, a final year undergraduate student at Midlands State University
carrying out a research on an assessment of effectiveness of succession planning in
enhancing business continuity: - a case study of family-owned businesses in Masvingo
urban. This is being done as a partial fulfillment of requirements for the honors degree in
business management. The following questionnaire will require approximately 6-8 minutes
of your time. There is no compensation for responding, nor is there any known risk.

If you decide to take part in this survey exercise, provide answer to all questions as honestly
as possible and return the completed questionnaires immediately. Understand that
participation is strictly voluntary, and you may decline to participate at any point.
Information obtained from this study will be treated with great confidentiality. Your
cooperation is greatly appreciated in advance.
SECTION A: Demographic information

Kindly, tick the appropriate block as it applies to you.

1 What is your gender? Male ☐

Female ☐

2 What is your marital status? Single ☐

Married ☐

3 How old are you?

Under 30 30-39 40-49 50-59 60 years and

Age
years ☐ years ☐ years ☐ years ☐ over ☐

4 How long have you been operating your business?

Work Below 10 10-20 Above 20

Experience years years years
☐ ☐ ☐

5 What is your highest level of education?

Highest Level of Education

Secondary 1☐

Certificate (professional courses) 2☐

Degree (BSc/HND/B.Ed.) 3☐

Masters (MSc/ MBA) 4 ☐

Doctorate (PhD) 5☐
SECTION B: Background to Business

1. How long has your business been in existence?

……………………………………………………………………………………………..
2. Are you the proprietor or you inherited the business?
……………………………………………………………………………………………..
3. What generation are you?

1st
2nd
3rd

4. What is the nature of your business?

……………………………………………………………………………………………..

SECTION C: Succession planning

1. How important do you believe succession planning is for the long-term success of a
family-owned business?
…………………………………………………………………………………………………..
......................................................................................................................................................

2. Does your family-owned business have a documented succession plan in place?

…………………………………………………………………………………………………..
......................................................................................................................................................

3. How frequently is the succession plan reviewed and updated?

…………………………………………………………………………………………………..
......................................................................................................................................................

4. How involved are family members in the succession planning process?

…………………………………………………………………………………………………..
......................................................................................................................................................

5. How much consideration is given to the skills and qualifications of the potential
successor(s) when selecting a family member to lead the business?
………………………………………………………………………………………………..
…………………………………………………………………………………………………
…..
6. Does the succession plan address potential conflicts that may arise among family members
during the transition period?
…………………………………………………………………………………………………..
......................................................................................................................................................

7. How is the successor(s) prepared for their new role in the company?
…………………………………………………………………………………………………..
......................................................................................................................................................

8. How much input do non-family members have in the succession planning process?
…………………………………………………………………………………………………..
......................................................................................................................................................

9. How is the performance of the successor(s) evaluated once they have taken on their new
role in the company?
…………………………………………………………………………………………………
…………………………………………………………………………………………………

10. What steps does your family-owned business take to ensure business continuity during
the transition period?
…………………………………………………………………………………………………
………………………………………………………………………………………………….

11. How do you measure the success of your succession planning process?
…………………………………………………………………………………………………
…………………………………………………………………………………………………
 SEMI-STRUCTURED INTERVIEW GUIDE FOR BUSINESS OWNERS

Introduction

My name is Fortune Nguvo, a final year undergraduate student at Midlands State University
carrying out a research on an assessment of effectiveness of succession planning in enhancing
business continuity: - a case study of family-owned businesses in Masvingo urban. This is
being done as a partial fulfillment of requirements for the honors degree in business
management.

If you decide to take part in this survey exercise, provide answer to all questions as honestly
as possible and return the completed questionnaires immediately. Understand that
participation is strictly voluntary, and you may decline to participate at any point.
Information obtained from this study will be treated with great confidentiality. Your
cooperation is greatly appreciated in advance.

1. Could you tell us a little bit about your experience with succession planning in your
family-owned business?

2. What factors have you found to be most important for successful succession planning in a
family-owned business?

3. How has your family-owned business benefited from having a succession plan in place?

4. Have you experienced any challenges or roadblocks in implementing a succession plan in

your family-owned business? If so, what were they, and how did you address them?

5. Do you feel that your family-owned business is adequately prepared for a potential
leadership transition in the future? Why or why not?

6. How do you believe that succession planning can help to enhance overall business
continuity in a family-owned business?

7. Are there any additional comments or insights you would like to share regarding
succession planning in family-owned businesses?
8. What are succession planning strategies that have been implemented in family owned
businesses in Masvingo urban?

9. What are the benefits of succession planning to family-owned business?

10. What are the challenges associated with development of succession planning?
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