The ethnic factor in intergenerational succession in business among the small and medium enterprises in Nairobi, Kenya

Abstract

Succession is an inevitable event in the life of a family business. The mode and the strategies employed to facilitate the trans-generational transition of ownership and control of the business have been observed to have a significant influence on the survival and performance of the business. A number of factors influence this succession. Key among them is the context. Specific contexts include culture, the business and the family. Against the background of minimal research on family business succession in Kenya, and rich entrepreneurship, this study aimed at determining the relationship between succession strategy and the ethnicity of the entrepreneurs. This study surveyed 249 SMEs in Nairobi. Chi square test of independence established that there were significant differences in terms of the businesses carried out, with Asians being more in manufacturing than African. Africans were generally underrepresented in manufacturing sector. In addition, the Asians operated slightly older businesses than the Africans. There was however no significant differences in specific succession practices of having written succession plans and formalized successor identification. This was equally supported by the correlation analysis which indicated weak correlations. The study found minor differences in the relationship between ethnicity and succession in family businesses. This has implications for the understanding of family business succession practices in Kenya. The obvious implication is that differences in ethnic representation in business ownership do not necessarily mean differences in managerial practices.