Succession Planning, Entrepreneurial Orientation, Business Development Services and Performance of Small and Medium Family Businesses in Machakos County, Kenya
Abstract
Succession planning is a major problem that affects the performance of family-owned
businesses in Kenya leading to their deaths, only one in three family businesses
makes it from the first to the second generation. Family owned businesses continue to
form the backbone of most of the national economies, especially in Kenya. This study
sought to contribute to knowledge and based on the view that succession planning,
entrepreneurial orientation, and business development services affect firm
performance. Building on existing theoretical frameworks and literature, the study
seeks to find out the influence of entrepreneurial orientation and business
development services on the relationship between succession planning and firm
performance. The study looked at the family businesses in Machakos County, Kenya.
It is anchored on the family systems theory, stewardship theory; resource based
theory, and agency theory. The study applied positivist research paradigm, a cross
sectional survey design. Both secondary and primary data was collected using a semistructured
questionnaire; the sample size was 139. The study applied both descriptive
and inferential statistics to analyze the data and test the study hypotheses created from
the study objectives. The study found that succession planning, though lowly applied
in family businesses had a statistical significance on performance; entrepreneurial
orientation whose presence among family businesses was observed to be high had
significant effect on the relationship between succession planning and firm
performance statistically. However, the study observed that business development
services are mildly applied within these firms and did not have a statistically
significant effect on the relationship between succession planning and firm
performance. Finally, the joint effect of succession planning, entrepreneurial
orientation, and business development services on firm performance was found to be
greater than that of individual variables and, therefore, it is the best model for the
study. The study concludes that succession planning, entrepreneurial orientation, and
business development services positively affect the firm performance of family
businesses. The findings of this study support and add knowledge to previous studies
on family businesses. The results supports the resource based theory in that firms need
resources to better their performance, the agency theory that the firms need to
outsource human skills, the systems theory that there should be a balance in all
systems in a family business. Finally, stewardship theory is also supported in that the
workers must contribute positively to the growth of the business to enable it carry on
the founder’s vision and be passed to other generations. The study recommends all
stakeholders in entrepreneurship, policy, and practice and family business owners to
enhance the application of succession planning, entrepreneurial orientation, and
business development services in the County. The study suggests further studies
targeting the three variables in varying environment to assess their outcomes and
relationship towards their inclusion in the entrepreneurship theories and family
business theories.
Publisher
University of Nairobi