| dc.description.abstract | Succession is an inevitable event in the life of a family business. The mode and the strategies employed to facilitate the transgenerational 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 nature of business succession strategies, the factors that influence succession and relationship between succession and firm performance among the family owned SMEs in Nairobi.
This study employed a multi-method design incorporating both survey of a sample of 249 SMEs in Nairobi and six case studies. Both descriptive and inferential statistics as well as content analysis techniques were appropriately applied to analyze the data relating to the various dimensions of the study i.e. the nature of succession, factors influencing succession and the relationship between succession and firm performance. The results indicated that family owned SMEs in Nairobi did not explicitly document their succession strategy. However contrary to expectations regarding the nature of succession, it was evident that they made significant unwritten plans for transgenerational succession. Specific plans included investing in relevant education of offspring (sons or daughters) as a way of preparing them to take over and engaging them in the business at an early age. The largely absent documentation of plans regarding succession could be explained by the culture. It is against the African cultural practices to discuss openly the possible death of a relative whether young or old.
While the survey data did not indicate a clear relationship between succession planning and performance, analysis of the case studies indicated that the firms that invested in preparing the children to take over were good performers - that they experienced smooth transition, survived longer and had faster post-transition expansion. There was also evidence of post succession business growth as newer generation took over and introduced new ideas and pursued new business opportunities. The family and firm level institutions did not have statistically significant moderating effect of the relationship between succession and firm performance; however, based on the case analysis, the family circumstances were critical factors influencing succession.
The harmony in the family or lack of it determined whether the business remained as a unit, split into different units or collapsed altogether. The chi-square test of independence between ethnicity and business sector indicated that the Asians were statistically more represented in the manufacturing sector than the African. The indigenous Africans also operated much younger businesses compared to the Asians who operated businesses that were significantly older in the categories of 11 to 50 and over 50 years. However, there were no statistically significant relationship between succession and ethnicity in areas of successor identification and written succession plans. The study leads to broad conclusions that succession planning in the SMEs was largely existent but not documented.
There were mixed findings relating to the moderating effect of family and firm level institutions and so no clear cut conclusion can be made. This is supported by the findings of studies elsewhere as indicated in the empirical literature. It is recommended that there is need to develop family business succession infrastructure including establishment of professional support, legal systems and opportunities for learning succession best practices while being sensitive to the cultural orientation of the people. | en_US |
