Impacts of succession in family business

Abstract

While many studies in family business research focus on mono-causal impacts of succession, the purpose of this paper is to employ a systemic approach to analyze dynamic effects of intra-family succession on multiple business areas in family-run companies. A system analysis using a participatory approach was conducted for a reference family-run company operating in the horticultural retail sector in Germany. The Vester Sensitivity Model, supplemented with principles from system thinking was used to identify key variables related to intra-family succession. Expert input and analysis of variable co-occurrence revealed key variables associated with succession such as “strategic planning,” “productivity” and “financial flexibility.” Dynamic interactions among various business areas were identified by simulating interventions in succession trajectories. In particular, key variables such as “conflicts between family and work” and “organizational climate” turned out to be highly sensitive to changes during a succession process. The concept and design of this system analysis tool will allow practitioners such as company managers and business consultants to better understand complex interrelations within companies and provide additional guidance with regard to critical events like business transfer. The present study uses system thinking to analyze succession and its dynamic and time-lagged impacts on affected business areas in family-run companies for the first time. Repeated application of the systemic approach presented here to real-world business cases will gradually improve the tool and the quality of information it provides.