Academic journal article Journal of Small Business Management

Leadership Personality and Firm Culture during Hereditary Transitions in Family Firms: Model Development and Empirical Investigation

Academic journal article Journal of Small Business Management

Leadership Personality and Firm Culture during Hereditary Transitions in Family Firms: Model Development and Empirical Investigation

Article excerpt

The present study is the first to propose a theoretical framework for an exploration of the relationship among organizational culture, leader personality, and the success of hereditary transitions in family businesses. Using Dyer's cultural framework and Jungian personality concepts, the authors test empirically this framework among family businesses in Cyprus. In turn, they identify certain common dimensions of leader personality and firm culture in relation to the success of a transition, which could serve as the basis for further research on the subject.

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Introduction

Among the most difficult challenges a family business faces is succession, which is the replacement of the Chief Executive Officer (CEO) or the ruling cadre with another (Handler 1994; Lank et al. 1994; Birley 1991). This replacement usually takes place between generations of family members as the majority of such firms remain in the family, and families do stay in their businesses (Barnes and Hershon 1991). In turn, hereditary succession is the focus of this article.

As hereditary succession is crucial for the survival of a family enterprise, it must be completed effectively (Barnes and Hershon 1991). The issue is how to ensure its effectiveness. According to Dyer (1986), certain kinds of cultural configurations in family firms tend to create the conditions that facilitate the transition's success and ensure the firm's long-term survival. Furthermore, such configurations are usually created and transformed by firm leaders (Schein 1995; Churchill and Hatten 1987; Dyer 1986). The behavior of these leaders in ensuring a successful transition has been studied extensively. In fact, a number of studies highlight what family-firm leaders should or should not do to ensure an effective succession (Seymour 1993; Blackman 1991; Longenecker and Schoen 1991; Nelton 1991; Ward and Sorenson 1991a, b; Handler 1989). Yet, no study so far has diagnosed which family-firm leaders would actually behave in such a way.

Leader behavior is not only complex and multidimensional, but also contingent upon the overall system in which leaders operate. A good way to study the underlying dynamics of leader behavior is by focusing on leader personality (Church, Waclawski, and Burke 1996). Further, in succession planning, the personality characteristics of leaders who leave office (successees), as well as those who take over (successors), become of interest.

The authors of the present study have proposed a working model to explore the relationship among the success of a transition, the personality characteristics of firm leaders, and the culture of a firm. In this model, the culture of a firm is assessed through Dyer's theory of cultural configurations. Leader personality is viewed through 16 combinations of personality types measured with the Myers-Briggs Type Indicator (MBTI). Further, the success of a transition involves a list of issues cited in existing literature, which are considered important for an effective succession and usually need to be attended to by firm leaders--both present and future ones. The proposed model is presented in Figure 1.

The authors depict three propositions in the model, demonstrated through a dotted-line triangle on the figure. First, the authors hypothesize that certain leader personality characteristics are more conducive to effective successions. Second, they postulate that certain cultural configurations are more propitious to the success of a transition. Third, they propose that the cultural configurations more conducive to successful transitions are closely related to the personality characteristics of effective leaders.

The authors analyze below the manner in which personality, succession, and culture relate to the model proposed in the present study. Then, they examine the methodology used for the research, present its results, and discuss the implications. The paper concludes with the limitations of the study and suggestions for future research. …

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