Academic journal article Entrepreneurial Executive

Family Business Succession: How Men and Women Predecessors Can Bring Credibility to Their Successors?

Academic journal article Entrepreneurial Executive

Family Business Succession: How Men and Women Predecessors Can Bring Credibility to Their Successors?

Article excerpt

INTRODUCTION

Known for their major contribution to economic growth, family businesses represent close to 75% of all entrepreneurships in Canada. They generate about 45% of the Canadian net growth product, create employment for 50% of the labour market, and create each year 70% to 85% of all new jobs (Bruce & Picard, 2005; Deloitte & Touche, 1999). However, according to a study from Bruce and Picard (2006) on Canadian family business predecessors, 41% of them will transfer their business to a successor within the next five years, reaching a proportion of 71% in the upcoming 10 years. And only 35% of family business predecessors say that they have a well-established plan for selling or transferring their business, notwithstanding the fact that the successions are known to be a long and complex process with a very low success rate.

According to numerous authors, successful successions depend on identifiable factors. For some authors, the transition depends not only on the predecessor's will to retire (Lansberg & Astrachan, 1994) or to let go (Bruin de Pontet et al., 2007), but also on the succession planning (Sharma, 2004; St-Cyr & Richer, 2007) and on the successor's preparation and ability to operate the business (Venter et al., 2005). Others identify the predecessor's ability to build a good relationship with the successor (Cabrera-Suárez, 2005; De Massis et al, 2008; Garcia-Alvarez et al., 2002) as a basis for a stable future. Some researchers are more interested in the abilities such as the successor's skills to assume his/her leader's role (Mitchell et al., 2009; Venter et al., 2005), or in his/her degree of experience (Le Breton-Miller et al., 2004), or even in the successor's commitment, satisfaction, and motivation (De Massis et al, 2008). Finally, some researchers consider that in order a transfer be successful: a) sound and ethical values must be transferred to the successor (Garcia-Alvarez et al., 2002); b) assistance must be provided for the successor's development (Cabrera-Suárez, 2005); c) the successor must be feeling involved into the process (Haberman et al., 2007; Koffi, 2008); and finally, the successor must have credibility (Barach et al., 1988; Bayad & Barbot, 2002).

Despite of the mass of research conducted during the past 30 years on the problem of successions in family businesses, very few researchers have focused on the process of succession when the business owner is a woman, and even less on how she should proceed to set up her successor (Salganikoff, 1990; Sharma, 2004; Sonfield & Lussier, 2009). Particularly since in all likelihood many of the family business predecessors struggling with the difficulties of succession will be women. Indeed, Statistics Canada as well as Industry Canada report that more than 40% of the Canadian entrepreneurs are women (St-Cyr & Richer, 2007). In addition, the entire body of research realized on women entrepreneurship and their leadership style, from the study by Hisrich and Brush in 1984 to those of Büttner in 2001, shows that the behavior of women entrepreneurs towards their personal and business circles differs from those of their male counterparts.

So the specific leadership style and behavior of men and women entrepreneurs and the urgency to support their successors in a successful transfer of their family business is certainly important and relevant as a research topic in itself. Its main objective is to better understand and describe the different behaviors adopted by men and women predecessors of family businesses in transferring credibility to their successor in the eyes of the employees with which they have built their business, especially when credibility appears to be a necessity for the enterprise durability and survival (Barach et al., 1988; Sathe, 1985). In other words, what are the behaviors to be adopted by men and women predecessors to ensure the credibility of their successors? And, what could characterize a credible successor in the eyes of men and women predecessors, employees, and successors? …

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