Succession Planning is Survival Planning: A Case Study Analysis of Succession Within Small to Medium Family-Owned Businesses

Abstract

Family-owned businesses are the engine that drives the US economy. A recent study found that 77% of new businesses established are family-owned (Åsa Björnberg, 2016). In 2016 there were over 30 million small businesses in the US, of which approximately 20%, or 6 million, were family-owned (U.S. Small Business Administration Office of Advocacy, 2019). These family businesses contribute 57% of the US GDP and employ 63% of the workforce (Cornell University - SC Johnson School of Business). Despite the size and significance of family-owned businesses, little research has been conducted beyond the company, owners, and family members to explore the entire system. This case study research project focused on the factors that influence succession planning success for first-generation, US-based, small and medium-sized family-owned businesses. Contrary to existing studies, our research did not support the importance of formal succession planning. This study, however, identified seven factors: culture, family characteristics, founder characteristics, family control, non-family leader, successor characteristics and generational change. By understanding these factors, family-owned businesses can improve succession planning and increase the likelihood of their businesses surviving to the next generation.

Keywords: succession planning, family-owned business, case study