Predecessor Related Factors Affecting Successful Succession in Family-Owned Firms in Bangladesh

Abstract

Family-owned firms play significantly important role in the new global economy. In every small and medium sized family-owned firm succession is a common event though now it is considered as the most critical issue as experienced by researchers. Therefore, a proper succession process is important in the sense that it affords the family-owned firms to select the most appropriate leaders to carry on the business successfully. The role of the predecessor is of greater importance during this succession process. Succession planning is the first and one of the most important steps of succession process. The focus of the researchers on the succession is derived from the fact that resistance of the predecessor could be responsible for the lack of succession planning in the family-owned firms. Thus, this study analyzes the predecessor related factors that affect succession planning and in turn succession process in family-owned firms in Bangladesh. Family-owned firms located in the northern region of Bangladesh have been studied to achieve the objective of the research. The study explores the trait, behavior and career related factors of the predecessor as well as external factors that come from within the family or the family-owned firm to influence the behavior of the predecessor. The research has used qualitative method to study the trait, behavior, and career related factors of the predecessor that affect succession plan. The study also uses quantitative method in the form of survey to explore the external factors that may have strong influence on the predecessors that affect their succession planning related behavior. The study has approached 229 second or subsequent generation family-owned firms located in eight districts of Rajshahi Division with direct interviewing method using the interview questionnaire. SPSS-20 package has been used for data entry and analysis. Descriptive statistics such as frequency distribution, cross tabulation, mean, standard deviation, percentage, etc.; graphical presentations; and factor analysis have been used to analyze the data with an aim to answer the research questions. Case study method has been used for qualitative research of the study. The present study applies multiple case studies where six cases have been selected, four from Rajshahi district and remaining two from Naogaon district. The outcomes of the six cases have been compared to test whether the findings from one case replicate in the other cases or not. Based on the findings a model has been developed to show the predecessor related factors that affect succession planning behavior of the predecessors. A set of trait, behavior and career related factors that have been identified from case studies have been presented in the model. The model also shows important external factors identified from survey that consciously or subconsciously affect the predecessors in succession planning behavior of the same. Findings of the study have been compared with findings of the previous studies. Though most of the findings of the present study agree with previous studies, a few findings of the study do not comply with them. Finally, the study recommends further in-depth study on similar issues on family-owned firms in Bangladesh.