Development model for family business successions evaluation with a South African Case Study

Abstract

Family businesses (FB) contribute between 45 and 90% to global gross domestic product (GDP). However, empirical research has raised the alarm pertaining to the need to prolong the longevity of such businesses. Findings indicate that within the next 5 years, over 50% of FB executives could retire from day to day running of such businesses. This highlights the significance of successful business successions. The dynamics around the succession process and the criteria influencing successful successions have thus engaged the attention of researchers. Therefore, the purpose of this study was to better understand the development of successors in FB. The study began with a literature survey through which a development model was identified. The study then went on to evaluate the model through an FB case study. The single qualitative case study was used to test whether the six (6) prepositions proposed in the model applied to the case that was studied. Through one-on one interviews and a qualitative data analysis, it was observed that the 6 prepositions were applicable to the FB. In other words, FB grappling with succession planning can be advised to endeavour to understand and take actions aligned with the prepositions.

Keywords: Family businesses, Small businesses, Shareholders, Succession