Family Business & Succession

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CHAPTER III METHODOLOGY

History Matters: How path dependence in the family business influence succession planning.
As the theory of path dependence requires, in the process of change, a full understanding of past events (Schreyögg et al., 2003), which caused the path’s trajectory into the lock-in stage, we need to include the importance of the social analysis in the methodology. Whereas in neo-classical economics, researchers view the social interaction between the actors as something which impedes the competitive market, Granovetter (1986) and Pettigrew (1997) refers to the significance of social embeddedness and its impact in the economic sphere. Therefore, Sydow et al., (2012) merge social embeddedness with the path dependence theory, by referring to the perspective of level-interrelatedness. A path can only be analyzed when it is contextualized.

Research Philosophy

In regard to the research purpose and questions, how history matters, through the use of the path dependence framework, this study follows an interpretive approach to include different perceptions of individuals regarding the unit of analysis. Especially in research within the field of family businesses, in which each case is distinct and unique in itself and consist out of a complex intertwined system between family, business and individuals (Habbershon, Williams & MacMillan, 2003). The application of an interpretivist philosophy supports the process of coming up with the most accurate findings for the research purpose.
By the interpretive perspective, we assume the existence of multiple realities, as different individuals have different perceptions. Unlike as in the theory of mindful deviation, the path dependence puts particular weight on the historical dimension of the analysis (Garud & Karnoe, 2001). Hence, also the theory of path dependence is framed into a relativistic ontology, excluding the possibility of only one “truth” existing. As we explore historical events at different time stages, including different views from various participants, and analyzing the surrounding of the events in their particular time happening, we presume the existence of more than one reality (Easterby-Smith, Thorpe & Jackson, 2015). As Collins (1983, pp. 88. cited in Easterby-Smith et al., 2015, pp.147) says, ”what counts for the truth can vary from place to place and from time to time”. Therefore, both research areas, family businesses and the framework of path dependence are demanding in the qualitative setting the relativistic ontology.
History Matters: How path dependence in the family business influence succession planning.
In line with the ontology, this study is based on the epistemology of social constructionism. As the epistemology defines the way of knowledge making in the certain ontology, its social constructionism assumes that the reality is not objective but constructed by the social interactions of its actors (Easterby-Smith et al., 2015). Therefore, it is an interpretative method, which relies on the shared experiences and views of the people interacting in a certain reality.

Research approach

In order to understand reality, social constructionism is firmly embedded in the method of qualitative research (Easterby-Smith et al., 2015). If the reality is not objective and not based on facts, is it necessary to ask for the people’s perception and experience. Hence, the collection of data is conducted by in-depth interviews. As this research is relying on the interpretations and experiences of actors related to the case company, this study is applying an abductive research approach.
As the abductive reasoning can be regarded as a combination of induction and deduction, is it useful to point out the primary intention of these different approaches. Thomas (2016, pp.238) describes the purpose of inductive reasoning as it “allow research findings to emerge from the frequent, dominant, or significant themes inherent in raw data, without the restraints imposed by structured methodologies.” While the deductive approach starts with a predefined network, the inductive reasoning is developing and subsequently ending up with a network (Miles & Huberman, 1994).
In the abductive reasoning, the researcher starts with understanding the way, the actors construct their everyday life (Ong, 2012) and subsequently make sense out of it. It is an abductive process, shifting from the first level construct to the second one (Blaikie, 2000).
In order to conduct the research as little biased as possible from other studies, the abductive approach demands the researcher to analyze and make sense out of the emergent data from the conducted study. In this regard, this study is integrating the general theoretical background in the frame of literature and subsequently clarify specific areas of interest, which arise during the emergence of patterns, in the analysis section. Therefore, the benefit in the abductive approach is, that although the researcher should have a problem area defined beforehand, he/she has the flexibility History Matters: How path dependence in the family business influence succession planning.
to align research-related topics as the literature review, according to the gained knowledge and arisen patterns from the qualitative studies (Blaikie & Stacy, 1984).

Research strategy

The strategy chosen is embedded in the explorative character of the study, which will be conducted in the form of a case study. As defined by Leonard-Barton (1990, pp. 249), a case study can be described as “a history of a past or current phenomenon, drawn from multiple sources of evidence.” Also, a case study strategy is a highly iterative process, linked to the empirical data crafted during the data collection (Eisenhardt, 1989) and thus follows the abductive reasoning of this study. The explorative design enables researchers to analyze a known phenomenon from another angle (Robson, 2002), which matches the research purpose.
While searching for gaps and flaws in the topic of path dependence and succession in family businesses, it was noticeably, that the exploration of family business succession from an organizational perspective is still poorly researched. Additionally, De Massis & Kotler (2012) stated in an earlier study with among the 215 most cited articles in the field of family business, the case study approach as a qualitative research design is rarely chosen (De Massis & Kotler, 2014). However, the application of case studies in the field of organizational and management studies are exceptionally reasonable, as it looks at different objects from multiple perspectives, resulting in a more detailed understanding of the phenomenon (Eisenhardt, 1989). The case study design is also in line with the chosen interpretive philosophy. Most of the case studies conducted in the field of family business follow a positivistic ontology, why the application of interpretivism is a significant theoretical contribution in this field (Nordqvist, Hall & Melin, 2009). According to Yin (2003), a case study approach should be selected in cases in which questions of “how” and “why” are aimed to be answered by the researcher. Also, the case study the appropriate choice in situations where the behavior of the involved individuals cannot be controlled and manipulated, the context around the unit of analysis needs to be understood, and lastly, no clear line can be set between the studied phenomenon and its context (Yin, 2003).
History Matters: How path dependence in the family business influence succession planning.
The way the research purpose is put is influencing the type of case study which has been selected. According to the research purpose: “How does path dependence influence succession in family businesses?” this study intends to understand the dynamics of different historical, present and future events and therefore, follows an exploratory research approach.
Furthermore, as Baxter (2008, p. 544) defines a qualitative case study as “[…] an approach to research that facilitates exploration of a phenomenon within its context using a variety of data sources,” it also underlines the explorative orientation of our research design. Hence, this study aims for an explorative research design, which demands a rich set of data and therefore, is in line with the qualitative and interpretive research setting. An explorative approach is always useful in studies with no predefined outcome and where the researcher needs to grasp an in-depth understanding of the unit of analysis and its context (Yin, 2003). This study follows the design of an exploratory study, as the researchers have no idea which kind of events or decisions might have affected strategic decisions in the organizations, related to the transition to the third generation. The explorative design is also in line with the theory of the path dependence, in which the historical events have a contingent characteristic and consequently exclude any possibility of drawing hasty conclusions. Also, the qualitative case study with an explorative purpose puts particular weight on the context around the unit of analysis, which supports the researcher to obtain a “true” picture (Baxter, 2008).

Method-case study

The researcher needs to be explicit about the unit of analysis, which can be described as “a phenomenon of some sort occurring in a bounded context” and represent the case itself in the study (Miles & Huberman, 1994, pp. 25). Identifying the unit of analysis is often explored in the field of family business by asking questions like “What is my unit of analysis?” or “What do I want to analyze?” (De Massis & Kotler, 2014). Answering these questions supports the researcher in delineating the unit of analysis. As this thesis is exploring, in particular, the intergenerational transition of the first to the second generation, as well as the upcoming ownership and leadership succession to the third generation, the focal area of interest is embedded in the organizational unit.
History Matters: How path dependence in the family business influence succession planning.
In terms of validity, Yin (2013) emphasizes the importance of having a clear research design in place, as well as the unit of analysis, before starting the empirical work. The unit of analysis is clearer with an initial round of interviews, once with the current CEO and also with the current owner of the company. Within the initial round, knowledge was gained about the essential challenges Holtab is going to face in the close future and could narrow down the literature search to the most relevant focus areas. However, the abductive reasoning chosen allows having the possibility of aligning the research questions according to the crafted data and emergence pattern during the empirical study (Miles & Huberman, 1994).
After the unit of analysis and the type of the case is defined, the researcher needs to decide whether a single case study or a multiple case study is more appropriate for the research purpose. The single case study can be especially relevant if the phenomenon studied and explored underlies a rare, unique, or extreme characteristic (De Massis & Kotler, 2014; Yin, 2003). Multiple case studies, on the other hand, are more appropriate for building theory as they allow to evaluate whether the findings of a single case are idiosyncratic or replicable to other cases (De Massis & Kotler, 2014). Although researcher as Yin (2013) emphasize that the downside of the single case study is determined in the lack of generalizability of the gained insights on other cases and therefore might lack on validity, Stake (2006) instead focus on the rich amount of information a single case study can provide. The advantage in the single case study approach is the easiness “[…] to perform a very intensive and complete study of an organization” (Miller & Friesen, 1982. pp.1024), as the generalizability of findings might be difficult in organizational studies, in which the explored phenomenon underlies a distinct and unique character. As this study is conducting an analysis which includes at least two levels – the organizational and the individual one -, a need arises, to have an understanding of all the interacting factors and therefore include various perspectives on particular events into the analysis. Thus, multiple case studies increase the external validity of the research design, while a single case study can increase the internal validity in grasping the patterns between the initial cause and its outcome (Leonard-Barton, 1990).
Hence, this study is following a single case study design, as the complexity of family businesses itself with its unique succession phase among all kinds of organizations, seems to be better understood in studying this phenomenon as a single History Matters: How path dependence in the family business influence succession planning.
entity. Also, the complex theoretical sampling and the extensive time consumption of multiple case studies (De Massis & Kotler, 2014) would exceed the time frame given for the master thesis in the research setting chosen.

Time Horizon

A crucial and challenging question for researchers is to determine the time frame of a study. In the topic of change, which is a significant part of organizational studies, in particular in the field of family business and its fearful succession phase, the “[…] empirical inquiry into change has to be capable of revealing the temporal patterns, causes, and movements from continuity to change and vice versa ” (Pettigrew, 1990, pp. 272). Pettigrew (1990) points out that the time frame of starting and ending the data collection and data analysis should be linked to the point of time when the researcher is able to do judgments about the change process.
As this study puts particular weight on events within the first generational transitions up to milestones affecting the succession to the third generation, we are conducting a longitudinal case study, from the starting point of the case company in 1973 until today. Furthermore, as Morgan (1986, pp.267) outlines, “we need to try and understand how the discrete events that make up our experience of change… are generated by logic unfolded in the process of change itself”, to which this study is conducting the interviews with broad sample size, for covering the largest possible time period and to understand the patterns between these events.

Method of Access

The access to the sample was selected primary according to the convenience sampling, where individuals are chosen based on the easy accessibility (Easterby-Smith et al., 2015). As part of a preliminary research project, the case company was already in a good relationship with our educational institute, Jönköping University, of which this study is conducted. The recent owner held a guest lecture in 2017, about the struggling succession in the first generation and was therefore selected based on the criteria of eligibility in line with our research purpose. Therefore, we benefit in the high level of access to the management and owner of the company and their willingness to cooperate with us. For studying the phenomenon of intergenerational transition, the case company is a perfect match, since the company is currently owned by the second generation and is going to experience a transfer of ownership and leadership within the next decade.
Regarding the definition of the unit of analysis but also for accessibility to available samples, the current CEO and owner of the case company were interviewed in the earlier stage of the study. Subsequently, the authors conducted a snowball sampling, where the CEO and owner were asked about individuals who might be eligible for the research and willing to be interviewed. The flipside of the beneficial access to the sample is the bias (Easterby-Smith et al., 2015), as findings cannot be proven to be credible out of the usually small sample scale in qualitative studies. Besides, the sample might only enclose information the researchers seem more interested in or which seems more relevant in a specific context (Gerring, 2017).
However, the possibility to obtain a rich set of data can offset this disadvantage (Stake, 2006). The field of family business, and especially the topic of succession, which touches upon a highly private and sensitive subject within the family, does not allow the selection of any random family organization. Thus, the case company chosen in this study already had a reliable connection to the university, had the willingness to talk about sensitive topics, and reflect the environment ideally, studied in this study.

Data collection

This study puts the focus on primary data in the data collection stage to answer the research purpose (Saunders, Lewis & Thornhill, 2012). According to Yin (2014), then the data collection can be done in six ways, documentation, archival records, interviews, direct observation, participant observation, physical artifacts. However, the most common method used for collecting primary data is to conduct interviews (Eisenhardt & Graebner, 2007). In regards to qualitative case studies, interviews are especially appropriate as they are once, conducted in a targeted way, in which essential topics within the case study are easy to grasp, and second, as the interviewer gets additionally valuable insights in the participants’ perception of the certain situation (Yin 2014). Yin outlines solely the bias, developed by poorly asked questions, the risk of response bias in the way, that the interviewee responds non-truthfully for aiming to satisfy the researchers’ purpose with presumed answers, as a challenge to deal with, while conducting interviews.

INTRODUCTION TO THESIS
Introduction & research problem
Purpose
Definitions
FRAME OF REFERENCE
Family Business & Succession
Path dependence
Self-reinforcing processes
Path creation and path-breaking
Organizational culture and conflicts in family businesses
METHODOLOGY
Research Philosophy
Research approach
Research strategy
Method-case study
Time Horizon
Method of Access
Data collection
Presentation of findings
Analysis
Trustworthiness & Quality standards
Research ethics
RESEARCH SETTING & CASE
Holtab
Company
Family
Ownership
Board
The Holtab case
Holtab
The First Generation
The Second Generation
The succession – The 7 Black Years
The next generation
EMPIRICAL FINDINGS & ANALYSIS
Path #1 – Ownership struggle
Stage 1: Preformation (1954 – 1990)
Stage 2: Formation: (1973-1995)
Stage 3. Lock-In (1995-1997/1998)
Path #1 – Analysis
Path #2 – Holtab today
Stage 1. Preformation (<1997)
Stage 2. Formation (1997-2010)
Stage 3: “Lock-in” (2010-2019)
Path #2 Analysis
DISCUSSION & CONCLUSION
Discussion
Path dynamics between path 1 and 2 in Holtab
Path dynamics on additional divergent paths
Conclusion
Implications, critique, and further research
REFERENCES
APPENDIX
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