The Importance of Family Owned Businesses 

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Chapter Two: Theoretical Considerations on Succession Planning


There is an agreement found among most researchers (as presented in different models) that succession is more of a process than an event (Churchill & Hatten, 1987; Handler, 1990). Succession is not simply a single step in time and space which takes place at once; it is a multistage and dynamic process that begins before heirs even enter the business. The effectiveness of succession is not limited to whether a successor has been chosen; but the entire process of succession also depends on the individual nature of the predecessor and successor as well among other group and organizational factors. In this chapter some succession planning models are presented. The list of models presented in this chapter is not exhaustive since there are several other models developed by researchers and other family business practitioners. The models in this chapter present a foundational base and some insight into the critical subject of succession planning. The models helped this researcher to develop the appropriate research objectives and to complete a comprehensive literature review in the area of succession planning in family owned businesses (section 3.2).

Transition Period Model

Among others The Transition Period Model by Gersick, Lansberg, Desjardins & Dunn (1999) (see Figure 2.1) attempts to explain the issues involved in generational transition. This model shows the transition periods found as a business move from one generational stage to another during the first three generations. The three stages explained by this model are the Controlling Owner State (First Generation), Sibling Partnership (second Generation) and Cousin Consortium (third generation). The model emphasizes how transition becomes more complex with successive generations, mainly due to the greater number of family members involved in later generations and the consequently greater number of options available (Perryer and Te, 2010).

Dana’s Push-Pull Model

Dana’s Push-Pull Model is a descriptive framework that emphasizes the need for pull factors to act on existing push factors for timely voluntary succession (Dana, 2005). Dana’s model was developed after Cohn (1992). Cohn had used the words “push- pull” in reference to what he had observed from his clients after many years of advising family business owners. Push forces are those that persuade incumbent owners to ‘let go’ and pass on management and ownership control of the FOB to their successors. The incumbent is compelled by these factors to plan and implement succession strategies. Push forces are generally external in nature, generated primarily by successors, other family members, employees, or by third party advisers such as accountants, attorneys and bankers. The push forces also come from professional advisers and peer pressure from family business associations that believe in a well-ordered and timely succession as the best thing for family and the business (Dana, 2005,Perryer and Te, 2010).Timing is critical for push forces to work, since the push factors help to coerce the incumbent to ‘let go’ of both management and ownership control. At the right time the incumbent will be compelled to pass on the torch. The incumbent usually enjoys the power and responsibility of being the owner and their position provides meaning and purpose. To pass on the torch means losing control, losing power and sometimes losing the identity hence to minimize resistance the timing should be right. This might be a factor why succession planning is often delayed. Otherwise the incumbent will neutralize or eliminate those that are pushing for retirement or succession (Dana, 2005, Perryer and Te, 2010).On the other hand pull factors draw the incumbent away from their businesses as their primary interest and activity (Dana, 2005). The incumbent feels that it is their decision, they are doing it their way and it is at their own time. Usually they are starting a new phase in their life. The pull factors include; a concern to spend more time with loved ones, a desire to serve the community; a desire to travel or to write a book or vacation and doing the things that they always wanted to do but never had an opportunity.

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Dedications and Acknowledgements
Table of Contents
List of Tables
List of Figures
Chapter One: Introduction and Problem in Context
1.1 Introduction 
1.2 Contextualizing Family Businesses 
1.3 The Importance of Family Owned Businesses 
1.4 Challenges Facing FOB’s 
1.5 Cultural Factors: Nine Dimensions of Societal Culture 
1.5.1 Justification for selecting the Anglo-Cluster USA and South African Indian FOB’s
1.6 Problem Definition 
1.6.1 Justification for the Comparison between USA and South Africa
1.7 Primary Research Objective/Research Statement
1.7.1 Secondary Research Objectives
1.8 Definition of Terms 
1.9 Assumptions of Study 
1.10. Significance of Study 
1.11 Scope of Study and Delimitations of the Study
1.12 Summary
Chapter Two: Theoretical Considerations on Succession Planning
2.1 Introduction 
2.2 Transition Period Model 
2.3 Dana’s Push-Pull Model 
2.4 Life Cycle Model 
2.5 Mutual Role Adjustment Model 
2.6 Stepping Stone Model for Family Business Transfer 
2.7 Burke Succession Planning Model 
2.8 Summary 
Chapter Three: Literature Review
3.1 Introduction 
3.2 Succession in Family Businesses 
3.3 Societal Culture Dimensions
3.4.1 Stability/Instability of Cultural Dimensions in Times of Financial and Economic Crisis
3.4.2 Societal Culture Dimensions and the GLOBE Study
3.4.3 The Southern Asia Cluster: The Nine Societal Culture Dimensions
3.4.4 The Anglo Cluster: The Nine Societal Culture Dimensions
3.5 South African Indian FOB’s
3.5.1 Skills Required For Successful FOB’s
3.5.2 Indian Family Owned Business Contextualized Within The South African Context
3.5.3 History Of South African Indian FOB’s
3.5.4 The Indian Culture
3.5.5 The Impact Of The Indian Culture on Family Owned Businesses
3.5.6 Overview of the Indian Family Owned Businesses and Their Contribution to the South African Economy
3.6 Summary 
Chapter Four: Research Design and Methodology
4.1 Introduction 
4.2 Mixed Methods Research
4.3 Quantitative Analysis
4.4 Research Design and the Sampling Method 
4.5 Research Variables 
4.6 Hypotheses
4.7 Descriptive Statistics 
4.8 Validity and Reliability 
4.8.1 Ethical Issues
4.8.2 Validity of the Instrument
4.8.3 Internal and External Validity
4.8.4 Internal Validity
4.8.5 External Validity
4.8.6 Reliability Analysis
4.9 Statistical Analysis 
4.9.1 Correlation Analysis
4.9.2 Multiple Linear Regression Analysis
4.10. Qualitative Analysis
4.10.1 Data Collection: Procedure for Interviews
4.10.2 Data Analysis
4.10.3 Validity and Reliability
4.4 Summary
Chapter Five: Results
5.1 Introduction 
5.2 Quantitative Analysis: Results
5.3 Descriptive statistics
5.4 Correlation Analysis 
5.5 Multiple Linear Regression Analysis 
5.5.1 Model USA1
5.5.2 Model SA1
5.5.3 Model USA2
5.5.4 Model SA2
5.5.5 Model USSA1
5.6 Summary (Quantitative Analysis) 
5.7 Qualitative Analysis: Results 
5.8 Description of the cases 
5.9 Summary 
Chapter Six: Discussions, Conclusion and Recommendations
6.1 Introduction
6.2 Discussion 
6.3 Recommendations 
6.4 Limitations and Recommendations for Future Research 
6.5 Conclusion/Final Comments 


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