Trends In Family Business
Family businesses are the backbone of the world economic where they are associated with economic and social transformation. While majority of large family businesses perform better than corporate or public organisations, there are millions of such businesses that do not survive beyond their first generation of operation. The inability to succeed is associated to several challenges among them trying to accommodate all family members in the businesses, over-specialising and under-specialising in certain functional areas and creating expertise gaps, diverting funds away from businesses and inability to manage family conflict especially relating to generation succession. However, with good strategies to manage family members’ role in businesses, …show more content…
It the family businesses intensions and commitment that gives room for desired succession trend. However, though critical to businesses survival, there is observable change in the number of businesses successful going through generation changes. In a study by Ward (1987) indicated that 30% of family businesses survived in the second generation with 13% surviving third generation while only 3% survived beyond third generation. There is also a change of mind among family owned businesses siblings and their commitment to such businesses. A more recent study among students with family businesses indicated that only 22.7% intended to succeed their family businesses (Zellweger, Sieger & Englisch, …show more content…
Inability to manage the issues has made many businesses not to go beyond first or second generation. A study by EY (2014:2) participating 2,400 world largest family businesses from the top global markets from Europe, Asia, Middle East and Americas emphasised that, “Family businesses and their leaders are the ultimate entrepreneurs. They must continually innovate to grow and pass on a thriving business from one generation to the next.” This observation emphasises the importance of family-businesses continued scrutiny in order to have a strong generational succession not deterred by external forces or pressure as could be the case of students (Zellweger et al., 2012). From EY study, 87% of family businesses had clearly identified successors, indicating a clear path to their future. To such businesses, succession preparation must be based on three factors, namely in terms of long term process, define who has responsibility for succession and finally empower the next generational for leadership (EY,
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