Carry the past into the future: the effects of CEO temporal focus on succession planning in family firms

Succession planning is a topic of interest in the family business literature because of its importance for the continuity and success of a family business (Lee, Lim, & Lim, 2003). Christensen (1953) describes several key processes in succession planning, including identifying the pool of potential successors, selecting the successor, and notifying the designated successor and other managers of the decision once it is made. Long-term planning, clear rules, training programs, the progressive delegation of tasks, and effective communication among family members (Bigliardi & Dormio, 2009) are also necessary for successful succession planning. As a form of procedural rationality, formal succession planning can reduce the risk of a power struggle caused by the absence of a clear successor, ensure family harmony and leadership continuity, and lead to better decisions and performance (De Massis, Chua, & Chrisman, 2008). In addition, the lack of a professional succession plan is related to the low survival rate and poor continuity of family businesses (Cucculelli & Micucci, 2008; Royer, Simons, Boyd, & Rafferty, 2008), which can lead to leadership crisis (Santora, Sarros, & Cooper, 2011) and succession failure (Ibrahim et al., 2003). Thus, planning is likely to increase effective succession (Sharma, Chrisman, Pablo, & Chua, 2001; Ward, 1987).

However, succession planning in family firms is challenging (Gilding et al., 2015; Ip & Jacobs, 2006; Zhang & Rajagopalan, 2004). Specific factors that hinder effective succession planning have been identified, including the unwillingness of successors (Sharma et al., 2003), negative intergenerational relations (Becker, 1981), and financial constraints (Chittoor & Das, 2007), but our understanding of the effects of the individual characteristics of incumbent CEOs is still limited (Filser, Kraus, & Märk, 2013). In particular, the influence of temporality on succession planning has been overlooked (Ferrer & Gill, 2013). Drawing on the psychological concept of temporal focus (Bluedorn, 2002; Shipp et al., 2009), we explore how CEOs’ perceptions of time shape their succession planning, which is a type of strategic behavior central to family firms.

Time perspective theory (Zimbardo & Boyd, 1999) suggests that an individual’s perspective on various aspects of time affects his or her emotions, perceptions, and actions. Temporal focus can be defined as the extent to which people pay attention to the past, present, and future (Shipp et al., 2009), and is thus an important component of an individual’s time perspective. This perspective can be viewed as a continuum, in which the individual focuses only on the past, the present, or the future (Nuttin Jr, 1985). However, the literature on temporal focus suggests that “classifying people into a single category imposes artificial boundaries between each type of temporal focus” (Shipp et al., 2009: 2). Nadkarni and Chen (2014) suggest that past, present, and future focus are separate dimensions rather than points on a continuum and find that they have different effects on the introduction of new production processes. Similarly, Shipp et al. (2009) conclude that a temporal focus profile is best characterized by the three influences of past, present, and future focus. A past focus involves reflections on the past and the repeated application of past experience in decision-making (Clark & Collins, 1993). A present focus involves a “here and now” orientation and can improve well-being if it encourages the person to seize new opportunities (Zimbardo & Boyd, 1999). A future focus involves thinking about what the future holds and predicting future events (Bluedorn, 2002; Wallace, 1956), and can therefore encourage goal setting and provide motivation.

Previous findings on the effects of individual temporal focus on individuals’ behavioral outcomes are inconsistent. Some scholars have argued that past-focused individuals who positively evaluate past events are more likely to achieve their goals and to plan for the future (e.g., Sobol-Kwapinska & Jankowski, 2016; Zimbardo & Boyd, 1999). Conversely, others have identified negative influences of a past focus on positive acts (Kooij, Kanfer, Betts, & Rudolph, 2018; Nadkarni & Chen, 2014). Recent research has also shown that past and future focus both contribute to strategic change in organizations (Back, Rosing, Dickler, Kraft, & Bausch, 2020). Most of these studies used archival data (Nadkarni & Chen, 2014), and thus these researchers were unable to measure CEOs’ perceptions of time directly, which potentially explains the mixed findings. Adding to this stream of the literature, our study used both survey and semi-structured interview data to examine the effects of three dimensions of CEOs’ temporal focus on succession planning.

Temporal focus is a fundamental dimension of strategic decisions such as succession planning, because strategizing involves anticipating the future based on past and present circumstances (Das, 2004). CEOs’ temporal orientation determines their expectations and how they evaluate their environment, which in turn affects their strategic decisions (Bluedorn, 2002; Das, 1987). Succession planning is a type of future-oriented behavior (Sharma et al., 2003) that is time-sensitive (Dyck, Mauws, Starke, & Mischke, 2002; Glauben, Petrick, Tietje, & Weiss, 2009) and therefore closely related to temporality. Succession planning is a complex strategy and is associated with an incumbent CEO’s ideas and discoveries in different time frames, including their past experience and prior knowledge, their perceptions of the family firm’s current stage, and their future goal setting (e.g., Meier & Schier, 2016). Thus, we propose that an incumbent CEO’s past, present, and future focus are antecedents to the incumbent’s plans for family business succession.

Upper echelon theory provides an approach to jointly consider environmental factors and the individual characteristics of CEOs, analyzing their combined effects on strategic behavior and outcomes (Hambrick, 2007). Family firms are embedded in both family and business environments (Aldrich & Cliff, 2003). Jennings and McDougald (2007) emphasized the importance of considering family and business as situational factors that can affect CEO decisions. Most studies of family businesses have generally treated family and business as separate entities when they should be examined together as they are inextricably linked (Aldrich & Cliff, 2003). James et al. (2012) suggest that including family-related variables in family business research is necessary and argue that good business performance is rarely enough to overcome poor family relationships. However, overemphasizing the role of the family while ignoring threats in the business system can be fatal for family businesses (Schulze & Kellermanns, 2015). Thus, it is essential to integrate both family and business factors into a family business research model, but most research has adopted either a business or family approach (Poza, 2007). As a family firm is defined as a combination of family and business systems that overlap and interact, we argue that considering family and business environments simultaneously from a holistic perspective can provide a more complete understanding of family businesses (Basco & Pérez Rodríguez, 2009). Therefore, we examine the moderating effects of family interactions and environmental uncertainty in the family and business systems, respectively, to develop a comprehensive research model of succession planning.

Family interactions and environmental uncertainty have been considered as two important factors affecting intra-family succession (De Massis et al., 2008). First, the literature on family businesses recognizes the key role played by family relationships in family business governance, arguing that poor family interactions and relationships are the main obstacles to succession (De Rosenblatt, Mik, Anderson, & Johnson, 1985; Lansberg, 1983). The quality of family interactions can facilitate or hinder succession planning and successor training (Lansberg & Astrachan, 1994). The interactions of incumbent CEOs with other family members shape their behavior and decisions (Smith, Hamon, Ingoldsby, & Miller, 2009). In the succession process, it is essential to identify the specific sources of positive interactions between family members (Rasbash, Jenkins, O'connor, Tackett, & Reiss, 2011). The family is an essential social unit that affects an individual’s identity development (Jennings et al., 2014). By interacting with members of their closest social group, such as their families, incumbent CEOs can modify their behavior, decisions, and strategies based on the feedback they receive (Smith et al., 2009) and the shared understanding of family values established through family interactions (Handler, 1994; Smith et al., 2009).

Second, the family business literature proposes that the business context can influence succession, as uncertainty and contingencies in the business environment affect the distribution of power and incumbent CEOs’ perceptions of the current needs of their business, in turn influencing successor selection and succession planning (Pfeffer & Salancik, 1978). Empirical studies also show that environmental uncertainty moderates the effect of CEO temporal focus on a firm’s innovative strategies (Nadkarni & Chen, 2014). Therefore, we suggest that the influence of CEO characteristics on succession planning is also constrained by uncertainty in the business environment (e.g., Banalieva, Eddleston, & Zellweger, 2015; Chung & Luo, 2013). Taken together, we suggest that family interactions and environmental uncertainty are important factors moderating the relationship between CEO temporality and succession planning.

Family interactions are a key mechanism for creating a shared vision in family firms and can facilitate the decision-making process (Sirmon & Hitt, 2003). Research suggests that parent-child interactions can influence how a successor runs a business (Kets de Vries, 1993). Close interactions between an incumbent CEO and his or her potential successor can facilitate knowledge transfer during the succession process (Cabrera-Suárez et al., 2001). Interactions between siblings, such as vying for control of a business, can also influence decisions regarding the selection of a successor and the mode of succession (Lansberg, 1988; Lansberg & Astrachan, 1994). High-quality interactions between family members also create a harmonious environment for knowledge transfer, in which the incumbents share their experience and knowledge with potential successors.

Focusing on the past is useful for knowledge creation (Nadkarni & Chen, 2014). The continued success of a family business often relies on the unique experience and knowledge created by predecessors, which are essential strategic assets that enable a family firm to develop its competitive advantage (Cabrera-Suárez et al., 2001). Thus, tacit knowledge transfer is important to preserve and extend the competitive advantage of a family business. However, tacit knowledge created by past-focused CEOs is likely to be transferred through direct exposure and experience (Lane & Lubatkin, 1998). Therefore, effective family interactions provide a unique channel for this type of knowledge transfer, which can be seen by incumbent CEOs high in past focus as an opportunity to transfer their knowledge to their successor in the next generation.

In addition, the skills and willingness of a potential successor to acquire the knowledge of his or her predecessor can be a major challenge in succession (Cabrera-Suárez et al., 2001). High-quality interactions between incumbent CEOs and potential successors can encourage organizational citizenship behavior in successors (Zhong, Lam, & Chen, 2011), such as a willingness to learn and participate in family business management, thereby improving their job performance (Chen, Lam, & Zhong, 2012). High-quality family interactions can also offer past-focused CEOs the opportunity to improve the quality of their potential successors and their willingness for succession (Cadieux, Lorrain, & Hugron, 2002), thereby strengthening the relationship between past focus and succession planning. High-quality interactions and social exchange between family members also reflect mutual emotional support between incumbent CEOs and other family members. The positive feelings of past-focused CEOs for their firm and their strong personal emotional attachment to the firm resulting from past success can be amplified by the emotional support of family members, as this can motivate CEOs to initiate a succession plan. Consequently, we propose the following hypothesis:

High-quality family interactions can be a knowledge transfer mechanism (Cabrera-Suárez et al., 2001) and a conduit for current information. High-quality family interactions in a family business can have the same functions as a CEO focusing on the present when developing a succession plan. We propose that a present-focused incumbent CEO will generally seize the opportunities of the current environment (Zimbardo & Boyd, 1999) by analyzing current information and deploying the resources currently available (Shipp et al., 2009), thus providing the foundation for succession planning. Family interactions can also respond to the need for current family and business information (Handler, 1994), thereby replacing incumbent CEOs’ present focus and reducing the effect of present focus on succession planning. A present-focused CEO may realize the urgency of succession planning when approaching retirement age, and effective family communication can ensure that every family member is aware that the CEO does not have the energy to manage the business due to his or her age. This communication then enables family members to discuss how to help the CEO identify current problems in the company or family, thereby encouraging the CEO to think about succession planning. High-quality family interactions thus become a substitute for the role of present focus. Studies also show that parent-child interactions (Kets de Vries, 1993) and sibling-sibling interactions (Lansberg & Astrachan, 1994) affect incumbent CEOs’ interpretation of the current problems of their family business and their succession decisions. Effective interactions between incumbent CEOs and potential successors can provide a learning context through which family members can exchange ideas, information, and knowledge. This is a unique form of current family capital that acts as an alternative to a present focus. In addition, present-focused CEOs are more likely to consider external factors than focus on themselves because of their optimistic outlook. Frequent communication and interaction with other family members can also replace the effect of “paying attention to others.”

CEOs who have a good understanding of their family members are better able to choose an appropriate family successor due to effective family interactions, which can be a substitute for CEOs’ future focus. The knowledge acquired by successors through close interactions with incumbent CEOs can ensure that they are more effective in their future role. For example, CEOs can positively influence the development of their children and interest them in taking over the business through hands-on parenting. These family interactions lead to a better understanding of knowledge exchange and higher levels of cooperation between family members (Ingram & Simons, 2000). Michael-Tsabari and Weiss (2015) analyze the factors that hinder the succession process and find that open communication about future plans can reduce conflict and create a stable environment for succession. Thus, family firms with a high level of family interactions have an alternative to relying on their CEOs’ subjective temporality and can plan for succession through knowledge exchange between family members, mutual understanding between incumbent CEOs and potential successors, and a cohesive environment for succession. As a result, a high level of family interactions can reduce the positive effect of CEOs’ present or future focus on succession planning. Conversely, in a context with a low level of family interactions, CEOs may rely more on their temporal orientation, because poor communication and interaction between family members hinder the succession process. Therefore, we propose that family interactions reduce the effect of CEOs’ present or future focus on succession planning.

When making strategic decisions (Nadkarni & Chen, 2014), an executive’s perception of environmental uncertainty or assessment of future changes that may occur in the environment (Milliken, 1987) is important. An uncertain environment generates more adaptive tasks than a stable environment (Miller, 1991), which forces firms to gain new knowledge (Barkema & Vermeulen, 1998). By applying upper echelon theory, environmental factors and the individual characteristics of CEOs can be considered together, and their combined effects on strategic behavior and outcomes can be investigated (Hambrick, 2007).

Past-focused CEOs rely on their experience and knowledge, which are less likely to be of value in uncertain environments where changes occur rapidly (e.g., in technology, competition, the marketplace, and consumers). Thus, the feedback-based learning process valued by past-focused CEOs will not be beneficial in strategic decision-making (Eisenhardt & Tabrizi, 1995). Methods that have proven effective in the past quickly become useless when the environment is uncertain. An incumbent CEO high in past focus may fail to detect new product and market opportunities, which can make succession planning more urgent. A new CEO can bring new management skills and increase the likelihood of considering multiple alternatives and more flexible problem-solving (Datta, Rajagopalan, & Zhang, 2003), thereby alleviating problems related to the incumbent CEO’s prior knowledge. Therefore, environmental uncertainty strengthens the relationship between past focus and succession planning. Thus, we propose the following hypothesis:

Uncertain environments can replace the role of CEOs’ present or future focus in succession planning. A strong present focus can enable CEOs to maintain an up-to-date perspective on the current situation (Nadkarni & Chen, 2014), so present-focused CEOs are likely to carefully assess the current needs of their firm and realize their successor’s capabilities to run the business. In uncertain environments, prior knowledge can be useless, therefore CEOs are more likely to rely on their potential successor’s up-to-date knowledge and management skills (Miller et al., 2003), replacing the role of present focus in discovering or evaluating the capabilities of the next generation. For instance, in a highly turbulent and uncertain environment, family firms with rapidly changing technologies, methods, or customers may be encouraged to address succession planning to deal with environmental uncertainty, unlike firms in a highly predictable environment. CEO succession in family firms can serve as the basis for managing environmental uncertainty (Handler & Kram, 1988). Therefore, environmental uncertainty can substitute the positive effect of CEO present focus on succession planning, as both environmental uncertainty and present focus incite CEOs to develop a succession plan.

Future-focused CEOs generally plan ahead and are therefore more likely to implement succession planning. However, the effect of future focus on succession planning diminishes in uncertain environments, as incumbent CEOs must anticipate future technologies and market trends to cope with uncertainty, which in turn increases opportunities for succession planning. Successors represent the next generation, so they can often better anticipate future technologies and customer needs, helping organizations survive in uncertain environments (Finkelstein et al., 2009). Successors can also be more open-minded and creative in their strategic decision-making and manage environmental uncertainty more effectively (Barkema & Vermeulen, 1998). Thus, the strategic measures generated by CEOs’ predictions for the future in an uncertain environment will replace the effect of future focus. In contrast, in a stagnant or stable environment, incumbent CEOs tend to have conservative successors because there is little perceived or real need for change (Miller et al., 2003). In this case, incumbent CEOs’ future focus can show its significant positive effect on succession planning because it intrinsically motivates CEOs to plan ahead rather than being guided by the external environment. In short, in uncertain environments, the positive effect of incumbent CEOs’ present or future focus on succession planning will be weaker than in stable environments. Thus, we propose the following hypotheses:

We recruited 580 family firms in East China based on a list provided by an entrepreneurship research center at a local university. Following the standard criteria for defining family businesses used in the literature, a firm was considered “family-owned” if the following two conditions were met: (1) two or more family members were directors or top managers, and (2) family members held a substantial block of voting shares (e.g., Allen & Panian, 1982; Daily & Dollinger, 1993; Deephouse & Jaskiewicz, 2013; Gomez-Mejia, Larraza-Kintana, & Makri, 2003). Therefore, we used the level of family ownership of each business and the number of family members in the top management team to measure family involvement. If ownership remained in the family and at least two family members were employed as top managers, we considered this firm a family business.

We followed the translation/back translation procedure for the survey (Brislin, 1986) to convert the English items into Chinese. The Chinese questionnaire was then sent to three family business owners and two professors in human resource management to confirm the accuracy of the translation. Next, the questionnaires were delivered by hand by our research team or sent by e-mail to the CEOs of the 580 businesses. We received 239 responses, representing a response rate of 41.2%. We excluded 29 incomplete questionnaires and 12 questionnaires with inconsistent answers and obvious mistakes, reducing the sample size to 198 family firms. In our sample, 79 family firms (40%) did not select potential successors. The CEOs of the 198 family firms were on average 48 years old, indicating an age range close to retirement based on the expected retirement age of 60 in China. Among them, about 82% were men. Most CEOs had a high school certificate (55%) and many had a university degree (22%). Firm age ranged from 4 to 33 years, with 94 firms (47.5%) less than 10 years old and 83 firms (41.9%) between 11 and 20 years old. The sampled family firms came from a variety of industries, including sales, manufacturing, service (e.g., marketing and logistics), and consulting.

Table 1 presents the descriptive statistics and correlations of the study variables. Table 2 shows the hierarchical regression results. Table 3 summarizes the marginal effect of CEO temporal focus on succession planning at high and low levels of family interactions, and Fig. 1 presents the interaction plots. Similarly, Table 4 reports the marginal effect of CEO temporal focus on succession planning in uncertain and certain environments, and Fig. 2 illustrates their interaction plots.

Hypotheses 1a, 1b, and 1c postulate that CEO past, present, and future focus are positively related to family business succession planning. As Table 2 shows, the main effects of CEO past focus (β = .28, p < .01), CEO present focus (β = .17, p < .05), and CEO future focus (β = .24, p < .01) on succession planning are significant and positive. Thus, the main effect hypotheses are supported. Regarding the interaction between CEO temporal focus and family interactions, we propose that family interactions positively moderate the relationship between CEO past focus and succession planning (Hypothesis 2a), negatively moderate the relationship between CEO present focus and succession planning (Hypothesis 2b), and negatively moderate the relationship between CEO future focus and succession planning (Hypothesis 2c). The interaction term CEO past focus × family interactions in Table 2 is significant and positive (β = .20, p < .05), so Hypothesis 2a is supported. The interaction term CEO future focus × family interactions in Table 2 is significant and negative (β = −.12, p < .05), supporting Hypothesis 2c. However, the interaction term CEO present focus × family interactions is not significant, thus Hypothesis 2b is not supported.

The moderating effects can also be examined through a multi-group analysis. With our research model including two interaction factors, we tried to interpret the moderating effects of family interactions and environmental uncertainty separately (Zedeck, 1971). Using the dichotomization approach (MacCallum, Zhang, Preacher, & Rucker, 2002), we divided our sample into two subgroups based on the mean of family interactions. In Table 3, consistent with Hypothesis 2a, the marginal effect of CEO past focus on succession planning is positive at a high level of family interactions (β = .35, p < .01), but not significant at a low level. Again, consistent with Hypothesis 2c, the marginal effect of CEO future focus on succession planning is positive at a low level of family interactions (β = .30, p < .01), but not significant at a high level. These results and the corresponding interaction plots in Fig. 1 suggest that family interactions positively moderate the relationship between CEO past focus and succession planning and negatively moderate the relationship between CEO future focus and succession planning. Thus, Hypotheses 2a and 2c are supported, while Hypothesis 2b is not supported.

Hypotheses 3a, 3b, and 3c postulate that environmental uncertainty positively moderates the relationship between CEO past focus and succession planning (Hypothesis 3a), negatively moderates the relationship between CEO present focus and succession planning (Hypothesis 3b), and negatively moderates the relationship between CEO future focus and succession planning (Hypothesis 3c). The interaction term CEO past focus × environmental uncertainty in Table 2 is significant and positive (β = .18, p < .05), supporting Hypothesis 3a. The interaction term CEO present focus × environmental uncertainty in Table 2 is significant and negative (β = −.15, p < .05), supporting Hypothesis 3b. However, the interaction term CEO future focus × environmental uncertainty is not significant; Hypothesis 3c is therefore not supported.

Following the dichotomization approach (MacCallum et al., 2002), we divided our sample into two subgroups with high and low environmental uncertainty based on a mean split. The results are presented in Table 4. The effect of CEO past focus on succession planning is positive in an uncertain environment (β = .20, p < .1), but not significant in a certain environment, supporting Hypothesis 3a. In addition, the effect of CEO present focus on succession planning is not significant in an uncertain environment, but positive in a certain environment (β = .33, p < .01), supporting Hypothesis 3b. These results and the interaction plots in Fig. 2 suggest that environmental uncertainty positively moderates the relationship between CEO past focus and succession planning and negatively moderates the relationship between CEO present focus and succession planning. Thus, Hypotheses 3a and 3b are supported, but Hypothesis 3c is not.

The results of Study 1 supported most of our hypotheses. Although the moderating effect of family interaction on present focus (β = −.07, n.s.) and the moderating effect of environmental uncertainty on future focus were not significant (β = −.11, n.s.), the directions of these two moderating effects were consistent with H2b and H3c. One possible reason for the non-significant results could be our small sample size. The low number of survey participants somewhat decreased the statistical power. However, the lack of statistical significance does not mean that there was no effect (Altman & Bland, 1995). Therefore, we suggest that future studies use larger samples to test the moderating effects of family interaction and environmental uncertainty with a temporal focus.

The results of our survey data support most of our hypotheses. However, a major limitation of this survey study is that it examines only the correlations between CEO temporal focus and succession planning, so we cannot determine the psychological processes involved. To check the robustness of the results of Study 1 and better understand the psychological processes involved in the relationship between CEO temporal focus and succession planning, we conducted semi-structured interviews. A qualitative research design was particularly appropriate for our research objective given the lack of studies and mechanisms to explain the relationship between CEO temporal focus and succession planning based on our focus on the “how” and “why” questions (Yin, 1994). To better understand under what conditions our survey results hold, we conducted semi-structured interviews with 15 family firm CEOs who completed our surveys, to provide qualitative descriptions of the relationship between CEO temporal focus and succession planning. We first obtained a complete list (Koiranen, 2002) of family business owners who completed the questionnaire in Study 1. We then collected the contact details of these family business owners via their official company website and the entrepreneurship research center. As a result, we collected contact information for 50 family firms. Next, we contacted the owners of these family businesses via phone and 15 agreed to participate in our study. During the interviews, we first asked the respondents to rate three types of temporal focus with 3 points (Low - Medium - High) based on their situation. Regarding their attitudes toward the past, present, and future, we asked them several questions: What are the key factors influencing the succession planning decision of the family firm? How do different types of temporal focus shape their attitudes, cognitions, emotions, and motivations regarding succession planning? How does the family business participate in knowledge sharing from the incumbent CEO to the next generation? In addition, we asked the CEOs about their rational and emotional responses to succession planning. Among the participants, 13 were men and 2 were women and their ages ranged from 37 to 64 years.

Based on the principles of grounded theory (Glaser & Strauss, 1967; Strauss & Corbin, 1990), we read and reread the textual data collected during the interviews and labelled the variables (the different dimensions of temporal focus and succession planning). Adhering to the grounded theory of qualitative research (Glaser, 1978), we conducted open coding on the data from the semi-structured interviews. We followed a two-step method (Mayring, 2014) to analyze our qualitative data. In the first step, we used line-by-line, sentence-by-sentence coding and logically structured the descriptions of each of the 15 family firms with relevant information on CEO temporal focus, the effects of the family and business environments, and succession planning. Two independent coders read through the interview transcripts and identify “past focus,” “present focus,” and “future focus” as different constructs important for succession planning. Regarding succession, the responses of the interviewees were the main resources for understanding the process of developing a succession plan. Two coders independently read and coded the interview transcripts based on statements indicating a succession plan. Inspired by the literature on succession planning, we identified four succession planning tasks: successor selection, successor training, defining the role of the incumbent CEO during and after the succession process, and communicating the succession decision to the directors and family members. In the second step, we performed a cross-interview analysis to understand how the different types of CEO temporal focus were associated with succession planning. First, we hand-coded the interviews of all firms (Saldaña, 2012) with respect to the key constructs in our research model and classified the information into the different temporal focus categories. Table 5 provides several examples of quotes generated during this step. We then further categorized and identified the significant mechanisms linking the different types of temporal focus and succession planning (Miles & Huberman, 1994).

In Study 2, we investigated how CEO temporal focus affects family business succession planning. Upper echelon theory emphasizes CEOs’ affection, cognition, and motivation as the key factors affecting their decision-making process (Hambrick, 2007; Hambrick & Mason, 1984). In family businesses, incumbent CEOs may resist or initiate succession planning for lifestyle, economic, rational, psychological, and behavioral reasons (Sharma et al., 2003). From the knowledge or capability perspective, knowledge transfer between a family business owner and a successor is an essential task during the succession process (Bracci & Vagnoni, 2011; Cabrera-Suárez et al., 2001). Incumbent CEOs, as the key intangible knowledge holders (Sambrook, 2005), determine succession planning based on their perceptions of their experiences. From a motivational perspective, family-owned firms are organized around a set of emotionally charged interpersonal relationships. For succession to succeed, family CEOs must develop business practices and philosophy while balancing the relationship between family and business (Wee & Ibrahim, 2012). Therefore, we suggest that both cognitive and motivational processes might be important mediators of the relationship between CEO temporal focus and succession planning.

Table 6 provides an overview of the rating of the CEOs for the three types of temporal focus and the extent of succession planning initiated by each firm. Based on the patterns identified in our analyses, we propose a set of psychological processes that mediate the relationship between CEO temporal focus and succession planning, illustrated in Fig. 3.

Our first observation is that CEO past focus plays an important role in shaping the strategies of all family firms investigated. Most respondents suggested that recalling past events (e.g., they mentioned “recalling days gone by,” “the golden age of the past,” “previous experience,” “remembering a younger life,” and “past mistakes”) motivated them to transfer their family business to the next generation and gave them more confidence for a successful transition. For example, Jun, 37 years old and the second-generation CEO of a kitchenware company, stated, “My dad always tells me his old startup stories (...) He likes to share his successful work experience and past achievements. He wants to inspire me to take over the family business with his fascinating stories.” In addition, family CEOs consider both their past successes and failures in entrepreneurship as a wealth of life and enjoy sharing their stories with their children. These transmissions from parents to children in family businesses are motivated by altruism (Van den Berghe & Carchon, 2003). Reflecting on the past also enables family CEOs to determine what they want in the future and force them to make future plans, such as a succession plan. In fact, about 67% of the respondents indicated that their past focus forced them to remember their entrepreneurship stories and motivated them to plan their succession. These qualitative results further support Hypothesis 1a.

In an effort to identify potential explanations as to why CEO present focus is positively associated with succession planning, we obtained additional evidence in our qualitative data set. We observe that family CEOs with a high score on present focus strongly focus on their age and health problems, their firm’s current needs, and the influence of the external environment. For instance, Yue, a second-generation manufacturer of Chinese ham and sausages, explained: “When I take time to be present, I start to notice that I am 62 years old now. Succession is looming.” Most first-generation entrepreneurs in China are currently facing or approaching retirement. Looking at the current landscape, including their personal characteristics, such as age, health status, and knowledge structure, and environmental factors, such as changing customer needs, the popularity of e-commerce, and industry innovation, force them to speed up their succession planning. Qing, the founder of a clothing company, explained the following: “My daughter has just completed her postgraduate studies in France in fashion design. She will bring new design concepts and the latest technologies and software to the company to cope with the changing needs of young customers and the fierce competition in the current market.” In other words, a strong present focus in CEOs helps them realize the importance and urgency of succession. This result further supports Hypothesis 1b.

Another important observation from Study 2 is the positive influence of CEO future focus on succession planning. In firms with a future-focused CEO, the decision to develop a succession plan is generally considered at an early stage. For instance, Jun’s succession plan started the day his son was born: “I always think about my personal future and the future of our family business. I knew my son would become a part of our company when he was born.” Xin, the CEO of a plastic manufacturing company, also stated, “A succession plan is a future strategic plan. Thinking more about children’s future career opportunities and the future of the family firm encourages me to think about succession planning.” These qualitative results further support Hypothesis 1c. In general, the results of Study 2 provide solid evidence to support our hypotheses.

The results of Study 2 further support H1, which posits that CEOs’ past, present, and future focus have positive effects on succession planning. CEOs’ past successful experiences and technological knowledge shape their cognition regarding knowledge sharing across generations and increases their confidence in succession and their willingness to initiate a succession plan. CEOs’ present focus enables them to realize the urgency of succession because they are more concerned about their current age and health status. CEOs’ future focus increases their expectations regarding the longevity of the firm and increases their concern about their children’s future career choices. These findings help explain the psychological mechanism of CEOs’ temporal focus on succession planning. We suggest that three dimensions of CEOs’ temporal focus shape their cognition of and motivation for succession planning: individual experiences and knowledge, current analysis of the firm’s development stage, and future expectations of children’s career choices and the firm’s growth (see Fig. 3). Our findings are also consistent with the upper echelon literature, which has shown that CEOs’ cognitive frameworks and motivations affect their strategic decisions, including succession planning (e.g., Cho & Hambrick, 2006; Eggers & Kaplan, 2009). CEOs’ temporal focus is a relatively stable cognitive characteristic (DesJardine & Shi, 2020; Gamache, McNamara, Mannor, & Johnson, 2015) and motivational factor regarding succession planning.

Our study provides a number of important implications for theory and research on temporality and family business succession management. First, to the best of our knowledge, this is the first empirical study of the role of family CEOs’ temporal focus in predicting their succession planning, and it thus provides a new perspective for exploring the antecedents of succession in family firms. Although the literature has examined family business CEOs’ characteristics, such as sense of attachment to the business (Miller et al., 2003) and age (Marshall et al., 2006), no study has examined how a CEO’s subjective view of time determines succession planning. Drawing on the psychological concept of temporal focus (Gamache & McNamara, 2019; Nadkarni & Chen, 2014; Shipp et al., 2009), our study emphasizes the important role of CEOs’ temporal orientation in determining time-sensitive strategic decisions such as succession planning (Glauben et al., 2009; Sharma et al., 2003). We found that incumbent CEOs vary in the degree to which they consider past, present, and future time frames, which can explain the additional variance in succession planning beyond the effects of other CEO demographic characteristics. Given family CEOs’ ultimate control over succession decisions (Sharma et al., 2003), we highlight the importance of CEOs’ individual subjective time in determining strategic decisions, such as family firms’ long-term orientation (Le Breton–Miller & Miller, 2006; Lumpkin, Brigham, & Moss, 2010) and organizational longevity (Colli, 2012), rather than organizations’ objective clock-based time. In addition, we considered past, present, and future focus as different dimensions of CEOs’ time perspective, providing a new integrated view of how these time frames affect succession planning.

Our findings advance the literature on temporal focus in two ways. A key topic in this stream of the literature is the effect of individuals’ chronic attention to the past, present, and future on their individual behaviors (Shipp et al., 2009). Research has shown the diverse effects of past, present, and future focus on CEOs’ strategic decisions (e.g., Nadkarni & Chen, 2014). Some scholars have suggested that focusing more on the future can reduce a firm’s concern about past and present issues (Yadav, Prabhu, & Chandy, 2007). Although previous studies have found that CEOs’ past focus has a negative effect on new product introduction (e.g., Nadkarni & Chen, 2014), our results indicate that CEOs’ past focus has a positive effect on succession in the family business context. One possible reason is that past-focused CEOs are more likely to consider their past experience as tacit knowledge, which can be transferred to the next generation as a competitive advantage (Wang et al., 2017). Recent research on family imprints has highlighted the power of founders’ knowledge and family history in shaping firms’ strategies and succession process (Erdogan et al., 2020; Weber & Dacin, 2011). Unlike non-family businesses, family firms’ growth path is deeply rooted in their founders’ prior knowledge and family history (Erdogan et al., 2020), which determines the significant positive role of CEOs’ past focus during succession. Our findings suggest that considering CEO’ specific experience and knowledge, current status quo, and business context can help reconcile inconsistent findings regarding how temporal focus can affect strategic plans. We also found moderately positive relationships between past, present, and future focus, indicating that focusing on one period does not preclude focusing on others (e.g., Shipp et al., 2009). Most of the CEOs (51%) in our main sample had high scores on more than one dimension, and 21% had high scores on all three dimensions. The results of the qualitative study showed that 53% of the respondents focused on two periods simultaneously, and two respondents had high scores on all three dimensions of temporal focus. Our results suggest that focusing on one time frame does not preclude focusing on the other two (e.g., Back et al., 2020; Shipp et al., 2009). Our results thus add to the literature on temporal focus.

Additionally, from a holistic perspective (Basco & Pérez Rodríguez, 2009), we suggest that the effect of CEO temporal focus on succession planning in family firms is influenced by family and business environmental factors. We found that family interactions have a positive effect on knowledge transfer efficiency, which contributes to research on the effect of the family system on strategy formulation (Harris, Martinez, & Ward, 1994; Sharma, Chrisman, & Chua, J. H. (Eds.)., 2012). Our results also indicate that the relationship between a CEO’s temporality and subsequent activities is constrained by uncertainty in the business environment (e.g., Bingham & Eisenhardt, 2011; Nadkarni et al., 2016). Although the importance of the interplay between family and business systems has been noted (Colli et al., 2013; Jennings et al., 2014), little attention has been paid to owner families and family-related variables (Melin, Nordqvist, & Sharma, 2014). Therefore, the “reciprocal influence of family and business” (Zahra & Sharma, 2004: 333) should be considered. Adopting a holistic perspective (Basco & Pérez Rodríguez, 2009), our study emphasizes the importance of integrating both family and business environmental factors in assessing the boundary effect of CEOs’ temporality in the family business context.

This study provides a number of important practical implications. First, we suggest that CEOs’ past focus can help them produce succession plans, especially for family CEOs who have achieved business success and have rich past entrepreneurial experience and knowledge. These findings may encourage successful CEOs to recall their past, which will enhance their motivation and make them more confident about developing their family firms’ long-term vision and succession plans. Second, present focus may help CEOs who are close to retirement age recognize the urgency of succession planning. This finding may motivate middle-aged CEOs to plan for succession based on their analysis of current information. Third, we suggest that CEOs’ future focus promotes goal setting, motivation, and efforts to achieve, as future focus encourages family CEOs to think about the future and plan ahead. This study also has important implications for family relationship management and transgenerational succession in family businesses. Effective family interaction improves the efficiency of knowledge transfer between incumbent CEOs and potential successors and facilitates succession planning. Family CEOs who want to improve succession efficiency are encouraged to enhance family interaction frequency and quality to attain the common goals of family firms (e.g., intra-family succession), enlarge the internal talent pool of successor candidates, and obtain family agreement on succession issues.

Despite the results and implications discussed above, our study has limitations that should be explored in future studies. First, using convenience sampling poses a problem of generalizability. However, as Highhouse and Gillespie (2009) suggest, the main concern of our research method is that our theory is applicable to the sample used. Nevertheless, our results should be interpreted with caution, because family firms have different types of ownership structures and our data do not fully capture these differences. Incumbent CEOs’ perceptions of family interactions cannot fully assess their actual interactions, because different family members may perceive the quality of these interactions differently. We suggest that future studies collect family-level variables from different family members to better understand the effect of the family on CEO temporal focus. In addition, we do not empirically test the mediators in our research model, although we argue that positive affect can mediate the relationship between CEO temporal focus and succession planning. Thus, we suggest that future studies follow an appropriate cross-lagged model procedure to test the exact order of CEO temporal focus, psychological processes, such as cognitive framework and positive affect, and succession planning (e.g., Law, Wong, Yan, & Huang, 2016). Regarding the influence of the family on the strategies (Chrisman & Patel, 2012) and performance (Miller, Breton-Miller, & Lester, 2013) of family firms, the effects of CEO temporal focus on diverse strategies (e.g., R&D investment, strategic alliance) and on the financial performance of family firms warrant further investigation.