Lost in time: intergenerational succession, change, and failure in family business
Section snippets
Executive summary
Much of the time, successions in family owned businesses (FOBs) simply do not work out. In part, this is because personal and emotional factors determine who the next leader will be. This is especially true in the case of father to son successions where the desires of a family for their children dictate that a son take over the business regardless of suitability. Here, remedial paths consist not in finding the right person for the job but getting the successor the help he/she need. That can
The pilot study and its findings
We studied only intergenerational successions followed by poor performance that ended either in successor dismissal or bankruptcy.1 These are very common among FOBs for the reasons we discussed. Our database consisted of case and historical book accounts of 13 major firms, as well as a series of newspaper and journal articles
Conservative successions
In conservative successions, the new CEO remains in many ways dependent on the old—even after the latter has quit or died. So the shadow of the parent lingers. As a result, a period of strong leadership may be followed by one of conservatism in which strategies and organizations are locked in the past.
Wavering successions
Wavering successors are characterized by indecision. He/she want to make their mark on their firms but are uncertain as to how. On the one hand, he/she respect the policies and traditions of the founders. On the other, he/she wish to exert influence and show their independence. In addition, he/she vacillate between these attitudes, manifesting doubt and reversing their own initiatives.
Rebellious successions
In rebellious successions, a new CEO rejects the legacy of the prior generation. There is wholesale eradication of the past and its practices. Rebellious successions are rarer than those of conservatism or wavering because normally, renegade offspring decide not to go into the business or are discouraged from doing so by the older generation. But if rebels do ascend to power, he/she want to do things very differently from the “old man.”
Hypotheses about the causes of problematic successions
Although the focus of this study was on the nature of problematic successions rather than their causes, the qualitative historical data we gathered for each of our enterprises did provide hints as to the roots of many of these successions. These are summarized as conjectures on Table 2 and include intergenerational interaction patterns, CEO personalities and experiences, and the organizational and market contexts of a firm.
The performance implications of the three succession patterns
Because we have studied only failures, we cannot establish the relationship between our succession patterns and performance. We do believe, however, that the performance impact of the patterns will be moderated by contextual factors such as the market environment, the history of the firm, and the way the patterns are implemented.
Conclusions and directions for further research
Our findings suggest that intergenerational successions are very much plagued by problems of passage—by an inappropriate relationship between past and future Gersick et al., 1997, Hugron, 1993, Kets de Vries and Miller, 1984, Kets de Vries and Miller, 1987, Kets de Vries, 1996, Lansberg, 1999, Miller, 1991, Miller, 1993. This is evidenced by excessive attachment to the past by an overly dependent and conservative successor, a rejection of the past by a rebellious one, or an incongruous blending
Acknowledgements
The authors are grateful to the Social Sciences and Humanities Research Council of Canada for Grant #410-98-0405 and the Center for Entrepreneurship and Family Enterprise at the University of Alberta School of Business for funding. He/she would also like to thank Bill Bone of Loram, Jim Chrisman of the University of Calgary, Kenneth Craddock of Columbia University, and Jean-Marie Toulouse of HEC, Montreal, for their helpful comments.
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