Family Business Review

http://fbr.sagepub.com

Succession in Family Business: A Review of the Research

Wendy C. Handler
Family Business Review 1994; 7; 133
DOI: 10.1111/j.1741-6248.1994.00133.x
The online version of this article can be found at:
http://fbr.sagepub.com/cgi/content/abstract/7/2/133

Published by:
http://www.sagepublications.com

On behalf of:
Family Firm Institute

Additional services and information for Family Business Review can be found at:
Email Alerts: http://fbr.sagepub.com/cgi/alerts
Subscriptions: http://fbr.sagepub.com/subscriptions
Reprints: http://www.sagepub.com/journalsReprints.nav
Permissions: http://www.sagepub.com/journalsPermissions.nav
Citations http://fbr.sagepub.com/cgi/content/refs/7/2/133

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession in Family Business:

A Review of the Research
Wendy C. Handler
This paper reviews the research to date on succession in the field of family business
management.
Five streams
of research are
highlighted:
(1) succession as a process, (2) the role of the founder, (3) the perspective of the next generation,
(4) multiple levels of analysis, and (5) characteristics
of effective successions.
Gaps in the literature
and future
research directions are also
presented.

Researchers in the field of family business agree that succession is the most important issue that most family firms face. Succession is so central to the
firm's existence that Ward ( 1 9 8 7 ) chooses to define family firms in terms of the
potential for succession: "we define a family business as one that will be passed
on for the family's next generation to manage and control" (p. 2 5 2 ) . Theorists also
agree that the continuity of businesses from one generation to the next depends
highly on succession planning (Christensen, 1 9 5 3 ; Dyer, 1 9 8 6 ; Handler, 1 9 8 9 ;
Lansberg, 1 9 8 8 ; Rosenblatt, de Mik, Anderson, and J o h n s o n , 1 9 8 5 ; Tashakori,
1 9 7 7 ; Ward, 1 9 8 7 ) . However, despite the importance of planning, research has
found that succession planning is often not done by family firms (Christensen,
1 9 5 3 ; Handler, 1 9 8 9 ; Hershon, 1 9 7 5 ; Lansberg, 1 9 8 8 ; Tashakori, 1 9 7 7 ; Trow,
1 9 6 1 ; Ward, 1 9 8 7 ) .
The statistics confirm that succession is typically a problematic issue. Only
3 0 percent of the family firms survive the transition to second generation and
only 1 0 percent m a k e it to the third generation (Beckhard a n d Dyer, 1 9 8 3 a
and 1 9 8 3 b ) . T h e average life span o f the founder of the firm is twenty-four
years, which is also the average life tenure of the founder in the firm (Beckhard
and Dyer, 1 9 8 3 a ) . Many have argued that the responsibility for providing for
succession lies with the founder or owner (Barnes and Hershon, 1 9 7 6 ; Danco,
1 9 8 0 , 1 9 8 2 ; Davis, 1 9 6 8 ; Schein, 1 9 8 3 ; Levinson, 1 9 7 4 ) . Others have focused
on the experience of the next generation (Barnes, 1 9 8 8 ; Birley, 1 9 8 6 ; Blotnick,
1 9 8 4 ; Friedman, 1 9 9 1 ; Handler, 1 9 8 9 ; Patrick, 1 9 8 5 ; Rogal, 1 9 8 9 ) a n d the
relationship with their parent (Davis, 1 9 8 2 ; D u m a s , 1 9 8 9 , 1 9 9 0 ; Handler,
1 9 9 0 ) . Lansberg ( 1 9 8 8 ) indicates h o w the "succession conspiracy" impacts
FAMILY BUSINESS REVIEW, vol. VII, no. 2 , Summer 1 9 9 4 Jossey-Bass Publishers

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

133

134

Handler

stakeholders throughout the family business system, including family m e m bers, management, suppliers, and customers. Handler and Kram ( 1 9 8 8 ) also
take a multilevel approach b y showing that resistance factors to succession
planning exist on the part of the founder, as well as the interpersonal, group,
organizational, and environmental levels.
Researchers tend to agree that succession is more a process than an event
(Churchill and Hatten, 1 9 8 7 ; Farquhar, 1 9 8 9 ; Friedman, 1 9 8 7 ; Gilmore and
M c C a n n , 1 9 8 3 ; Gordon and Rosen, 1 9 8 1 ; Handler, 1 9 9 0 ; Longenecker and
Schoen, 1 9 7 5 , 1 9 7 8 ; Vancil, 1 9 8 7 ) . Succession is not simply a single step of
handing the baton; it is a multistaged process that exists over time, beginning
before heirs even enter the business. Furthermore, the effectiveness of succession is not limited to whether a president has b e e n designated; the ongoing
health of the firm, quality of life, and family dynamics are critical to the success of the succession process.
The focus of this article will be to review the research to date on succession in the field of family business. Both empirical and conceptual literature
will b e included in the discussion, and five streams o f research will b e discussed. T h e y include ( 1 ) succession as a process, ( 2 ) the role of the founder,
( 3 ) the perspective of the next generation, ( 4 ) multiple levels of analysis, and
( 5 ) the characterization of effective successions. Some studies have more than
one focus. For example, studies of the process of succession often also look at
the founder, the next generation, or their relationship, and there are studies of
succession effectiveness that draw on the experience of the founder and the
next generation. Thus, these five streams are not meant to be distinctly different. Rather they are complementary and sometimes overlapping ways of viewing the topic of succession.
Before proceeding, the definition of family business succession should be
considered. Family business succession has been defined as "the passing of the
leadership baton from the founder-owner to a successor who will either be a
family m e m b e r or a non-family m e m b e r ; that is, a 'professional manager'"
(Beckhard and Burke, 1 9 8 3 , p. 3 ) . Others have divided the "leadership baton"
into two a x e s t h a t of ownership and management (Barry, 1 9 7 5 ) . This suggests that there is a variety o f c o m b i n a t i o n s o f ownership and management
between family and professional managers available to the firm in transition.
Alcorn ( 1 9 8 2 ) explains further that the term "succession" refers specifically to
changes in the top leadership, although changes taking place at lower levels
may exhibit some of the same symptoms as top-level succession. She suggests
that the focus needs to be at the highest level of the organization because "the
real problem comes when the boss position itself is the place where change is
in process" (p. 1 4 8 ) .

Succession as a Process
Studies o f executive succession indicate that succession can b e viewed as
a process (Farquhar, 1 9 8 9 ; Friedman, 1 9 8 7 ; Gabarro, 1 9 7 9 ; Gilmore and
Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

oj the

Research

135

M c C a n n , 1 9 8 3 ; Gordon and Rosen, 1 9 8 1 ; Vancil, 1 9 8 7 ) with specific prearrival and postarrival phases (Gordon and Rosen, 1 9 8 1 ) , and that it is possible
to identify the characteristic problems occurring at various stages in the process
(McGivern, 1 9 7 8 ) . Furthermore, Davis ( 1 9 8 6 ) indicates the importance of
ongoing personal skills, family, and organizational development in order for a
family firm to progress from an early stage to a later stage in its growth.
Churchill and Hatten ( 1 9 8 7 ) have developed a life cycle approach to
describe the succession process between father and son in a family firm. They
distinguish four stages: ( 1 ) a stage of owner-management,
where the owner is
the only m e m b e r of the family directly involved in the business; ( 2 ) a training
and development stage, where the offspring learns the business; ( 3 ) a partnership stage between father and son; and ( 4 ) a power transfer stage, where responsibilities shift to the successor.
This framework is similar to the stage model of father-son succession that
had previously b e e n designated b y L o n g e n e c k e r and S c h o e n ( 1 9 7 8 ) . T h e y
break down the succession process into seven stages, three of which take place
before the successor actually enters the business as a full-time employee. This
third stage typically ends b y age 2 4 (Longenecker and S c h o e n , 1 9 7 5 ) and is
followed by four stages of more intensive involvement in the business. Thus,
there is ( 1 ) the prehusiness stage, where the successor may be only passively
aware of some facets of the organization; ( 2 ) the introductory stage, where the
successor may b e exposed b y family m e m b e r s to j a r g o n and organization
members although he or she has not worked even on a part-time basis in the
business; ( 3 ) the introductory-functional
stage, where the successor works as a
part-time employee; ( 4 ) the functional stage, where the successor enters the
organization as a full-time member; ( 5 ) the advanced functional stage, where the
successor assumes managerial responsibilities; ( 6 ) the early succession stage,
where the successor assumes the presidency; and ( 7 ) the mature
succession,
where the successor b e c o m e s the "de facto leader" of the organization.
Another way to understand the succession process is to conceive of it in
terms o f role transition theory. George Kelly ( 1 9 5 5 ) defines a role as "a psychological process based u p o n the role player's construction of aspects of the
construction systems o f those with w h o m he attempts to j o i n in a social enterprise" (p. 9 7 ) or "in idiomatic language, a role is a position that one can play
on a certain team without even waiting for the signals" (p. 9 8 ) . Thus, one can
conceptualize each phase of the succession process as being associated with
particular role behavior on the part of the founder or next-generation family
member, and the transition from one phase to another as a transition in role
behavior. "Role behavior" is being used here in the Katz and Kahn ( 1 9 7 8 )
sense, and refers to "the recurring actions of an individual, appropriately interrelated with the repetitive activities of others so as to yield a predictable outcome" (p. 1 8 9 ) .
Since family firms represent the overlap of various systems (Churchill and
Hatten, 1 9 8 7 ; Lansberg, 1 9 8 3 b ; Miller and Rice, 1 9 6 7 ) , it is possible to conceptualize the founder's or next-generation family member's role-set as a
Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

136

Handler

subset of this overlap. Role-set is defined as the system or stable collective pattern in which people play their parts (Katz and Kahn, 1 9 7 8 ) . In other words,
"to the extent that one person in the system construes the construction
processes of another, he may play a role in a social process involving the other
person" (p. 9 5 ) . This is Kelly's sociality corollary to his psychology of personal
constructs. Kelly explains in more detail:
If we can predict accurately what others will do, we can adjust ourselves to
their behavior. If others know how to tell what we will do, they can adjust
themselves to our behavior and may give us the right of way. This mutual
adjustment to each other's viewpoint takes place, in the terms of the theory
of personal constructs, because, to some extent, our construction subsumes
the construction systems of others, and theirs, in part subsumes ours.
Understanding does not have to be a one-way proposition; it can be mutual
[1955, p. 9 6 ] .
In m y own w o r k in this area (Handler, 1 9 9 0 ) , succession represents a
mutual role adjustment process between the founder and next-generation family members. My interviews with thirty-two next-generation family m e m b e r s
revealed a multiple stage process b y which the predecessor decreased his or
her involvement in the firm over time. As Figure 1 indicates, this role adjustment process typically influences, while lagging behind, the parallel process of
the next-generation family m e m b e r ( s ) , who move through phases o f increasing involvement. The lagthe fact that it takes the predecessor longer to move
into his roles than the heirmeans that the founder or owner may hold onto
a former role while the next-generation family member moves into a new role.
This is the perspective of the next-generation family members interviewed; a
study of founders could result in a different depiction.
Central to the progression o f this dance is the transferral o f leadership
experience, authority, decision-making power, and equity. Specifically, the

Figure 1. The Succession Process: Mutual Role Adjustment Between

Predecessor and Next-Generation Family Member(s)
Predecessor
Sole
Operator

Role
No F

Monarch

Overseer/
Delegator

Consultant
/

/
/

Helper

Manager

Next-Generation Family Member

Source: Handler, 1989, p. 194.

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

/
/

Leader/Chief
Decision Maker

Succession

in Family

Business:

A Review

of the

Research

137

founder-owner moves from sole operator (the central and typically sole family m e m b e r in the organization) to monarch (having preeminent power over
others), to overseer-delegator, and finally consultant w h o is disengaged or
retired from the organization. At the same time, the next-generation family
m e m b e r moves from having what was referred to as "no role" or an undefined
role, to helper, manager, and finally leader and chief decision maker. Many
founders never move beyond the monarch stage, insisting on maintaining control. Correspondingly, many heirs never progress beyond the helper or manager stage because of the inability of their parent(s) to authorize their increased
power. The arrows between or linking the separate role transitions in the diagram are meant to show the connection. According to the next generation, the
founder typically authorizes the heir's progression (therefore the solid arrow),
while the heir's ability to successfully undertake a new role allows the founder
to move forward to his or her new role (the dotted line), thus helping to overcome the resistance. (Most next-generation family members seemed to feel that
the founder was m o r e in control o f the progression than they were, thus the
distinction between solid and dotted lines.)
T h e process o f succession is not always s m o o t h or continuous. Herz
Brown's ( 1 9 9 3 ) theory of loss and continuity in the family firm sheds light on
h o w the succession process can b e disrupted b y the untimely death o f the
older generation or a potential successor. She indicates h o w these losses can
create particular difficulties in the business and ownership spheres.
If the death occurs at a crisis point or at a time of intense external pressure,
the shock may be enhanced. For example, the sudden death of a family
member in the middle of a difficult life transition, such as succession, can
leave a lot of unresolved tension and unfinished business. Since entrepreneurs tend to be doers and not planners, there may be also a lack of preparation for the realities of death, such as a will, insurance, or other financial arrangements [Herz Brown, 1993, p. 1 1 8 ] .
Furthermore, when an heir passes away, particularly an heir who has been
"annointed and accepted into the role" of successor, the experience of loss is
greatest. Herz Brown explains that "it is at these times that expectations are the
highest for everyone" (p. 1 2 3 ) .

The Role of the Founder

The characteristics of owners have received attention by theorists whose focus
is on the psychodynamic aspects of leadership (Kets de Vries, 1 9 8 5 ; Levinson,
1 9 7 1 and 1 9 8 3 ; Zaleznik and Kets de Vries, 1 9 8 5 ) . These characteristics often
manifest themselves as a need for achievement and power (McClelland, 1 9 6 1 ) ,
as well as an internal locus of control (Brockhaus, 1 9 7 5 ; Shapero, 1 9 7 5 ) , and
seem to reflect a deep-seated desire for immortality (Becker, 1 9 7 3 ) , and a sense

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Handler
of indispensability with respect to the business. T h e roots of these psychological characteristics have been studied by various theorists. Collins, Moore, and
Unwalla ( 1 9 6 4 ) discovered a significant similarity in the backgrounds and
childhood experiences of many business founders. Themes such as: "the escape
from poverty," "the escape from insecurity," "death and sudden death," and "the
parents that went away" seem to be part of the average entrepreneur's experie n c e p a r t of the "entrepreneurial romance." Warner and Abegglen's ( 1 9 5 5 )
study of successful, mobile m e n also resulted in findings that linked their personal drive and success to an earlier life trauma.
The business may b e c o m e the founder's link to reality as well as his way
of dealing with conflicts of identification developed during childhood. "In a
symbolic way, he unites with the enterprise" (Zaleznik and Kets de Vries, 1 9 8 5 ,
p. 2 2 6 ) to bolster his fragile superego by reaping the sense of self-esteem and
power (McClelland and B u r n h a m , 1 9 7 6 ) that he was denied in his past.
According to LeVinson ( 1 9 7 1 ) , the firm gives the founder meaning in three
important ways. First, since he has unresolved conflicts with his father, he
starts the business to escape the authority of powerful figures (Collins, Moore,
and Unwalla, 1 9 6 4 ) . S e c o n d , because the business represents the "baby" as
well as the "mistress" to the founder, those working for him are seen as "tools"
for shaping the company. W h i l e in the organization, power beyond being an
instrument is denied to workers; the only choice is to leave. Third, the business represents an extension of himself, so that succession issues get mixed up
with the founders own personal c o n c e r n about the m o n u m e n t he will leave
behind.
Kets de Vries' ( 1 9 8 5 ) study sets forth a fuller picture of the characteristics
driving the entrepreneur. He found that these individuals aspire to run their
own businesses as a result of a need to control, indicated by serious difficulties with issues of dominance and submission, and suspicion about "authority" (p. 1 6 1 ) . Entrepreneurs also have a strong distrust for the world around
them, which is likely to be mirrored in the way the firm is run. Thus, through
the business, they seek to confirm their "paranoia" (Kets de Vries and Miller,
1 9 8 4 ) b y protecting their little world from the evil forces that dominate the
environment. Finally, the entrepreneur's overwhelming "desire for applause"
(Kets de Vries, 1 9 8 5 , p. 1 6 3 ) in part explains the inability to consider succession in dynamic terms and provide for the future of the firm.
M a n y writers have c o n c l u d e d that it is in the nature of entrepreneurs
(Churchill and Lewis, 1 9 8 3 ; Dyer, 1 9 8 6 ; Greiner, 1 9 7 2 ; Kaplan, 1 9 8 7 ; Kets de
Vries, 1 9 8 5 ; Levinson, 1 9 7 1 ; Schein, 1 9 8 3 , 1 9 8 5 ) or C E O s (Sonnenfeld, 1 9 8 7 )
to have difficulty giving up that w h i c h they have created and directed. T h e y
are capable o f acting out this difficulty in a variety of nonproductive ways.
D a n c o ( 1 9 8 2 , p. 5 ) faults the founder for committing "corporeuthanasia,"
which he defines as "the owner's act of willfully killing off the business he loves
by failing to provide in his lifetime for a viable organization with clear continuity"

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

of the

Research

139

This disaster occurs because the owner of the business cannot face the fact
that at some point he must. . . and will be replaced. If the successful business owner, who had the ability, vision, and guts to build the business from
nothing, does not have the courage to face the problems of the future, then
his banker and attorney will do it for him on the way back from his
funeralfour cars back from the flowers [Danco, 1982, p. 5 ] .
Sonnenfeld ( 1 9 8 8 ) found that there are various types of retirement styles
of founders or C E O s . Monarchs do not leave until they are forced out or die.
Generals also leave office only w h e n forced out, but plan a return to power
often to rescue the c o m p a n y from an inadequate successor.
Ambassadors
leave willingly and b e c o m e advisors to the firm. Governors rule for a term
and then pursue other ventures. Furthermore, m a n y founders select successors w h o are b o u n d for failure (Levinson, 1 9 7 4 ) . Levinson uses the terms
loyal servant, watchful waiter, and false prophet to describe three types of inadequate successors typically c h o s e n b y a founder w h e n h e or she is given the
c h a n c e to c h o o s e . T h e first is a c o n s c i e n t i o u s h e l p e r b u t an i n c o m p e t e n t
leader, and the s e c o n d is a star performer from outside, w h o m u s t wait,
s o m e t i m e s indefinitely, for power to b e granted. T h e false prophet, on the
other h a n d , is a person whose area o f c o m p e t e n c e is not related to the role
required and, therefore, is an unrealistic choice for successor. Another type
of failed or problem succession (Hall, 1 9 8 6 ) occurs as a result of homosocial
reproduction (Kanter, 1 9 7 7 ) . This is when the owner or senior executive tries
to perpetuate the organization's future leader in his or her own image.
Several approaches have been offered as ways of overcoming the founder's
resistance to change through succession. O n e is helping the entrepreneur to
b e c o m e m o r e self-aware (Hall, 1 9 8 6 ; Kaplan, 1 9 8 7 ; Zaleznik and Kets de
Vries, 1 9 8 5 ) . A n o t h e r approach is encouraging the entrepreneur to m o v e
away from one venture and toward another. "Instead of trying to change himself, he can continue to be a pioneer, but on new frontiers" (Zaleznik and Kets
de Vries, 1 9 8 5 , p. 2 2 9 ) . However, if the business is to continue without him,
a successor may be necessary, and the quality of the relationship between the
leader and the s u c c e s s o r will b e a critical determinant o f the s u c c e s s i o n
process.
In summary, the findings from these studies o f owner-entrepreneurs
show that the leader's sense of immortality and indispensability contributes
to problematic successions (Boswell, 1 9 7 2 ; D a n c o , 1 9 8 0 , 1 9 8 2 ; Sonnenfeld,
1 9 8 7 ) , particularly at later stages of psychosocial development, as time and
retirement pressures are felt. F o r the entrepreneur or C E O , barriers to retirem e n t and s u c c e s s i o n i n c l u d e the loss o f h e r o i c stature and m i s s i o n ( S o n nenfeld, 1 9 8 8 ) . T h e adjustment o f attitudes a b o u t retirement prior to the
event is an important predictor o f subsequent retirement adjustment (Rosow,
1 9 6 3 ; Streib, 1 9 7 1 ; Streib and Schneider, 1 9 7 1 ; Thompson, Streib, and Kosa,
1960).

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Handler

140

The Next Generation's Perspective

T h e third stream of research on succession investigates the next-generation
family m e m b e r s perspective. Much of the early writing on family business succession focused the attention on the founder or entrepreneur as the central person in the family business system (see, for example, D a n c o , 1 9 8 0 , 1 9 8 2 ;
Schein, 1 9 8 3 ) . Individual members of the family were lumped together as "the
family." Exceptions included K. Danco's ( 1 9 8 1 ) analysis of the spouse, J . Davis'
( 1 9 8 2 ) study of the father-son relationship, and P. Davis' ( 1 9 8 6 ) mention of
the conflict between individual needs and reality for various members o f the
family. In addition, Patrick's ( 1 9 8 5 ) study of the "offspring," Birley's ( 1 9 8 6 )
study of the "inheritor," Blotnick's ( 1 9 8 4 ) description of the "reluctant heir,"
and a study of next-generation entry strategies into the family firm (Barach,
Gantisky Carson, and Doochin, 1 9 8 8 ) represent earlier attempts to look at succession from the heir's perspective.
Patrick's ( 1 9 8 5 ) survey of one hundred fifteen sons and daughters focused
on individuals' perceptions of satisfaction and their working relationships with
their fathers. Her findings suggest that "it is entirely possible to find working
in the family business with father as boss to b e a satisfying experience" (p.
2 1 3 ) . Establishing a good relationship with one's father at work depends on
the acceptance o f roles, needs, and guidance. Blotnick ( 1 9 8 4 ) suggests that
there is a "high resistance among these second-generation owner-managers to
being there in the first place" (p. 1 8 0 ) . Birley's ( 1 9 8 6 ) findings, w h i c h were
based on her study of college students and their decisions about "returning"
to the family firm after school, indicate that the responsibility to the family firm
does not appear to lie solely with the oldest child. Finally there are m a n y
advantages to a delayed entry strategy (Barach, Gantisky, Carson, and Doochin,
1 9 8 8 ) ; gaining experience outside the family firm is often a r e c o m m e n d e d
course of action.
Rogal's ( 1 9 8 9 ) theory describes the need for accession planning and quality decision m a k i n g regarding one's career. Rogal believes that assessing fit
between the career interests and abilities and the successor role is a critical part
of succession planning for the next-generation family member. Rogal describes
the use o f various self-assessment exercises designed to illuminate career
options. He explains:
On completing the self-assessment exercises, the heir should be able to envision some possible futuresperhaps both alluring and disturbing ones. It
is likely that these visions contain certain latent assumptions that may predispose the heir to a less-than-optimal course of action. By breaking down
one's visions of the future into discrete components, it may be possible to
reassemble those parts in unforeseen and satisfying ways. At the very least,
such an analysis will bring to light unexamined compromises embedded
within the heir's visions, thereby setting the stage for acceptance or reconsideration [Rogal, 1989, pp. 2 4 4 - 2 4 5 ] .
Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

of the

Research

141

Rogal also describes the importance of communication with other family

members regarding career options. If other members of the family system also
perform s o m e self-assessment exercises and an "exchange of attitudes and
expectations" regarding succession is performed, the b u r d e n s carried b y all
parties may be reduced.
In m y own work in this area, a host of factors impacting the next generation are indicated (Handler, 1 9 8 9 , 1 9 9 2 ) . From indepth interviews with thirtytwo next-generation family members, I put together a descriptive framework
which is based on the following findings (see Figure 2 ) .
T h e more a next-generation family m e m b e r has achieved fulfillment of three
needs (career interests, psychosocial needs, and life stage needs) in the context of the family firm, the more likely it is that the individual will have a
positive succession experience.

Figure 2. The Descriptive Framework

INDIVIDUAL INFLUENCES
Personal need fulfillment (+)
Career (interest)
Psychosocial (personal identity)
Life stage (exploration, advancement, balance)
Personal influence (+)

QUALITY OF SUCCESSION EXPERIENCE

RELATIONAL INFLUENCES
Mutual respect and understanding between generations (+)
Sibling accommodation (+)
Boundary Issues:
Commitment to family business perpetuation (+/-)
Separation strains due to family involvement (-)
Source: Handler, 1992, p. 288.
Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

142

Handler

T h e more a next-generation family m e m b e r has the potential or ability to

exercise personal influence in the family business, the more likely it is that
the individual will have a positive succession experience.
T h e m o r e a next-generation family m e m b e r achieves mutual respect and
understanding with the predecessor in succession, the more likely it is that
the individual will have a positive succession experience.
T h e more siblings can accommodate rather than conflict with one another
regarding the family business, the more likely it is that the individual will
have a positive succession experience.
T h e greater the c o m m i t m e n t to family business perpetuation as a family
value, the more likely it is that the individual will have a positive succession
experience (except when the commitment is to business means rather than
business ends).
T h e greater the existence of separation strains due to family involvement in
the business, the less likely it is that the individual will have a positive succession experience.
Iannarelli's qualitative study ( 1 9 9 2 ) in fifteen family firms found that the
career experience of the next-generation family m e m b e r starts in the preteen
years with the early socialization process into the family firm. Factors critical
to developing leadership interest in the family firm include ( 1 ) time with the
father in the business, ( 2 ) exposure to various aspects of the business, ( 3 )
development of skills in the business, ( 4 ) encouragement and positive attitude
from the parent about the business, ( 5 ) making an individual contribution to
the team, and ( 6 ) the time at w h i c h an opportunity to j o i n is presented.
Ianarelli found that young girls are often treated differently than their brothers during this socialization process. Specifically, they spend less time, develop
- fewer skills, and are encouraged less than their brothers. The choices are often
made for them at an early age without their knowledge of the options available. This may help explain why there is still a gap between the number of men
and w o m e n in leadership roles in family firms.
Other studies have focused on specific next-generation family m e m b e r s
daughters (Barnes, 1 9 8 8 ; Dumas, 1 9 8 9 , 1 9 9 0 ; Iannarelli, 1 9 9 2 ) , younger sons
(Barnes, 1 9 8 8 ) , and siblings (Friedman, 1 9 9 1 ) . Barnes ( 1 9 8 8 , p. 2 0 ) indicates that
daughters and younger sons who become CEOs cannot easily shake off their
family ties to the bottom levels of the family hierarchy. As CEOs, they then
become key figures in incongruent hierarchies. Their positions in the two
hierarchies can lead to discomfort, tension, and agony for all members of the
family. Outsiders who see this pain are often at a loss to know how to deal
with family members as the problems become public and sometimes tragic.
Dumas' indepth interviews ( 1 9 8 9 ) with forty family members in eighteen
family firms focused on the role of daughters. Most interesting and relevant to

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review of the

Research

143

the succession literature is her finding that many daughters in her sample "had
not originally been seen as potential members, managers, or successors in the
business." She uses the term "invisible successor" to describe these daughters.
One hundred percent of the fathers interviewed said that they had not considered their daughters as viable successors either before they joined the
firm or for long periods of time afterward. Similarly, all the daughters interviewed had never even considered entering the family business, let alone
becoming manager or successor, until a crisis or unforeseen circumstances
had forced them to consider the family business as a source of employment
[Dumas, 1989, p. 3 9 ] .
Dumas continues b y indicating that primogeniture is still alive in many family firms. The assumption is still made that family businesses will be passed to
sons. Attitudes are slow to change despite the fact that the numbers have.
Swogger's case studies ( 1 9 9 1 ) of five family firms describe three dimensions
of sibling relationships important to the intergenerational transition process:
bonding versus rivalry; autonomy versus dependency; and leadership versus
paralysis. Friedman ( 1 9 9 1 ) suggests that one way to manage the rivalry is to
work with siblings as unique individuals with special talents and interests. In
this way, they move from being stereotyped to being unique through a process
of individuation. Moving from resentment to fairness is another important goal
that can be accomplished by developing mutual empathy between siblings.
Imagining reversed roles and discussing what has led to feelings of injustice are
two ways in which feelings of resentment can be reduced. Moving from dependency to autonomy requires replacing old ways of handling conflict, which often
involve relying on parents, with new, more adult, means of conflict resolution.
Thinking about how sibling relationships might have been different if their parents allowed them to resolve conflict on their own can be an effective part of the
process. Swogger ( 1 9 9 1 ) found that leadership is most effective when siblings
are able to take charge, and are not paralyzed by their ties to their parents.

Multiple Levels of Analysis

Davis' survey ( 1 9 8 2 ) o f one h u n d r e d fifty-four m e n (sixty-eight responded
with their father or son and thirty-three responded without their father or son)
focused on the developmental relationships of fathers and sons. He found that
the relationship between father and son was relatively harmonious w h e n the
father was age 5 0 - 5 9 and the son was age 2 3 - 3 2 . O n the other hand, the relationship between father and son was relatively problematic w h e n the father
was age 6 0 - 6 9 and the son was 3 4 - 4 0 . Only weak support was obtained for
the hypothesis that a problematic relationship between father and son would
exist w h e n the father was 4 1 - 4 5 and the son was 1 7 - 2 2 . Davis and Taguiri
( 1 9 8 9 ) state that "the responsibility for the quality of the father-son w o r k

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

144

Handler

relationship lies with both men . . . Perhaps it [the findings] can promote a dialogue . . . that will save their relationship and their company." Seymour's survey ( 1 9 9 3 ) o f seventy-seven firms also focused on the relationship between
intergenerational relationships and succession. He found that a positive, significant association existed between the reported quality of intergenerational
work relationship and successor training. However, no significant association
was found between the quality of the work relationship and formal succession
planning.
Lansberg ( 1 9 8 8 ) and Handler and Kram ( 1 9 8 8 ) offer two key theories of
succession from multiple levels of analysis, b o t h of which are shaped b y the
tenets of general systems theory (Miller and Rice, 1 9 6 7 ; Rice, 1 9 6 9 ) . Central
to this theory is the belief that the interconnectedness of related subsystems is
critical to understanding h o w the overall system functions. Miller and Rice
( 1 9 6 7 ) explain that the family business is an instance of the interaction of two
subsystemsfamily and businesswhere the potential for conflict exists.
The family business [is] an example of disequilibrium between two systems
of activity. Two tasks are placed in increasing conflict through differential
pressures from their environments. But often in our experience, the situation is not seen in these terms. It is felt initially, as mounting conflict within
the family group. Only when the multiple tasks [relating to family and business] have been clearly identified and their distinctive requirements and
constraints spelled out does it become possible to differentiate the controls
that each calls for; and only through engaging in this process of analysis can
the family group, while not perhaps resolving its conflict, at least confront
it more constructively [Miller and Rice, 1967, p. 1 0 5 ] .
Succession is an issue that requires analysis from the perspectives of family, management, and ownership systems in order to adequately understand
the perspectives of the different stakeholders. Lansberg describes h o w succession planning is a topic approached with ambivalence because it "imposes a
wide variety of significant changes on the family firm: family relationships need
to be realigned, traditional patterns of influence are redistributed, and longstanding management and ownership structures must give way to new structures" ( 1 9 8 8 , p. 1 2 1 ) . Lansberg shows h o w succession impacts m a n y
stakeholders directly, starting with the founder, and moving up the levels o f
analysis to the family, the managers, the owners, and those in the environment.
They all conspire in their own ways not to plan for succession.
According to Lansberg's theory, the founder fears losing control and is concerned that retiring from the firm will m e a n a demotion in his or her role
within the family. Loss o f identity and power in the firm may also mean loss
of stature in the community. (The section of this article entitled "The Role of
the Founder" gives further reasons for the founder's ambivalence to retire.) The
family's approach to succession planning is often highly related to the stage of

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review of the

Research

145

the life cycle occupied b y the family during the time o f succession (Lansberg,
1 9 8 8 ) . Typically, succession planning does not begin until the founder and his
spouse enter the last stage in the life cycleoften in their sixties. Denial is a
typical response to facing succession, especially when a couple is already having to cope with children leaving h o m e , the empty nest, and the death or illness of parents. Succession is difficult to discuss because it means potentially
preferential treatment of children and the disruption of family life. The spouse
m a y conspire not to do succession planning because the firm has played an
important role in her identity (K. Danco, 1 9 8 1 ; Rosenblatt, de Mik, Anderson,
and J o h n s o n , 1 9 8 5 ) .
Lansberg's theory suggests that managers are also threatened by the
change, because it m a y mean a shift from a personal relationship with the
founder to a m o r e professional relationship with the successor. O w n e r s ,
whether they are family members or not, have often received their shares as a
"paternalistic gesture o f goodwill." T h e implied expectation o f loyalty to the
owner m a k e s it awkward for them to express their opinions regarding the
transfer of power, because not agreeing with the founder would be seen as disloyal. Suppliers and customers, as well as others in the environment, have also
grown dependent on the entrepreneur as the primary contact within the firm.
Handler's ( 1 9 8 9 ) theoretical model of resistance to succession in the family business underscores many of the points Lansberg makes. Succession is a
conspiracy; it is not simply the founder's fault for not having planned ahead.
Factors at the individual, interpersonal and group, as well as the organizational
and even environmental levels, are all involved in the failure to plan for succession (see Figure 3 ) .
The founder's resistance to planning for succession is related to the inability to dissociate from the firm (Kets de Vries, 1 9 8 5 ) , due to identity being
wrapped up with the firm, lack of other interests, fears associated with retirement, and an inability to learn or seek out consultation. At the interpersonal
level, lack o f communication and trust can confound the succession process.
The timing of the succession is also critical; if there is no heir, or the heir is disinterested, inexperienced, or not trained, succession planning may be in vain.
"If an owner's decision to retire cannot be juxtaposed with an heir's appropriateness and readiness to take over, then succession may not occur under the
best possible conditions" (Handler and Kram, 1 9 8 8 , p. 3 7 6 ) . Power imbalances, family conflicts (Levinson, 1 9 7 1 ; Stern, 1 9 8 6 ) , and lack of a clear choice
for heir also seem to complicate the succession process. At the organizational
level, factors relating to organizational culture (Schein, 1 9 8 3 ) , structure, and
stability also appear related to problematic successions. Finally, environmental turbulence (Emery and Trist, 1 9 6 5 ) , requirements (including licensing and
tax considerations), and prerequisites for entry into the industry (specialized
knowledge) may deter succession planning.
According to Lansberg ( 1 9 8 8 ) , mobilizing the succession planning process
means dealing directly with the ambivalence of the different stakeholders. One

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

146

Handler

Figure 3. A Model of Resistance to Succession

in the Family Business
Factors Reducing Resistance

Factors Promoting Resistance

Succession Planning
Individual Level
Good health
Lack of other interests
Identity with business
Retention of control over time
Fear of aging, retirement, and
death
Avoidance of self-learning
Avoidance of technical advice
and consultation
Interpersonal Group Level
Lack of open communication
Minimal trust
Heir(s) are or appear
disinterested, incapable,
inexperienced, or inappropriate
Minimal training
Power imbalances
Family conflicts or issues
permeate the business
Nuclear and extended family
members as potential heirs
Organizational Level
Culture threatens
organizational development
Stability of organizational
growth
Maintenance of structures
promoting unilateral control
Environmental Level
Nonproblematic environment
Many industry requirements Specialized professional -
prerequisites

Health problems
Other interests
Ability to dissociate from the firm
Delegation of responsibilities to
others
Opportunity for new life and
career planning
Capacity for self-reflection
Pursuit of technical advice
and consultation

Honest, informed communication

is encouraged
High level of trust
Heir(s) are actively and capably
involved in the business
Mentoring is encouraged and
practiced
Shared power
Family dynamics are separated
from business issues
One child as potential heir

Culture reinforces organizational

continuity
Impending organizational crisis
Organizational structure promotes
functional delegation

Problematic environment
Few industry requirements
Minimal professional
prerequisites

Source: Handler, 1988, p. 375.

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

oj the

Research

147

suggestion for dealing with the founders insecurities is to develop a supportive group of founders w h o have themselves done succession planning. T h e
ability to dissociate from the firm and delegate responsibilities to others is also
critical (Handler and Kram, 1 9 8 8 ) . Both Lansberg and Handler and Kram
found that a close encounter with death or illness can mobilize the founder to
begin the planning process. T h e capacity for self-reflection, as well as the
advice and support of others, is important as well. The family needs to understand h o w painful it is for the founder to let go, and the founder must also be
made aware of the importance of planning.
The raising of awareness must be coupled with concrete ideas about what
to do about the problem. The basic tasks involved in succession planning
include:
Formulating and sharing a viable vision of the future in which the founder
is no longer in charge of the family firm
Selecting and training the founder's successor as well as the future top management team
Designing a process through which power will be transferred from the current generation of management to the next
Developing an estate plan that specifies how family assets and ownership of
the enterprise will be allocated among the founder's heirs
Designing and staffing the structures appropriate for managing the change,
including a family council, a management task force, and a board of
directors
Educating the family to understand the rights and responsibilities that come
with various roles that they may assume in the future [Lansberg, 1988,
p. 135].
Helping the family overcome resistance means opening the c o m m u n i c a tion channels so that family members discuss succession together and in different subgroups. T h e development of a family council can b e critical to this
process (Lansberg, 1 9 8 8 ) . Heirs must b e encouraged to actively w o r k in the
business, seek mentors, and get valuable experience. Developing a five-year
management continuity plan can b e an important mission for a special task
force. Finally, activating a board of directors is critical to the whole process,
and will greatly help the determination of the future ownership structures.

Effective Successions: What Characterizes Them?

Ward's study ( 1 9 8 7 ) of why family firms fail offers alarming statistics. O f the Fortune 5 0 0 companies, "since 1 9 5 5 , only 1 8 8 companies have kept their status on
this list as independent concerns. More than 6 0 percent have been sold or
acquired or have watched their sales decline significantly in the past thirty

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

148

Handler

years" (Ward, 1 9 8 7 , pp. 1 - 2 ) . Correspondingly, the life expectancy of two hundred successful manufacturers from 1 9 2 4 to 1 9 8 4 reveals that 8 0 percent no
longer survive, while 2 0 percent are still surviving as independent. O f these 2 0
percent, only 13 percent are still owned by the same family as in 1 9 2 4 . The reasons for failure are many. "Businesses mature. Markets and technology change,
eliminating the need for various products and services. Suppliers and customers
alter the "rules of the game," or competitors quickly copy successful strategies.
Any of these changes can take the company by surprise, decreasing its sales and
profits" (Ward, 1 9 8 7 , p. 2 ) . Ward indicates that failure to plan strategically for
the future of the firm is a major reason for the demise of the family firm. Deans
survey ( 1 9 9 2 ) of 2 3 6 African-American family firms found that only 1 7 . 2 percent of the oldest firms had selected a successor. Furthermore, in Welsch's survey of two hundred six family firms, 7 0 percent of respondents agreed with the
statement "management succession is not always openly discussed with the result
that not every personal decision is clear to all the individuals involved" ( 1 9 9 3 , p.
45).
This final stream of research implies that there are more and less effective
successions and seeks to understand those influences on effectiveness. Indicators of effective succession processes are suggested in the literature. The selection and grooming of the best candidate is a critical part of the planning
process (Ward, 1 9 8 7 ) . The opportunity for the heir to fulfill his or her career,
personal, and life stage needs in the context of the firm is central to satisfaction working in the business. Specifically, heirs need the chance to fulfill career
interests, to be their own persons, and to explore (in the teens and twenties),
advance (in the thirties), and seek balance (in the forties) within the context
of the family firm (Handler, 1 9 8 9 ) . Training may be a formal training program
or unstructured, on-the-job learning (Calder, 1 9 6 1 ) . The degree of responsibility the heir takes on is easily measurable, based on the types of tasks performed "when a family m e m b e r is required to earn his position" (Donnelley,
1 9 6 4 , p. 1 0 5 ) . Related to this is the owner's time, effort, and capacity to delegate. T h e next-generation family member's skills and overall ability to do the
j o b is also important (Lansberg, 1 9 8 6 ) . Assessment of the individual should
involve performance review and appraisal (Danco, 1 9 8 2 ) , which may be part
of a formal career development process.
Mentoring has b e e n r e c o m m e n d e d as an important function for career
development (Kram, 1 9 8 5 ) . However, it is not clear whether or not mentoring in the family firm is most effective w h e n done b y a parent or relative in
charge. Mentoring by parents has been discouraged because of the many other
roles they already play (Bork, 1 9 8 6 ; Nelton, 1 9 8 6 ; Ward, 1 9 8 7 ) , but it has also
b e e n highly encouraged as the only way of making sure that the owner's
knowledge gets passed on to the successor (Danco, 1 9 8 2 ) . Gaining experience
outside the business has also b e e n r e c o m m e n d e d (Nelton, 1 9 8 6 ; D a n c o ,
1 9 8 2 ) , as has c o m m u n i c a t i o n (Barnes and Hershon, 1 9 7 6 ; Lansberg, 1 9 8 8 ;
Rosenblatt, de Mik, Anderson, and Johnson, 1 9 8 5 ; Ward, 1 9 8 7 ) , and planning

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

oj the

Research

149

(Alcorn, 1 9 8 2 ; Beckhard and Dyer, 1 9 8 3 a ; Flamholtz, 1 9 8 6 ; Malone, 1 9 8 9 ;

Peiser and Wooten, 1 9 8 3 ; Thurston, 1 9 8 3 ; Ward, 1 9 8 7 ) .
Malone ( 1 9 8 9 ) found, in a study o f three hundred thirty-five wholesale
l u m b e r dealers, that strategic planning and continuity planning are related,
and that a positive and significant relationship existed between an outsiderdominated board and the level of continuity planning. W a r d ( 1 9 8 7 ) points
out that strategic planning needs to incorporate the strategic plans of the family to insure that "family philosophies" regarding the family's role in the c o m pany's future are taken into account. The importance of the family mission to
the c o m p a n y strategic plan differentiates strategic planning in family firms
from nonfamily firms. Dyer ( 1 9 8 6 ) believes that the role of the business, family, and the boardand their cultural configurationis critical to succession.
He describes business, family and board conditions that favor succession transitions in family firms.

Business Conditions
1. The transition occurred when the organization was relatively "healthy."
2. The founder moved gradually away from active involvement in the
firm's operations.
3. There was a well-developing training and socialization program for the
successor.
4. There was an interdependent relationship between the founders and their
successors.

Family Conditions
1.
2.
3.
4.
5.

The family shared common views concerning equity.

The family had planned for emergencies and other contingencies.
The family had developed mechanisms to resolve conflict.
The family shared superordinate goals.
High trust existed among family members.

Board Conditions
1. Power relationships were clearlittle ambiguity.
2. The board had the necessary expertise to manage problems of both the
firm and family [p. 1 3 7 ] .
In addition, a study by Stempler ( 1 9 8 8 ) of fifteen family-owned businesses
indicates that respect, understanding, and complementary behavior between
the next-generation family m e m b e r and the organizational leader is critical to
an effective succession. Handler's ( 1 9 8 9 ) qualitative research in thirty-two family firms confirms that mutual respect and understanding between the founder
and next-generation family m e m b e r s running the firm is an important c o m p o n e n t of good succession o u t c o m e s . Research on executive succession

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Handler

150

confirms and extends this finding. According to Friedman's analysis of succession systems,
One of the more striking sets of findings is the degree to which CEO
involvement correlates with outcomes. This is witnessed in the percentage
of CEO's time spent on succession issues and in the CEO's influence on various stages of succession events. Although it is nearly a truism to say that
top management commitment is a prerequisite for the success of any program of activity, it seems that in the matter of succession systems, it is
indeed true [1986, p. 2 0 9 ] .
This information, applied to family business succession, suggest the importance not only of a good working relation between the owner and the next generation but also the active involvement of the owner in the succession process.
In addition, according to Malone ( 1 9 8 9 ) , founders with an internal locus of
control are likely to engage in higher levels of business continuity planning
than those with an external locus of control. Other important factors are the
levels of sibling accommodation, commitment to perpetuating the family firm,
m i n i m a l tensions between family and firm values (Handler, 1 9 8 9 ; Ward,
1 9 8 7 ) , and general family harmony (Malone, 1 9 8 9 ) . In addition, Goldberg and
Wooldridge's survey ( 1 9 9 3 ) of two hundred fifty-four C E O s found that selfconfidence and m a n a g e m e n t a u t o n o m y are characteristics o f effective s u c cessors.
Legal or estate planning is also a critical part o f the succession process
(Ayres, 1 9 9 0 ; Benson, 1 9 9 0 ) . Ayres reminds us of the priorities. He indicates
that, instead of getting bogged down in the transfer taxes, trust schemes, and
insurance analyses,
A new set of priorities . . . can get both client and adviser moving down a
track that will ultimately supply a more complete and hopefully more
humane solution to these intertwined issues. [They are:]
1.
2.
3.
4.

Preservation or disposition of the business

You (the client), the current senior generation
Your children, all of them
Transfer taxes [1990, p. 4 ] .

Bringing the successor generation into the planning process should only b e
done when the formal process of transfer of ownership is clear, knowledge of
the estate plan is clear, and roles of the family members are matched with interests and abilities (Swogger, 1 9 9 1 ) .
McCollom's ( 1 9 9 2 ) case study of a 2 5 million dollar construction firm in
southern New Hampshire is an example of h o w ownership trusts can actually
paralyze the succession process. McCollom's interviews with the unofficial heir

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

of the

Research

151

of the firm revealed h o w the trust arrangement separated ownership and use
so that the trust "owns" the company until both the trust and the business disappear. Thus, the trust arrangement left the current president unable to "bless"
a successor by transferring the business as property to him. T h e successor was
in the position o f having to b u y the business from the trust in order for the
ownership succession to occur.
Succession outcomes are the products of effective successions. Two important outcomes suggested by the literature are the assumption of leadership b y
the next-generation family member (Lansberg, 1 9 8 6 ; Longenecker and Schoen,
1 9 7 8 ) , and him or her taking the title of president. Next-generation control of
the stock, which for a private organization is held internally, is also a symbol
of an effective succession. Yet another indicator, according to Longenecker and
Schoen ( 1 9 7 8 ) , is the amount of time that an individual has been in the position as successor. They suggest that it often takes at least two years to "master
the complexities of the position and gain the control associated with the leadership role" (p. 5 ) . Other outcome measures c o m e from studies of executive
succession, and include the company's reputation, financial performance,
turnover, and succession system performance (Friedman, 1 9 8 6 ) .

Future Research
Since Christensen's study o f management succession in family firms ( 1 9 5 3 ) ,
m u c h research has b e e n done on the subject of succession in family firms. It
is generally acknowledged to b e one of the critical areas in the field, with
important practical implications for the continuity of family firms. However,
there are still many gaps in the literature. There appear to be at least four major
areas where succession research is scant. T h e first is the question of h o w succession is planned for or handled by different ethnic groups. While there have
been few studies o f family business issues which include succession in other
countries or by different ethnic groups, this area of research is growing. Family Business Review recently devoted an entire issue ( S u m m e r 1 9 9 1 ) to "International Perspectives on Family Business" and another ( W i n t e r 1 9 9 2 ) to
"Ethnicity and Family Enterprise." T h e studies that have been conducted suggest there is m u c h to be learned by comparing the process of succession in the
United States (and among different ethnic groups in the United States) with
succession m a n a g e m e n t in Latin America, Europe, J a p a n , China, and other
countries where family firms are a dominant force.
Lansberg and Perrow's theory-building paper ( 1 9 9 1 ) describes h o w most
Latin American economies are dominated b y large, cosmopolitan, family businesses referred to as "grupos." T h e diversification of these enterprises is "fostered b y the entry o f the s e c o n d generation, m a n y o f w h o m have b e e n
extensively trained abroad and many of w h o m seek new business opportunities within the family enterprise" (p. 1 3 0 ) . Davis ( 1 9 6 8 ) conducted case studies of five Mexican family firms and focused interviews with another twenty

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

152

Handler

entrepreneurs. He found three c o m m o n patterns of entrepreneurial succession:

strong father and weak son, conservative father and progressive son, and (several) branches of the family. He speculates that the first pattern seems likely to
fail, while the second may result in a son bored of waiting. The outcome of the
third depends on the level o f conflict between family branches. Ferkany's
( 1 9 9 2 ) ethnographic and survey-based study of family firms in Monterrey,
M e x i c o , concludes b y affirming "the persistence of the family firm business
organization . . . Reliance on the family for resources such as capital, labor,
skill, knowledge, and experience is reinforced b y an unstable and unpredictable external environment" (p. 1 2 4 ) .
European studies include Gallo and Pont's ( 1 9 8 8 ) demographic analysis
of Spanish family firms. They found that family firms account for 5 9 - 6 6 percent o f the total n u m b e r of j o b s provided b y Spanish companies, with sales
over 2 0 0 million pesetas. Also, a "significant number of family firms succeeded
in making the transition from one generation to the next" (p. 1 9 ) . Thomassens
seventeen interviews ( 1 9 8 8 ) c o n c e r n i n g succession in D u t c h family firms
affirmed the importance of communication, planning, the role of non-family
management, and ongoing guidance of the next generation. Chau ( 1 9 9 2 ) contrasts Japanese succession through primogeniture (succession to the eldest son)
with the Chinese tradition of coparceny (the equal division of family assets
among all male descendants). Chau concludes that "primogeniture assists capital accumulation, while coparceny leads to fragmentation of e c o n o m i c
resources" (p. 1 6 6 ) . Wong, McReynolds, and Wong ( 1 9 9 2 ) find other factors
that explain the short life spans o f Chinese firms in the San F r a n c i s c o Bay
areaa major one being the assimilation of second and third generations into
the dominant culture. M u c h more research is needed on succession in different countries and among different ethnic groups to assess cultural similarities,
differences, and what each culture can learn from the other.
The second area for future research is the role of family dynamics and its
impact on succession. A working paper b y Lansberg and Astrachan ( 1 9 9 0 )
describes the results o f a survey in eighty-nine firms (eighty-four questionnaires returned were from successors and forty-two from owner-managers).
T h e y found ( 1 ) that family cohesion predicts the quality of the relationship
with the successor for owner-managers but not for successors, ( 2 ) family adaptability positively effects the quality of the owner-manager and successor relationship, ( 3 ) family cohesion positively effects the family's commitment to the
firm, ( 4 ) the family's commitment to the business is positively associated with
the extent of succession planning, ( 5 ) the family's commitment to the firm positively effects the degree of successor training, and ( 6 ) the quality of relationship between the owner-manager and the successor positively effects the extent
of successor training. In addition, Malone ( 1 9 8 9 ) found that general family
h a r m o n y aids continuity planning, and S e y m o u r ( 1 9 9 3 ) found that a good
intergenerational work relationship aids successor training. However, little else

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review

oj the

Research

153

has b e e n written about the effect of family dynamics, structure, and interaction patterns on succession process. Clearly this is an area where more work
is needed. The effect of family dysfunction and conflict on family business succession has b e e n written about often in the popular press. T h e Binghams,
Esprit Corporation, U-Haul, Levolor, and Crown Books are j u s t a few companies that have been publicized because family dynamics have led to succession
problems. Further studies are needed to understand which aspects of family
dynamics are most critical to the succession process. The field of family therapy has important contributions and linkages to make with the family business area.
T h e third stream for future attention is the effectiveness of succession.
Researchers including Davis ( 1 9 8 2 ) , Dyer ( 1 9 8 6 ) , Goldberg and Woolridge
( 1 9 9 3 ) , Handler ( 1 9 8 9 ) , Lansberg ( 1 9 8 6 ) , Malone ( 1 9 8 9 ) , and Stempler
( 1 9 8 9 ) have done empirical research on the question of what factors create an
effective succession. W o r k is needed to test the hypotheses Lansberg ( 1 9 8 8 )
and Handler and Kram ( 1 9 8 8 ) set forth regarding succession resisted. Extensive research of the various stakeholdersfounders, spouses, next-generation
family members, managers, suppliers, and c u s t o m e r s m a y aid discovery of
ways to minimize resistance to succession planning. Case studies of failed successions and successful succession processes also m a y provide lessons as to
what eases the process.
A fourth area requiring further research is the role of gender issues in
career and succession planning. Dumas ( 1 9 8 9 ) , Iannarelli ( 1 9 9 2 ) , and Barnes
( 1 9 8 8 ) are three researchers w h o directly deal with this issue. More research
is needed to look at the socialization process of boys and girls into family firms,
as well as other stages of the succession process, and h o w gender may impact
the experience for next-generation family m e m b e r s . T h e gender dynamics
between the founder and heirwhether they be father-son, father-daughter,
mother-son, or mother-daughteralso require attention, particularly now that
more w o m e n are becoming founders of and heirs to family firms.
In conclusion, m u c h research progress has b e e n made in the past forty
years in the field of family business and the critical issue of succession, but
there is still m u c h research to be done, particularly in the areas of international
family firms and family firms operated by different ethnic groups, the impact
of family dynamics on succession processes, factors responsible for effective
successions, and the role of gender on succession. Hopefully, in the next forty
years m a n y gaps will be filled and a better understanding of what produces
effective successions will result. T h e implications are staggering. W h i l e existing statistics offer dim hope that family firms will make it into the second and
third generation, research may uncover the factors significant to survival and
continuity. The goal is to help more businesses pass to the next generation with
less avoidance and conflict, and more strategic planning and family involvement in the process.

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

154

Handler

References
Alcorn, P. B. Success and Survival in the Family-Owned Firm. New York: McGraw-Hill, 1982.
Ayres, G. R. "Rough Family Justice: Equity in Family Business Succession Planning." Family Business Review, 1990, 3(1), 3 - 2 2 .
Barach, J . A., Gantisky, J . , Carson, J . A., and Doochin, B. A. "Entry of the Next Generation: Strategic Challenges for Family Business." Journal of Small Business Management, 1988, 26, 4 9 - 5 6 .
Barnes, L. B. "Incongruent Hierarchies: Daughters and Younger Sons as Company CEOs." Family Business Review, 1 9 8 8 , 1 ( 1 ) , 9 - 2 1 .
Barnes, L. B., and Hershon, S. A. "Transferring Power in the Family Business." Harvard Business
Review, 1 9 7 6 , 5 4 ( 4 ) , 1 0 5 - 1 1 4 .
Barry, B. "The Development of Organisation [sic] Structure in the Family Firm." Journal of General Management, 1975, 3, 4 2 - 6 0 .
Becker, E. The Denial of Death. New York: Free Press, 1973.
Beckhard, R., and Burke, W. "Preface." Organizational Dynamics, 1 9 8 3 , 12, 12.
Beckhard, R., and Dyer, W. "Managing Change in the Family FirmIssues and Strategies." Sloan
Management Review, 1983a, 24, 5 9 - 6 5 .
Beckhard, R., and Dyer, W. "Managing Continuity in the Family-Owned Business." Organizational Dynamics, 1983b, 12, 5 - 1 2 .
Benson, B. Your Family Business: A Success Guide for Growth and Survival. Homewood, 111.: Dow
Jones-Irwin, 1990.
Birley, S. "Succession in the Family Firm: The Inheritor's View." Journal of Small Business Management, 1986, 24, 3 6 - 4 3 .
Blotnick, S. "The Case of the Reluctant Heirs." Forbes, Jul. 1984, pp. 134, 180.
Bork, D. Family Business: Risky Business: How to Make It Work. New York: AMACOM, 1986.
Boswell, J . The Rise and Decline of Small Firms. London: Allen and Unwin, 1972.
Brockhaus, R. H., Sr. "I-E Locus of Control Scores as a Predictor of Entrepreneurial Intentions."
Paper presented at the Academy of Management meetings, New Orleans, 1975.
Calder, G. H. "The Peculiar Problems of a Family Business." Business Horizons, 1961, 4, 9 3 - 1 0 2 .
Chau, T. T. "Approaches to Succession in East Asian Business Organizations." Family Business
Review, 1992, 4(2), 1 6 1 - 1 7 9 .
Christensen, C. Management Succession in Small and Growing Enterprises. Boston: Division of
Research, Harvard Business School, 1953.
Churchill, N. C , and Hatten, K. J . "Non-Market-Based Transfers of Wealth and Power: A
Research Framework for Family Businesses." American Journal of Small Business, 1987, 11(3),
51-64.
Churchill, N. C , and Lewis V. L. "The Five Stages of Small Business Growth." Harvard Business
Review, 1 9 8 3 , 61, 3 0 - 5 1 .
Collins, O. F., Moore, D. G., and Unwalla, D. B. The Enterprising Man. East Lansing: Bureau of
Business and Economics Research, Graduate School of Business Administration, Michigan State
University, 1964.
Danco, K. From the Other Side of the Bed: A Woman Looks at Life in the Family Business. Cleveland:
The University Press, 1 9 8 1 .
Danco, L. Inside the Family Business. Cleveland: The University Press, 1980.
Danco, L. Beyond Survival. Cleveland: The University Press, 1982.
Davis, J . A. "The Influence of Life Stage on Father-Son Work Relationships in Family Companies." Unpublished doctoral dissertation, Harvard Business School, 1982.
Davis, J . A., and Tagiuri, R. "The Influence of Life Stage on Father-Son Work Relationships in
Family-Owned Businesses." Family Business Review, 1989, 2(1), 4 7 - 7 4 .
Davis, P. "Family Business: Perspectives on Change." Agency Sales Magazine, Jun. 1 9 8 6 , pp. 9
16.
Davis, S. "Entrepreneurial Succession." Administrative Science Quarterly, 1 9 6 8 , 1 3 , 4 0 2 - 4 1 6 .

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business:

A Review of the

Research

155

Dean, S. M. "Characteristics of African-American Family-Owned Businesses in Los Angeles." Family Business Review, 1992, 5(4), 3 7 3 - 3 9 5 .
Donnelley, R. G. "The Family Business." Harvard Business Review, 1964, 42, 9 3 - 1 0 5 .
Dumas, C. A. "Understanding of Father-Daughter and Father-Son Dyads in Family-Owned Businesses." Family Business Review, 1989, 2(1), 3 1 - 4 6 .
Dumas, C. A. "Preparing the New CEO: Managing the Father-Daughter Succession Process in
Family Businesses." Family Business Review, 1990, 3(2), 1 6 9 - 1 7 9 .
Dyer, W. G., Jr. Cultural Change in Family Firms: Anticipating and Managing Business and Family
Transitions. San Francisco: Jossey-Bass, 1986.
Emery, F. E., and Trist, E. L. "The Causal Texture of Organizational Environments." Human Relations, 1965, 18, 2 1 - 3 2 .
Farquhar, K. A. "Employee Responses to External Executive Succession: Attributions and the
Emergence of Leadership." Unpublished doctoral dissertation, Department of Psychology,
Boston University, 1989.
Ferkany, S. T. '"For the family': Building Business in Monterrey, Mexico." Unpublished doctoral
dissertation, Wayne State University, 1992.
Flamholtz, E. How to Make the Transition from an Entrepreneurship to a Professionally Managed Firm.
San Francisco: Jossey-Bass, 1986.
Friedman, S. "Succession Systems in Large Corporations: Characteristics and Correlates of Performance." Human Resource Management, 1986, 25, 1 9 1 - 2 1 3 .
Friedman, S. "The Succession Process: Theoretical Considerations." Paper presented at the annual
meeting of the Academy of Management, New Orleans, 1987.
Friedman, S. "Sibling Relationships and Intergenerational Succession in Family Firms." Family
Business Review, 1 9 9 1 , 4(1), 3 - 2 0 .
Gabarro, J . "Socialization at the Top; How CEOs and Subordinates Evolve Interpersonal Contacts." Organizational Dynamics, 1979, 7(3), 3 - 2 3 .
Gallo, M. A., and Pont, C. G. "The Family Business in the Spanish Economy." Paper presented
at the Research Day of the Family Firm Institute Conference, Boston, Mass., Oct. 1988.
Gilmore, R. N., and McCann, J . E., III. "Designing Effective Transitions for New Correctional
Leaders." In J . W. Doig (ed.), Criminal Corrections: Ideals and Realities. Lexington, Va.: Lexington Books, 1983.
Goldberg, S. D., and Wooldridge, B. "Self-Confidence and Managerial Autonomy: Successor
Characteristics Critical to Succession in Family Firms." Family Business Review, 1993, 6(1), 5 5
72.
Gordon, G. E., and Rosen, N. "Critical Factors in Leadership Succession." Organizational Behavior and Human Performance, 1981, 27, 2 2 7 - 2 5 4 .
Greiner, L. E. "Evolutions and Revolutions as Organizations Grow." Harvard Business Review,
1972, 50, 3 7 - 4 6 .
Hall, D. T. "Dilemmas in Linking Succession Planning to Individual Executive Learning." Human
Resource Management, 1 9 8 6 , 2 5 ( 2 ) , 2 3 5 - 2 6 5 .
Handler, W. C. "Managing the Family Firm Succession Process; The Next-Generation Family
Member's Experience." Unpublished doctoral dissertation, School of Management, Boston University, 1989.
Handler, W. C. "Succession in Family Firms: A Mutual Role Adjustment Between Entrepreneur
and Next-Generation Family Members." Entrepreneurship: Theory and Practice, 1 9 9 0 , 15(1),
37-51.
Handler, W . C. "The Succession Experience of the Next-Generation." Family Business Review,
1992, 5(3), 2 8 3 - 3 0 7 .
Handler, W. C , and Kram, K. E. "Succession in Family Firms: The Problem of Resistance." Family Business Review, 1988, 1(4), 3 6 1 - 3 8 1 .
Hershon, S. "The Problems of Management Succession in Family Businesses." Unpublished doctoral dissertation, Harvard University, 1975.

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Handler

156

Herz Brown. "Loss and Continuity in the Family Firm." Family Business Review, 1993, 6(2), 1 1 1
130.
Iannarelli, C. L. "The Socialization of Leaders: A Study of Gender in Family Business." Unpublished doctoral dissertation, University of Pittsburgh, 1992.
Kanter, R. M. Men and Women of the Corporation. New York: Basic Books, 1977.
Kaplan, R. "Helping Succession SucceedWith High-Powered Development." Paper presented
at meetings of the Academy of Management, New Orleans, 1987.
Katz, D., and Kahn, R. The Social Psychology of Organizations. (2nd ed.) New York: Wiley, 1978.
Kelly, G. The Psychology of Personal Constructs. Vol 1. New York: W. W. Norton, 1955.
Kets de Vries, M.F.R. "The Dark Side of Entrepreneurship." Harvard Business Review, 1985, 63,
160-167.
Kets de Vries, M.F.R., and Miller, D. The Neurotic Organization. San Francisco: Jossey-Bass, 1984.
Kram, K. E. Mentoring at Work: Developmental Relationships in Organizational Life. Glenview, II.:
Scott, Foresman, 1985.
Lansberg, I. S. "Conversation with Richard Beckhard." Organizational Dynamics, 1983a, 12, 2 9 - 3 8 .
Lansberg, I. S. "Managing Human Resources in Family Firms: The Problem of Institutional Overlap." Organizational Dynamics, 1983b, 12, 3 9 - 4 7 .
Lansberg, I. S. "Program for the Study of Family Firms: Survey on Succession and Continuity."
Unpublished questionnaire. Yale University School of Organization and Management, 1986.
Lansberg, I. S. "The Succession Conspiracy." Family Business Review, 1988, 1(2), 1 1 9 - 1 4 3 .
Lansberg, I. S., and Astrachan, J . H. "Family Influences on Leadership Succession in Family Businesses." Unpublished paper, 1990.
Lansberg, I. S., and Perrow, E. "Understanding and Working with Leading Family Businesses in
Latin America." Family Business Review, 1991, 4(2), 1 2 7 - 1 4 7 .
Levinson, H. "Conflicts That Plague the Family Business." Harvard Business Review, 1971, 49, 9 0
98.
Levinson, H. "Don't Choose Your Own Successor." Harvard Business Review, 1974, 52, 5 3 - 6 2 .
Levinson, H. "Consulting with the Family Business: What to Look For, What to Look Out For."
Organizational Dynamics, 1983, 12, 7 1 - 8 0 .
Longenecker, J . G., and Schoen, J . E. "An Empirical Investigation of Pre-Entry Socialization of
Successors for Leadership in Family-Controlled Businesses." Management Perspectives on Organizational Effectiveness. Proceedings of the Southern Management Association meetings, 1975.
Longenecker, J . G., and Schoen, J . E. "Management Succession in the Family Business." Journal
of Small Business Management, 1978, 16, 1-6.
McClelland, D. The Achieving Society. Princeton, N.J.: Van Nostrand Reinhold, 1 9 6 1 .
McClelland, D., and Bumham, D. "Power Is the Great Motivator." Harvard Business Review, 1976,
54, 1 0 0 - 1 1 0 .
McCollom, M. "The Ownership Trust and Succession Paralysis in the Family Business." Family
Business Review, 1992, 5(2), 1 4 5 - 1 6 0 .
McGivern, C. "The Dynamics of Management Succession." Management Decision, 1 9 7 8 , 16(1),
32-42.
Malone, S. C. "Selected Correlates of Business Continuity Planning in the Family Business." Family Business Review, 1989, 2(4), 3 4 1 - 3 5 3 .
Miller, E. J . , and Rice, A. K. Systems of Organization. London: Tavistock, 1967.
Nelton, S. "Making Sure Your Business Outlasts You." Nations Business, Jan. 1 9 8 6 , 3 2 - 3 8 .
Patrick, A. "Family Business; The Offspring's Perception of Work Satisfaction and Their Working Relationship with Their Father." Unpublished doctoral dissertation, The Fielding Institute,
1985.
Peiser, R. B., and Wooten, L. M. "Life-Cycle Changes in Small Family Businesses." Business Horizons, 1983, 26(3), 5 8 - 6 5 .
Rice, A. K. "Individual, Group, and Intergroup Processes." Human Relations, 1969, 22, 5 6 5 - 5 8 4 .
Rogal, K. H. "Obligation or Opportunity: How Can Could-Be Heirs Assess Their Position?" Family Business Review, 1989, 2(3), 2 3 7 - 2 5 5 .

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009

Succession

in Family

Business: A Review of the

Research

157

Rosenblatt, P., de Mik, L., Anderson, R., and Johnson, P. The Family-in Business. San Francisco:
Jossey-Bass, 1985.
Rosow, I. "Adjustment to the Normal Aged." In R. H. Williams, C. Tibbitts, and W. Donahue
(eds.), Process of Aging. Vol. 2. New York: Atherton Press, 1963.
Schein, E. H. "The Role of the Founder in the Creation of Organizational Culture." Organizational
Dynamics, 1983, 12, 1 3 - 2 8 .
Schein, E. H. Organizational Culture and Leadership. San Francisco: Jossey-Bass, 1985.
Seymour, K. C. "Intergenerational Relationships in the Family Firm: The Effect on Leadership
Succession." Family Business Review, 1993, 6(3), 2 6 3 - 2 8 1 .
Shapero, A. "The Displaced, Uncomfortable Entrepreneur." Psychology Today, Nov. 1 9 7 5 , pp.
8 3 - 8 6 , 8 8 , 133.
Sonnenfeld, J . "Chief Executives as the Heroes or Villains of the Executive Process." Paper presented at the meetings of the Academy of Management, New Orleans, 1987.
Sonnenfeld, J . The Hero's Farewell. New York: Oxford University Press, 1988.
Stempler, G. "The Study of Succession in Family Owned Businesses." Unpublished doctoral dissertation, George Washington University, 1988.
Stern, M. H. Inside the Family-Held Business. New York: Harcourt Brace Jovanovich, 1986.
Streib, G. Longitudinal Study of Retirement. Ithaca, N.Y.: Cornell University Press, 1 9 7 1 .
Streib, G., and Schneider, C. J . Retirement in American Society. Ithaca, N.Y.: Cornell University
Press, 1 9 7 1 .
Swogger, G., Jr. "Assessing the Successor Generation in Family Businesses." Family Business
Review, 1 9 9 1 , 4 ( 4 ) , 3 9 7 - 4 1 1 .
Tashakori, M. Management Succession. New York: Praeger, 1977.
Thomassen, A. J . "Succession in Family Business." Paper presented at the Research Day of the
Family Firm Institute Conference, Boston, Mass., Oct. 1988.
Thompson, W. E., Streib, G., and Kosa, J . "The Effect of Retirement on Personal Adjustment: A
Panel Analysis." Journal of Gerontology, 1 9 6 0 , 1 5 , 1 6 5 - 1 6 9 .
Thurston, P. H. "Should Smaller Companies Make Formal Plans." Harvard Business Review, 1983,
61, 1 6 2 - 1 7 3 .
Trow, D. B. "Executive Succession in Small Companies." Administrative Science Quarterly, 1 9 6 1 ,
6, 2 2 8 - 2 3 9 .
Vancil, R. F. Passing the Baton: Managing the Process of CEO Succession. Boston: Harvard Business
School Press, 1987.
Ward, J . L. Keeping the Family Business Healthy. San Francisco: Jossey-Bass, 1987.
Warner, W. L., and Abegglen, J . C. Big Business Leaders in America. New York: HarperCollins,
1955.
Welsch, J.H.W. "The Impact of Family Ownership and Involvement on the Process of Management Succession." Family Business Review, 1993, 6(1), 3 1 - 5 4 .
Wong, B., McReynolds, B. S., and Wong, W. "Chinese Family Firms in the San Francisco Bay
Area." Family Business Review, 1992, 5(4), 3 5 5 - 3 7 2 .
Zaleznik, A., and Kets de Vries, M.F.R. Power and the Corporate Mind. Chicago: Bonus, 1985.

Wendy C. Handler is assistant professor of management, Babson College, Babson Park, Massachusetts.

Downloaded from http://fbr.sagepub.com at SAGE Publications on May 21, 2009