Emotional and developmental influences on the management of generational transitions by business-owning families

Abstract

In recent years, succession has become a major theme in family business research. Much of the research effort has concentrated on the managerial dimension of succession, often subordinating the importance of other major variables such as family relationship dynamics and the form of business ownership on the succession outcome. Family enterprises are generally conceptualised as a dynamic, evolving systems in which the actions and interactions taking place amongst constituent groups determine the system's outputs. This study aimed to overcome the limitations of examining only one dimension of a system's activities by carrying out a longitudinal holistic analysis of the evolution of the family enterprise system as it went through the process of generational transition. The research for this thesis employed the multiple case study method to investigate the influence of emotional and developmental factors on the ability of business-owning families to make progress with the tasks required to complete a generational transition. Three specific issues were examined: the nature of the task environment facing the family enterprise system over the duration of the transition period; the approaches used by families to address the tasks required for them to move through the stages making up the transition process; and the extent to which emotional and developmental factors prevented or promoted progress being made with the generational transition. The results reveal that families face the same sequence of stages in the generational transition process. However, they differ in their ability to move through these stages, towards closure of the transition period and the achievement of a succession outcome, Importantly, the degree to which individuals and families are able to make progress is related to their ability to manage the anxiety generated during the transition process. Anxiety is created when the structures or network of interrelationships that hold their family enterprise system intact are evaluated and may be dismantled and reconstructed differently for the next stage in the system's development. The study supports the view that anxiety is generated during transition times when developmental pressures for change build up from changes taking place in the life-cycles underway within the family enterprise system. It also supports the view that developmental pressure (such as a crisis) from the business subsystem alone does not lead to transition task activity and progress. Progress in response to business sub-system pressure comes about when the opportunity exists to solve an ongoing adult development problem by implementing a solution to a transition task problem. The ability to manage anxiety was found to be related to both the quality of emotional functioning in the family and the extent to which the adult development agendas of both generations are in alignment. Favourable alignment brought a developmental opportunity for the individuals concerned. It allowed them to do the exploratory work required in order to assess the extent to which the family business could provide part of their life structure for the next phase of their development. However, in addition to adult development generational alignment, the study confirmed that the quality of emotional functioning in the family (their ability to overcome multigenerational patterns of functioning and behaviour) influenced the family's ability to make progress with ownership transfer and other tasks. The study concludes that emotional and developmental influences are mediating factors between the forces for change originating in the family enterprise system and its environment and the ability of those in the system to respond to the need for change and manage the transition process. It also found that families significantly underestimate the nature and complexity of the work involved in the transition process, as well as the timescale and emotional commitment required to complete the transition.