A firm's knowledge is considered a key strategic asset in the course of generating competitive advantages. However, especially within family firm succession, there is a high risk that knowledge embedded if the predecessor leaves the organization. Thus, in order to maintain the family firm's competitive advantage an understanding of the challenges regarding the knowledge transfer within family firm succession is needed. In this chapter, the authors employ a qualitative empirical approach to identify context-based knowledge transfer strategies and develop a typology of transfer constellations. The results provide insight for students, researchers, consultants, policy makers and family firm leaders, who are searching for the most appropriate knowledge transfer strategy given the nature, philosophies and traditions of specific small and medium sized family firms.
TopIntroduction
A firm’s specific knowledge, as well as the ability and willingness to transfer it, is considered a key strategic asset in the course of generating competitive advantages (Spender & Grant, 1996). Knowledge is viewed as the sum of expertise, skills and abilities applied by individuals in the form of theoretical knowledge and modes of dealing to solve problems (Leonard & Sensiper, 1989). It can include facts and information, as well as understanding gained through experience, education or reason.
Especially in family firms, which represent 80-95% of all businesses (Nordqvist & Melin, 2010) and make a major contribution to employment, revenues, and GDP in most capitalist countries (Sharma, Chrisman, & Chua, 1996), the success of the multistage succession process can be determined by preserving the predecessor’s knowledge (Mazzola, Marchisio, & Astrachan, 2008).
However, within family firm succession, the knowledge transfer is most often not managed at all or poorly managed at best and in many cases does not work out the way participants wish it would (Cabrera-Suárez, De Saá-Pérez, & García-Almeida, 2001). The typical characteristics of family firms, like their small size, informal organization structures and a restrictive information policy (see e.g., Gallo, 1995) applied by the main entrepreneur, implicate lower pressure and lower propensity to make contextual information, framed experiences, values and expert insights, which are embedded in or hoarded by the main entrepreneur in the majority of cases (Cabrera-Suárez et al., 2001; Hatak & Roessl, 2013), explicit. With the family entrepreneur as the central information source leaving the firm in the course of a generation change, questions arise as to whether the firm is going to irrecoverably loose the knowledge together with the predecessor, or whether it will be transferred to the successor or to another employee and, thus, placed in another personal storage, or whether the predecessor’s knowledge will be stored in the firm (i.e., in a database), independent of individual people.
In order to develop and maintain the family firm’s competitive advantage and to set the basis for innovating and improving efficiency, thus realizing the potential value of the predecessor’s knowledge, an understanding of strategic managerial challenges associated with the knowledge transfer within family firm succession is needed. This chapter therefore aims at identifying context-based knowledge transfer strategies and at developing a typology of transfer constellations. By identifying the associated management requirements, the chapter wants to provide insight for students, researchers, consultants, policy makers and family firm leaders, who are searching for the most appropriate knowledge transfer strategy given the nature, philosophies and traditions of specific small and medium sized family firms.