Strategic Aspects of Non-Family SMEs Succession

Strategic Aspects of Non-Family SMEs Succession

Susanne Durst (University of Liechtenstein, Principality of Liechtenstein, Liechtenstein) and Simon Katzenschlager (University of Liechtenstein, Principality of Liechtenstein, Liechtenstein)
DOI: 10.4018/978-1-4666-5962-9.ch014
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Abstract

While reviewing SME succession literature, an empirical dearth in internal non-family SMEs succession research was detected. This situation is somewhat surprising considering the demographic developments and the fact that in many countries (e.g. Belgium and the Netherlands) the majority of business transfers are actually non-family. In this chapter, internal non-family succession is explored in a smaller Austrian company to shed light on how the firm is preparing for this type of succession. With regard to succession preparation, insights into the aspects of successor selection, successor training, employee involvement in the succession process, and performance measurement systems are provided. The findings this chapter reports may be useful for both academics and practitioners.
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Introduction

Succession represents a subject that is frequently discussed in academic research. A noticeable majority of research focuses on issues relating to family businesses succession (e.g. Handler, 1994; Sharma, Chrisman, & Chua, 1997; Cabrera-Suárez, De Saá-Perez, & García-Almeida, 2001; Dyck et al., 2002; Sharma, Chrisman, & Chua, 2003; Le Breton-Miller, Miller, & Steier, 2004; De Massis, Chua, & Chrisman, 2008; Van der Merwe, Venter, & Ellis, 2009) and corporate succession (Friedman, 1986; Zajac, 1990; Bagby, 2004; Groves, 2007). The study of non-family succession / SME business transfers to externals, however, appears to be rather scarce in quantity. This situation is somewhat surprising considering the demographic developments and the fact that in many countries (e.g. Belgium, the Netherlands), the majority of business transfers are actually non-family (Camerlynck, Ooghe, & De Langhe, 2005; Van Teeffelen, Uhlaner, & Driessen, 2011; Van Teeffelen, 2012), or are set against the background of declines of family business succession, for example, in Austria (Mandl & Obenaus, 2008), Germany (Schlömer & Kay, 2008) as well as in other European countries (European Commission, 2002). Additionally, as Sambrook (2005) rightly stressed “not all small businesses are family firms, where there are “natural” (and possibly competing) successors waiting within the “family labor market” (p. 583). Finally, regarding the type of succession, recent findings from Switzerland reveal that management-buy-ins (MBI) are as frequent as family succession (Christen et al., 2013). The study further shows that in micro companies, management-buy-outs (MBO) are increasing compared with MBI. This underlines the need for a more balanced study of different types of succession.

Addressing this issue, this study attempts to contribute to a better understanding of (internal) non-family succession. Given the relevance of (internal) non-family succession, advancing our understanding of different types of succession is important. In this study, the main interest is on succession planning. It is assumed that rigorous succession planning increases the likelihood of a successful succession (Sharma, Chrisman & Chua, 2003). Yet, observations suggest that many firms do not have a systematic succession planning process at hand (Ip & Jacobs, 2006). As the pool of potential successors for small firms is smaller than for larger public firms (Le Breton-Miller, Miller, & Steier, 2004), the failure to plan properly can be dangerous as it may lead to company closures. Thus, it is of particular interest to better understand the underlying assumptions underpinning certain actions in the succession planning process.

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