Strategies for Sustainable Succession Planning in Family Business

Literature Review

Family-Owned Businesses (FOB) or Small and Medium-Enterprises (SME) contribute significantly to every nation’s economy. They are an important aspect of most nations’ economic landscape, as a result, family business studies is attracting more attention from the academia in the recent years (Chrisman, Chua and Sharma, 2005).

Various studies have shown that ninety per cent of all enterprises in the united States are family businesses, that contribute between fifty and sixty per cent of the gross domestic product (Francis, 1993). Family businesses in Western Europe represent seventy-five to ninety-five per cent of all registered corporations thus contributing significantly to the respective countries’ economies (Lank, 1995).

In Thailand, FOB accounted for sixty five percent (65%) of nominal GDP in 1997 (Suehiro, Akira & Wailerdsak, Natenapha (2004). Family-owned Businesses (FOB) in Thailand comprise ninety-five per cent of the total number of industrial entities of the country and employ over twenty per cent of the industrial workforce on average (Madden and Kelly, 2004). In addition, about seventy to seventy-five per cent of the businesses are family run (Sriwipa Siripunyawit, 2007). Thai SMEs accounted for over seventy-five per cent of total employment, contributed to thirty-eight per cent of Thailand’s GDP in 2005 and accounted for twenty-nine per cent of total exports by value in 2006 (Thamrong Mahajchariyawong, 2007). Family businesses account for about eighty per cent of companies listed on the Stock Exchange of Thailand (Pornnalat Prachyakorn, 2009). Virasak Sutanithavibul (2009) stated that Small and Medium-Sized Enterprises (SMEs) make up around ninety-six per cent of all business enterprises in Thailand. SMEs are Thailand’s major corporate tax payers with 278,191 small businesses paying 31.36 billion Thai Baht in 2008 out of the total of 100 billion Thai Baht of corporate tax collected (Chatrudee Theparat, 2009).