| Abstract | Family businesses are those that are owned by members of a family, and in most cases, the father or mother have the overall responsibility for the day-to-day decisions of the business. Most family businesses tend to be small and medium-sized enterprises (SMEs). SMEs are an important component of the economy in many countries. The aim of this study was to understand the challenges facing family business owners during succession in the Kingdom of Saudi Arabia. The study sought to identify the factors that lead to failure of family businesses in Saudi Arabia after these businesses have been transferred by the owners to their heirs.
In the existing literature, the discussion has examined the issue of succession, considering why it has to happen and the challenges thereof. The main issue is in identifying a solution that will make succession in family businesses a practice that can be conducted without controversies and challenges in families. These challenges are numerous, and mainly institutional. There is a tendency in Saudi Arabia to impose succession, which is caused by the dictates of tradition, culture, religion, and family.
This is a qualitative study, where semi-structured interviews were conducted with a number of respondents who were owners and successors of family businesses. Thematic analysis was used to analyse the responses and generalisations made.
The main finding of this study was that the institutional forces tend to have a major impact in the failure of succession planning by the owners, who eventually tend to leave their entities in a state of failure through their own in ability to act – an acquiescent behaviour that tends to lead to imposition.
Another finding of this study is that the government needs to create institutions that can offer training to business owners and offer other forms of support to family businesses. This is because family business owners do not have the necessary skills to ensure that they have succession plans ready so that continuity can be guaranteed when they leave their entities. On the other hand, if there are institutions that are specifically created to offer other forms of support to family businesses, the failure rate of family businesses after succession can be reduced.
The practical implications of this study include the following: First, business owners should be supported to manage their organisations in a way that can lead to continuity once they relinquish the day-to-day control of their businesses. Second, government support is crucial for successful succession to take place among family businesses. Third, succession of family business entities should be planned well in advance, to avoid quick and often rushed decisions, which tend to lead to the failure of such businesses.
This study contributes to the literature on owner behaviour in a dynamic business environment, as given in the literature on entrepreneurial innovation by Schumpeter. Another contribution is the suggested model of succession planning, which includes the factors that contribute to successful succession planning, and a model for successful succession planning among family businesses in Saudi Arabia.
This study proposes that future studies on succession planning among family businesses in Saudi Arabia can seek more respondents to avoid generalisations and there should be more participation of government officials among the respondents to ensure that the views of the government are represented. |
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