Leadership Transfer and the Successor’s

Development in the Family Firm

Katiuska Cabrera-Sua´rez(2005)

Originally Published in The Leadership Quarterly ,71–96

INTRODUCTION

During recent years, there has been a growing interest in the study of family

firms   (FFs)   from   diverse   fields   and   disciplines.   This   interest   is   not   surprising,
assuming that even the most conservative estimates show that the proportion of firms
worldwide whose ownership or management lies in family hands is between 65% and
80% (Gersick, Davis, McCollom, & Lansberg, 1997). Also, estimates of contribution
to GDP as well as employment vary from 45% to 70% in the non-communist world
and many observers claim that the majority of new jobs created in the last decade can
be attributed to family firms (Neubauer & Lank, 1998).
    However, the high mortality rate in this type of organization points to the problem
of management succession as the main challenge facing these firms. According to
Ward (1987) fewer than 30% of successful family businesses make it to the third
generation   and   fewer   than   15%   make   it   through   that   generation.   In   1996,   the
European Observatory for small- and medium-sized enterprises (SMEs) estimated that
more than 5 million enterprises in the European Union, representing about 30% of all
European enterprises, would shortly be facing the transfer of leadership. Moreover,
the observatory estimated that about 30% of those enterprises, i.e. 1.5 million, would
disappear because of lack of preparation regarding this transfer. According to the Best
Project expert group report published in July 2002, roughly one-third of all European
Union   companies   will   change   hands   over   the   next   10   years   (from   25%   to   40%
depending on the Member State). This report suggests that an average of 610,000
SMEs will change hands each year potentially affecting 2.4 million jobs.
    Succession is, therefore, one of the most researched topics in the family firm field.
Nevertheless, most studies have focused on the figure of the predecessor–founder as
the principal architect of the company and its culture, and often as the main obstacle
to the evolution of the succession process. Our point of departure here, however, is the
consideration that the development of the future leaders is an essential strategic aspect
in the survival of family firms that are by their very nature directly affected. The
general literature on leadership development may not be suitable or complete enough
in the case of family firms. On the other hand, the literature on the subject indicates
that the factors to be considered regarding this topic are numerous and inter-related.
    Our aim, therefore, is to study the factors influencing the successful transfer of the
leadership of the company to the next generation of the owner family by comparing
more and less successful cases. To do this, after introducing the subject of succession,
we   base   our   research   propositions   on   the   relevant   literature   on   successors   T