Why do eligible successors withdraw from the succession process in family businesses? A social exchange perspective

Abstract

Purpose

Successors' unwillingness to participate in the family business is known to impede intergenerational succession. However, little is known about why those considered eligible, do not choose to become the next chief executive officer (CEO). The authors investigate why some eligible successors withdraw from the succession process while others remain involved. The purpose of this paper is to build theory for which the authors made use of purposive sampling techniques that complied with certain criteria.

Design/methodology/approach

The authors use an inductive, exploratory multi-case study design and investigate six Australian food manufacturers.

Findings

This paper's analysis reveals that successors' decisions are driven by dimensions: pursued outcome and reciprocity. Eligible successors withdrawing from succession are concerned about personal financial sustainability and the business' growth potential; this is accompanied by negative exchanges with the incumbent.

Research limitations/implications

The authors studied a limited number of organizations and these were mainly managed by owner/founders. In this type of organization, successors have been widely exposed to the business and its struggles from an early age. Differences can be present in businesses managed by later generations whose emotional investment, therefore, socio-emotional needs might be different from the cohort being investigated. Second, the authors' aim in carrying out this study was to build theory for which we made use of purposive sampling techniques that complied with certain criteria. Further studies aiming at generalizable results would shed light on the usefulness of the typology and whether other rules apply to the incumbent–successor relationship while ascertaining how the exchanges contribute to the successor's decision to remain or withdraw from the family business.

Practical implications

This study reveals the crucial nature of the incumbent in the succession process. Their role is not limited to how they interact with the successor but how deeply incumbents manage to understand and monitor the successor's motivations and concerns. Incumbents aiming at retaining eligible successors need to thoroughly understand successors' motivations for agreeing to become the next CEO.

Originality/value

This paper is one of the first to investigate successor withdrawal post training. The authors' methodology includes the responses of non-family senior managers to provide an objective view on the family dynamics.

Citation

Rodriguez Serna, L., Nakandala, D. and Bowyer, D. (2022), "Why do eligible successors withdraw from the succession process in family businesses? A social exchange perspective", Journal of Family Business Management, Vol. 12 No. 4, pp. 999-1019. https://doi.org/10.1108/JFBM-04-2021-0036