Sustainability of family business : overcoming generational issues

• Main Author: Zadeh, Ali Sayyadi
• Other Authors: Clark, Murray ; O'Hare, Daniel ; Darabi, Fariba
• Published: Sheffield Hallam University 2015
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.741537

This research contributes to bridging the gap in the existing knowledge on sustainability of family businesses. It provides understanding that enables engagement with the theoretical processes underpinning transition. It is grounded in the context of Iranian family businesses, a field in which generational issues have not really been considered before. Furthermore, this research provides understanding of the process of transition from the perspectives of different generations. It thereby enhances family businesses' knowledge of how to grow their business across generations. In both advanced and developing economies, the vast majority of business enterprises are family owned and together they account for most of the jobs created in the economy. Furthermore, scholars have indicated that most family businesses are dysfunctional in transferring the business to the next generation. Hence, transition of family businesses to the next generation involves crises that threaten the sustainability of family firms. The literature on family business and entrepreneurship has not fully investigated the sustainability of family business. This is especially true for firms outside of Western Europe and North America. To address this gap, the study examines a set of eight Iranian entrepreneurial family firms to understand how the family businesses in this region can sustain to the next generation. Therefore the purpose of this thesis is to understand how SME family businesses manage and overcome their generational issues to transit successfully to the next generation. The findings aim to inform family businesses and the practitioners how the conflicts and issues among young generation and senior generation family members can be managed in a way which will result in sustainability of the family business. This study explores the common conflicts that exist between first, second and third generation family members which obstruct the continuity of family businesses in Iran. A qualitative approach was conducted to gather empirical data through in-depth semi-structured interviews with CEOs, family managers and non-involved family members from different generations at the selected SMEs. A purposive sampling technique and general analytical induction approach were used for data collection and analysis respectively. The analysis of the data produced three main themes: Sustaining Governance, Family Trust and Family Integration. The findings of this research identified that, generational issues in Iranian family businesses are related to three main areas. These areas, categorised as sustaining governance, family trust and family integration, have not been explicitly identified in previous research or identified as the main areas of conflicts in family businesses. Furthermore, the findings of this research suggest how to consider and manage each area of conflict. This research also identified participative commitment as a factor linking the derived three main themes in order to resolve issues and support sustainability of family businesses. Accordingly, the research reveals the importance of family members' engagement and participation in every stage of the continuity model. For instance, in developing plans and policies, it is essential to manage family members' expectations, build long term trust among family members and enhance family integration. These are recognised as important elements for the continuity of family business to the next generation. Therefore, participative commitment is recognised as a key concept supporting the sustainability of family businesses. The main outputs from the present research are two practice-based models of 1) continuity process and 2) initiating and building a family business sustainability model. These conceptual models are discussed in chapter 4 (Figures 4.9 and 4.10). The models include elements which can help predecessors and successors in SME family businesses to define their strategy in sustaining to the next generation.