Planning for succession and firm’s sustainability: Evidence from family owned businesses in Lagos and Ogun States, Nigeria

Abstract

Family businesses constitute a large number of commercial activities worldwide, contributing significantly to the global economy. Succession planning is a key issue influencing the sustainability of family businesses. There are many family business failures in Nigeria, especially at the demise of the owner/founder. This study investigated the factors that are responsible for ensuring planning for succession and firm’s sustainability of family businesses in Lagos and Ogun States of Nigeria. The study adopted a survey design with a population of study limited to the family business owners who are members of the National Association of Small and Medium Scale Enterprises (NASME). A stratified sampling technique was used to select the family businesses, from where a random sample of 327 was selected. Pearson’s Product Moment Correlation and Multiple Regression were used to analyze the data. The results revealed that there was a strong positive correlation between planning for succession and firm’s sustainability, with an r value of correlation coefficient at 0.93 and significant level of P<0.05 @ 0.000. The founder must act proactively by crafting succession plan early enough in the life of the business, such that his experience will help the firm’s survival. Issues that can create conflicts should be avoided like appointing an incompetent successor, while the successor should be made to come into the family business early enough to gain the confidence and respect of other family and non-family workers.

Keywords: Family business, succession, sustainability, succession planning.