Succession in family businesses: Exploring the effects of demographic factors on offspring intentions to join and take over the business

One does not have to limit oneself to cultural interfaces to encounter the bizarre, the parataxic, or the insane. Much is inherent in any given culture.Understanding man, understanding culture, and understanding the world and unraveling the irrational are inseparable aspects of the same process (Hall 1989, p. 216, 220). One could consider irrational and paradoxical the common belief that while family businesses are considered important economic and social pillars throughout the world, not many survive beyond the first generation (Birley 1991; de Jordy 1991; Dunlop 1993; Gallo 1995; Lank et al. 1994; Madore 1993; Rosenblatt et al. 1985; Thomassen 1992). Also irrational, yet understandable, seems the notion that offspring are quite often welcome in the family business regardless of their ability to contribute to its success (Kets de Vries 1993). Many researchers have attempted to explore the reasons behind such irrationalities, but most of these attempts have focused on the owners and their inability to plan their succession (Aronoff and Ward 1992; Kerr 1993; Marshack 1993; Seymour 1993; Welsch 1993; Whiteseide 1993). Few have focused on the heirs and the factors related to their involvement in the family business (Davis 1968; Handler 1989; Rosenblatt et al. 1985). Even fewer have investigated heir intentions to join and take over the family business (Birley 1991; Stavrou 1996). Succession is not a static event, or a process that begins once heirs are involved in the business; it is a long-term endeavor initiated early in the heirs' lives (Christensen 1953; Davis 1968; Longenecker and Schoen 1991; Stavrou and Winslow 1995; Trow 1961; Ward 1987). Succession models that investigate the role of heirs in their families' firms divide that role into three levels of involvement (Churchill and Hatten 1987; Handler 1989; Longenecker and Schoen 1991; Ward 1987). The first level entails the association of offspring with the firm through family discussions or part-time employment. The second level entails the full-time employment of offspring in the family business. The third level entails the appointment of offspring to the leadership roles and responsibilities of their parents in the business. Some offspring may decline any participation in the family firm; others may become involved at only the first or second levels described above. The extent of their participation may be up to them or may depend on decisions made by the firm's managers (their family elders). However this is decided, in order for the firm to make the best possible decisions regarding future management and succession planning, it is imperative to understand the intentions of rising family members before plans are made for them to join the business. The present study focuses on an exploration of offspring intentions to join and take over their parents' business. Offspring intentions were viewed in light of a set of demographic characteristics of the offspring, the parent-owners, and the firms. Figure 1 illustrates the theorized relationships between these demographic variables and offspring intentions. Offspring intentions were explored when the offspring were in college or university at the ages of 18 through 28. This time-frame was selected because many if not most offspring tend to seek full-time employment or a career in their families' firms sometime between their eighteenth and twenty-eighth birthdays (Birley 1991; Handler 1989; Longenecker and Schoen 1991; Ward 1987). Further, most young adults make important choices between their eighteenth and twenty-eighth birthdays that can affect the rest of their lives and careers (Banks et al. 1992). In addition, a study revealed that even though most offspring first become involved in their parents' firms around age thirteen, many do not join the firm on a full-time basis until age twenty-one (Mass Mutual 1993). College students were chosen because whereas previous generations employed in businesses have been prepared for their roles primarily through on-the job training, the current generation is strongly encouraged to get a college education (Mass Mutual 1993; Thomassen 1992; Ward 1987; Welsch 1993). …