Succession has been recognized as one of the major problems of family businesses and, for this reason, has become one of the most researched topics in the family business research field 1, 2, 3. Family businesses represent an important share in the structure of all firms. According to research findings, more than 70% of all firms worldwide 4 are family ones, most of them being micro, small or medium-sized firms (SMEs). According to some research results, such as 5, 6, between 40% and 80% of Slovenian businesses are family SMEs, with the majority owned by the first generation of the family 7. Recently, the discussion in Slovenia has focused on the problem of transferring family firms to the next generation. Family SMEs established in the 1990s are approaching the critical phase of transferring firms to the next generation. Owners/managers of these firms, mostly founders, have practically no experience in managing the succession process due to the lack of a succession tradition in Slovenia. As Slovenia is one of the innovation followers with a below average performance, the enhancement of innovativeness and entrepreneurial orientation of successors and their firms is of crucial importance for the future of Slovenia as an innovative society.
In our study, we will explore family SMEs challenged by succession in Slovenia and how entrepreneurialism (i.e., entrepreneurial competences of successors) and knowledge transfer (from founders to successors) contribute to effective succession in family SMEs. According to many authors, including 8, 9, knowledge and the processes of creating new and using existent knowledge are of crucial importance for firms' innovation capability. In our research, we propose that entrepreneurial competences are of crucial importance for the development of capable successors who should bring fresh perspectives in a firm, thereby contributing to the strategic renewal of a firm in the next generation. Our definition of factors that contribute to the formation of entrepreneurial competences is based on research findings of 10 and cognitions on entrepreneurship, knowledge, knowledge management and innovations of scholars in family businesses research field, such as 11, 12, 13, 14, 15. Working experience outside a family firm, family context (i.e., familiness), and formal education (i.e., in entrepreneurship) are recognized in our research as an important factors in building entrepreneurial competences.
The realization of effective succession depends to a great extent on how well a succeeding generation is prepared to take over a leadership and entrepreneurial role 16, 17, 18. For this reason many research studies have dealt with the nurturing, preparation, and development of successor(s) 19, 20, 21 as an important predictor of successful succession. Several studies, such as 22, 23, 24, have argued the importance of a successors’ education level for smooth and successful realization of succession; the selection of successors is increasingly based on their experiences and skills as well as commitment to a family firm 25. Successors’ educational level should meet requirements needed to be an entrepreneur in a knowledge-based economy, where it is no longer enough just to know how to perform a specific activity or function. Being competitive requires being able to create new knowledge, which also depends on a successor’s absorptive capacity established by academic and professional education 26. The process of getting formal/academic education also exposes successors to new ideas and trends 27. Successors’ experiences gained by working outside the family firm have also been found to be of great importance in developing specific abilities, getting different view of the business, and learning how to do business 28, 29, 30, 31, 32. Such experiences are of special importance as they offer exposure to new ideas and perspectives 33 and provide knowledge that is relevant for the future development of a firm’s innovation capacity 34, 35. Tightly linked to the question of preparing a competent leader are research studies dealing with the transfer of knowledge during the succession process 36. In particular, the transfer of tacit knowledge from predecessor to successor and the successor’s training to assume the top management functions have been found to be key processes in developing and protecting knowledge (especially tacit knowledge) and guaranteeing the existence and development of a family business 37, 38.
The main goal of our research is to broaden our understanding of the importance and factors of building entrepreneurial competences for effective succession in family SMEs. The role of formal education in building entrepreneurial competences of succeeding generations is introduced for two cases of educational institutions in Slovenia: the Faculty of Economics and Business, University of Maribor and GEA College, Faculty of Entrepreneurship. Twenty Slovenian family SMEs were used for the case study, which was conducted in order to explore how entrepreneurialism and the transfer of tacit knowledge between a founder and a successor contribute to effective succession in family SMEs. We limit our research on the intra-family business transfer of leadership (i.e., management succession) from the first (i.e., founder) to the second family generation.
The topic researched induced us to adopt a qualitative research approach, where we found the case studies’ research method to be the most suitable. Many authors, including 39, 40, 41, have argued that qualitative methods are needed in the field of family business research as this type of business is characterized by complex relationships and interactions that actively construct reality. We apply a multiple-case study approach, where replication logic is possible 42. The twenty cases were carefully selected from a database that the authors of this study have been developing for many years.
We begin our paper with the conceptual framework and an overview of existing research and literature; we continue with the presentation of methodology and empirical findings. We end our paper with conclusions and propositions for future research directions. Implications for practice are presented as well.
- 1134 reads
