SciELO - Scientific Electronic Library Online

vol.13 issue3Labour conflict and the persistence of macro underemployment in South AfricaDebt financing the capital requirements of South African informal market traders author indexsubject indexarticles search
Home Pagealphabetic serial listing  

Services on Demand



Related links

  • On index processCited by Google
  • On index processSimilars in Google


South African Journal of Economic and Management Sciences

On-line version ISSN 2222-3436
Print version ISSN 1015-8812

S. Afr. j. econ. manag. sci. vol.13 n.3 Pretoria Jan. 2010




The determinants of the readiness to let go among senior generation owner-managers of small and medium-sized family businesses



Stephan van der Merwe

Potchefstroom Business School, North-West University




The objective of this study was to assess the determinants of the readiness of the senior generation owner-managers to finally transfer the management and control of the family business to the younger generation. Data from 504 questionnaires linked to 81 family businesses were collected and analysed. An Oblimin oblique rotation was carried out on the principal components of the exploratory factor analysis. Five factors with eigen-values greater than one, explaining 62.64 per cent of the variance, were extracted. These five factors describing the theoretical dimensions of the dependent variable were: the senior generation owner-manager's readiness to let go, and the independent variables of retirement planning, perceived suitability of the successor, estate planning, and the perceived liquidity of the business after the transfer. No significant practical differences relating to these five factors could be found between the perceptions of male and female respondents, the senior and younger generation family members or family members involved in medium-sized or small businesses. Practical recommendations are suggested to ensure a smooth final transfer of the management and control of the business to the younger generation family members.

JEL: D13, 21



“Full text available only in PDF format”




ACKERMAN, R. 2001. Hearing grasshoppers jump: the story of Raymond Ackerman as told to Denise Prichard, Claremont: David Philip.         [ Links ]

ADENDORFF, C.M. 2004. The development of a cultural family business model of good corporate governance for Greek family businesses in South Africa , unpublished doctoral thesis, Rhodes University, Grahamstown, South Africa.         [ Links ]

ARONOFF, C.E. 2003. Letting go: Preparing yourself to relinquish control of the family business, Marietta, GA: Family Enterprise Publishers.         [ Links ]

ARONOFF, C.E., ASTRACHAN, J.H., MENDOZA, D.S. & WARD, J.L. 1997. Making sibling teams work: the next generation, Marietta, GA: Family Enterprise Publishers.         [ Links ]

ARONOFF, C.E. & WARD, J.L. 1992. Family business succession: The final test of greatness, Marietta, GA: Business Owner Resources.         [ Links ]

ARONOFF, C.E. & WARD, J.L. 2001. Family business values: how to assure a legacy of continuity and success, Marietta, GA: Family Enterprise Publishers.         [ Links ]

ARONOFF, C.E. & WARD, J.L. 2002. Family business ownership: how to be an effective shareholder, Marietta, GA: Family Enterprise Publishers.         [ Links ]

ASTRACHAN, J.H. & SHANKER, M.C. 2003. Family businesses' contribution to the U.S. economy: a closer look, Family Business Review, 16(3): 211-219.         [ Links ]

BASU, A. 2004. Entrepreneurial aspirations among family business owners: an analysis of ethnic business owners in the UK, International Journal of Entrepreneurial Behaviour and Research, 10(1/2): 12-33.         [ Links ]

BIRD, B., WELSH, H., ASTRACHAN, J.H. & PISTRUI, D. 2002. Family business research: the evolution of an academic field, Family Business Review, 15(4): 337-350.         [ Links ]

BJUGGREN, P. & SUND, L. 2001. Strategic decision making in intergenerational successions of small-and medium-sized family-owned businesses, Family Business Review, 14(1): 11-23.         [ Links ]

BLESS, C. & HIGSON-SMITH, C. 1995. Fundamentals of social research methods: an African perspective (2nd ed.) Cape Town: Juta.         [ Links ]

BORK, D., JAFFE, D.T., LANE, S.H., DASHEW, H. & HEISLER, Q.G. 1996. Working with family businesses: a guide for professionals, San Francisco, CA: Jossey-Bass.         [ Links ]

BROCKHAUS, R.H. 1996. Family business in Southern-Africa: an old new frontier, Paper presented at the Ninth Annual Conference of the International Council for Small Business in Southern Africa, Nelspruit, May.         [ Links ]

BROWN, R.B. & COVERLY, R. 1999. Succession planning in family businesses: a study from East Anglia, U.K, Journal of Small Business Management, 37(1): 93-97.         [ Links ]

CHRISMAN, J.J., CHUA, J.H. & STEIER, L.P. 2003. An introduction to theories of family business, Journal of Business Venturing, 18(4): 441-448.         [ Links ]

COHEN, J. 1992. A power primer, Psychological Bulletin, 112(1): 155-159.         [ Links ]

DE VISSCHER, F.M., ARONOFF, C.E. & WARD, J.L. 1995. Financing transitions: managing capital and liquidity in the family business, Marietta, GA: Family Enterprise Publishers.         [ Links ]

DICKENSON, T.M. 2000. Critical success factors for succession planning in family businesses, unpublished MBA dissertation, University of the Witwatersrand, Johannesburg, South Africa.         [ Links ]

DONCHELS, R & LAMBRECHT, J. 1999. The re-emergence of family-based enterprises in East-Central Europe: what can be learned from family business research in the Western World? Family Business Review, 12(2): 171-188.         [ Links ]

DYER, W.G. JR. 1986. Cultural change in family firms: Anticipating and managing business and family transitions, San Francisco, CA: Jossey-Bass.         [ Links ]

ELLIS, S.M. & STEYN, H.S. 2003. Practical significance (effect sizes) versus or in combination with statistical significance (p-values), Management Dynamics, 12(4): 51-53.         [ Links ]

EMENS, J.R. & WOLPER, B.E. 2000. Family business basics: The guide to the family business financial success, New Albany, OH: AASF Publications.         [ Links ]

EYBERS, C. 2010. Copreneurs in South African small and medium-sized businesses, unpublished M.Com. dissertation, Nelson Mandela Metropolitan University, Port Elizabeth, South Africa.         [ Links ]

FARRINGTON, S. 2009. Sibling partnerships in South African small and medium-sized family businesses, unpublished doctoral thesis, Nelson Mandela Metropolitan University, Port Elizabeth, South Africa.         [ Links ]

FIELD, A. 2009. Discovering statistics using SPSS. (3rd ed.) London: Sage.         [ Links ]

FILE, K.M. & PRINCE, R.A. 1996. Attributions for family business failure: the heir's perspective, Family Business Review, 9(2): 71-84.         [ Links ]

FRIEDMAN, S.E. 1998. The successful family business, Amherst, NY: The NGP Publishers.         [ Links ]

GOLDBERG, S.D. 1996. Research note: effective successors in family-owned businesses: significant elements, Family Business Review, 9(2): 185-197.         [ Links ]

GOLDBERG, S.D. & WOOLRIDGE, B. 1993. Self-confidence and managerial autonomy: successor characteristics critical to succession in family firm, Family Business Review, 6(1): 55-73.         [ Links ]

GRASSI, S.V & GIARMARCO, J.H. 2008. Practical succession planning for the family-owned business, Journal of Practical Estate Planning, Feb: 27-60.         [ Links ]

HUME, S.A. 1999. An assessment of risk of family business failure, unpublished doctoral thesis, Antioch University, New Hampshire.         [ Links ]

IBRAHIM, A.B. & ELLIS, W.H. 2004. Family business management: concepts and practice (2nd ed.) Dubuque, IA: Kendall/Hunt.         [ Links ]

JAFFE, D.T 1991. Working with the ones you love: Strategies for a successful family business, Berkeley, CA: Conari Press.         [ Links ]

KLEIN, S.B., ASTRACHAN, J.H. & SMYRNIOS, K.X. 2005. The F-PEC scale of family influence: construction, validation, and further implication for theory, Entrepreneurship Theory and Practice, 29(3): 321-339.         [ Links ]

LANSBERG, I. 1999. Succeeding generations: Realizing the dream of families in business, Boston, MA: Harvard Business School Press.         [ Links ]

LEA, J.W. 1991. Keeping it in the family: successful succession of the family business, New York, NY: Wiley.         [ Links ]

MATTHEWS, C.H., MOORE, T.W. & FIALKO, A.S. 1999. Succession in the family firm: a cognitive categorization perspective, Family Business Review, 12(2): 159-169.         [ Links ]

MEGGINSON, W.L., SMART, S.B. & GRAHAM, J.R. 2010. Financial management (3rd ed.) Singapore: South-Western.         [ Links ]

MORCK, R. & YEUNG, B. 2004. Family control and the rent seeking society, Entrepreneurship theory and practice, 28(4): 391-409.         [ Links ]



NEUBAUER, F. & LANK, A.G. 1998. The family business: its governance for sustainability, Hampshire: MacMillan.         [ Links ]

NUNNALLY, J. & BERNSTEIN, I.H. 1994. Psychometric theory (3rd ed.) New York, NY: McGraw-Hill.         [ Links ]

PAGE, C. & MEYER, D. 2000. Applied research design for business and management, Roseville: McGraw-Hill.         [ Links ]

POTTS, T.L., SCHOEN, J.E., LOEB, M.E., & HULME, F.S. 2001. Effective retirement for family business owner-managers: perspective of financial planner, Part 2, Journal of Financial planning, July.         [ Links ]

RAWLS, L.H. 1999. Seeking succession: how to continue the family business legacy, Maitland, FL: Horizon Business Press.         [ Links ]

RIVERS, D.W. 2005. Prescriptions for a healthy family business, Raleigh, NC: The Family Firm Institute.         [ Links ]

ROBBERTS, J. 2006. Evaluation of the unique challenges facing family businesses in South Africa, unpublished MBA dissertation, North-West University, Potchefstroom, South Africa.         [ Links ]

RYAN, C. 1995. Are family businesses better?, Productivity South Africa, March/April: 11-13.         [ Links ]

SAS INSTITUTE 2005. SAS Institute Inc., SAS OnlineDoc®, Version 9.1, Cary, NC: SAS Institute. SHANOFF, B. 2006. Avoiding family feuds, Waste Age, Feb.         [ Links ]

SHARMA, P. 1997. Determinants of the satisfaction of the primary stakeholders with the succession process in family firms, unpublished doctoral thesis, University of Calgary, Calgary, Canada.         [ Links ]

SHARMA, P., CHUA, J.H. & CHRISMAN, J.J. 2000. Perceptions about the extent of succession planning in Canadian family businesses, Canadian Journal of Administrative Sciences, 17(3): 233-244.         [ Links ]

SHORT, D.G., LIBBY, R., LIBBY, P.A. 2007. Financial accounting: a global perspective (5th ed.) New York, NY: McGraw-Hill Irwin.         [ Links ]

SONFIELD, M.C. & LUSSIER, R.N. 2004. First-second and third-generation family firms: a comparison, Family Business Review, 17(3): 189-202.         [ Links ]

SOUTH AFRICA 1996. National Small Business Act (Act 102 of 1996) Government Gazette, 377(17612).         [ Links ]

SOUTH AFRICA 2004) National Small Business Amendment Act (Act 29 of 2004), Government Gazette, 474(27101).         [ Links ]

SPSS INC. 2008 SPSS® 16.0 for Windows, Release 16.0, Copyright© by SPSS Inc., Chicago, Ill.: SPSS.         [ Links ]

STEIER, L.P. & WARD, J.L. 2006. If theories of family enterprise really do matter, so does change in management education, Entrepreneurship Theory and Practice, 30(6): 887-895.         [ Links ]

STURGILL, TC. 1998. The states, too, demand their pound of flesh, Family Business, 9(3): 60-63.         [ Links ]

SWART, H.C. 2005a. Evaluation of the factors that ensure long-term sustainability of family businesses, unpublished MBA dissertation, North-West University, Potchefstroom, South Africa.         [ Links ]

SWART, P.J. 2005b. Unique challenges facing family businesses, unpublished MBA dissertation, North-West University, Potchefstroom, South Africa.         [ Links ]

THOMPSON, B. 2001. Significance, effect sizes, stepwise methods, and other issues: strong arguments move the field, Journal of Experimental Education, 70: 80-93.         [ Links ]

VAN DER MERWE, S.P. 1998. Formal planning in family businesses in the Vaal Triangle, unpublished doctoral thesis, North-West University, Potchefstroom, South Africa.         [ Links ]

VAN DER MERWE, S.P. & ELLIS, S.M. 2007. An exploratory study of some of the determinants of harmonious family relationships in small and medium-sized family businesses, Management Dynamics, 16(4): 24-35.         [ Links ]

VENTER, E. 2003a. The succession process in small and medium-sized family businesses in South Africa, unpublished doctoral thesis, University of Port Elizabeth, Port Elizabeth, South Africa.         [ Links ]

VENTER, E. & BOSHOFF, C. 2007. The influence of organisation-related factors on the succession process in small and medium-sized family businesses, Management Dynamics, 16(1): 42-55.         [ Links ]

VENTER, E., BOSHOFF, C. & MAAS, G. 2003. The influence of relational factors on successful succession in family business: a comparative study of owner-managers and successors, South African Journal of Business Management, 34(4): 1-13.         [ Links ]

VENTER, W.P. 2003b. The role of familiness in the performance of family business groups, M. Phil dissertation, Rand Afrikaans University, Johannesburg, South Africa.         [ Links ]

VILLALONGA, B. & AMIT, R. 2006. How do family ownership, control and management affect firm value?, Journal of Financial Economics, 80: 385-117.         [ Links ]

VOELLER, M., FAIRBURN, L. & THOMPSON, W. 2002. Exit right: A guided tour of succession planning for families-in-business-together (2nd ed.) Toronto: Summit Run.         [ Links ]



Accepted April 2010



Appendix 1 - Click to enlarge

Creative Commons License All the contents of this journal, except where otherwise noted, is licensed under a Creative Commons Attribution License