Family Business Succession: Owners and Successors Perspectives

Abstract

Background: Family businesses are considered as the cornerstone of the world economic systems. However, according to PwC Indonesia Family Business Survey in 2018, 63% of family businesses did not survive the first generation, 65% did not survive the second generation, 85% did not survive the third generation and only 4% would continue to the fourth generation. This number shows an alarming succession failure rate for family firms. Objectives: This research is conducted to analyse the effect of leadership, successor commitment and organizational family culture to family business succession. Methods: The research method used is a survey using Likert scale. In order to collect the data, the researcher distributed online questionnaires to 97 respondents who are family business owners or potential successors, using purposive sampling method. This research uses multiple linear regression analysis to analyse the factors that affect family business succession. The data analysis uses IBM SPSS Results: The factors used for this research are leadership, successor commitment and organizational family culture. The multiple regression analysis result shows that leadership (sig. value=0.026), successor commitment (sig. value=0.000) and organizational family culture (sig. value=0.008) all have significant relationship to family business succession Conclusions: In this study, it can be explained that there are significant influence between leadership, successor commitment and organizational family culture to family business succession.