Succession planning in family-run business

| July 22, 2019


Look at succession planning in different parts of the world, paying special focus to the Middle East and East African countries with Islamic background and cultures. Look at what succession plans have been put in place by the business founders. Does their decision favor the male heirs therefor leading to sexism?

Conduct 15 question from the literature review and interview 3-4 business owners and founders from those regions about the plans for their business once they have moved on.

Main Outline:
* Title page
*Executive summary
*Table of Contents
* Table of illustrations
List of Tables
List of figures

Main Body:
*Literature review
*Findings/ Data analysis
*Interpretation of findings
*Discussion and Conclusion


Executive summary

Family-run businesses (FRBs) continue to play increasingly crucial roles in contemporary societies. However, their continued survival has traditionally been threatened by succession problems. The problem of founder resistance is a serious one, in which case owners are unwilling to hand over oversight and management roles to the next generation. However, at some point, the founders are forced to decide that time has come for the succession planning process to begin.

At such a point, the next big problem is normally about the choice between male and female successors. All around the world, founders have had face this dilemma. This paper explores the extent to which founders of family-run businesses prefer male successors to female ones. The paper utilizes structured internet interviews to obtain data from the founders of three companies: Madivani and madivani Group (an Indian company), MaxiLeti Inc. (a Portugal-based company), and Rema Group (A Brazilian company). The study’s findings show that the different FRBs use different strategies to handle succession planning processes, and that the issue of male preference predominates in all the contexts. Similarly, there is no uniformity of the strategies used to reconcile family-business conflicts, particularly in today’s highly globalized world.



Acknowledgements. 2

Executive summary. 3

Chapter 1: Introduction. 6

Background to the study. 6

Research aims and objectives. 12

Research hypothesis. 13

Statement of the problem.. 13

Chapter 2 literature review.. 17

Introduction. 17

Overview of succession planning in family-run businesses. 17

Main challenges faced during succession planning. 17

The role of founder in succession planning. 19

Family-run business successions in Western countries: The case of Portugal. 21

Family-run businesses in Asia. 23

Role of mothers and daughters during succession: The case of China’s family businesses. 28

Succession planning in Latin America. 32

Women successors in Brazil’s family-run businesses. 32

Father-daughter succession Colombia. 35

Conclusion. 36

Chapter 3: Research Methodology. 38

Research design. 38

Justification for qualitative research method. 39

Justification for structured internet interviews. 41

Purposive sampling. 42

Chapter 4: Data analysis and Interpretation of findings. 44

Madvani and Madvani Group (India) 44

MaxiLeti Inc. (Portugal) 44

Rema Group (Brazil) 44

Preference for male heirs in the succession planning process. 45

Madvani and Madvani Group (India) 45

MaxiLeti Inc. (Portugal) 46

Rema Group (Brazil) 48

Chapter 5: Discussion and Conclusions. 50

Discussion. 50

Conclusions. 52

References. 56

Appendix 1: Interview questions. 63

Chapter 1: Introduction

Background to the study

A large number of enterprises in the contemporary world are run as family-run businesses. In some regions, family businesses play a critical role in influencing trends in national economies. It is unfortunate that no conclusive statistics are available to making comparisons on the presence of these businesses in different regions of the world. Nevertheless, The Family Firm Institute presents an interesting finding by indicating that family-owned businesses create between seventy and ninety percent of global GDP annually (Davis & Kirby, 2010). This makes them a backbone of today’s global market economy (Davis & Kirby, 2010). In the past, family-run businesses were considered to be among the weakest forms of enterprise. Whenever a family-run business achieved success, many people would find it appropriate to point out that such success had been achieved despite the business being a family-run enterprise.

Today, family businesses have started playing a central role in policy and public discussions. In many countries, authorities continue to acknowledge the crucial played by these businesses in facilitating economic growth and development at the national, regional, and global levels. In the European Union, for instance, the Small Business Act (2008) accord special attention to family-owned enterprises, particularly the issue of business succession planning.

Despite the continued success of family-run businesses, the issue of succession planning continues to be very problematic. Major problems arise whenever the need to transfer business ownership from one generation to the other arises (Miller, 2003). The problem of succession planning affects not just large businesses but also small and medium enterprises. Successful transfer of ownership and management is always an issue of interest not just to the family members but also to the company’s employee. A major issue is normally on whether the management structure is going to change. Some employees worry about the likelihood of losing their jobs when a new board of directors is ushered in. The concern arises because the transfer of management and ownership brings with it the likelihood of far-reaching policy changes being introduced.

A number of studies show that few family-run businesses survive beyond the second generation (Kets de Vries, 1993; Miller, 2003). Moreover, many such businesses collapse soon after the takeover by the second generation (Kets de Vries, 1993; Miller, 2003). One of the main reasons for this collapse is lack of proper succession planning strategies. The transition of ownership tends to be poorly solved. In some instances, no efforts are made at all to solve the problems arising during the transition of ownership from one generation to the other or from one family member to the other.

The high rate of failure of family-run businesses poses a threat not just to the family members and employees but also to the economy at large. Globally, it is estimated that only thirty percent of family-owned businesses survive to the second generation (Dahlan & Klieb, 2011). For this reason, there is a need for the issue of succession planning in such businesses to be addressed with the seriousness it deserves from all policy perspectives. Fortunately, intergenerational succession planning remains a key area of research focus.

In scholarly research, this subject is normally discussed within the discipline of entrepreneurship (Howorth, 2006; Piramal, 1998). Howorth (2006) observes that when family businesses succeed, this greatly revitalizes the entrepreneurial spirit in society. Moreover, crucial insights for contemporary entrepreneurial research are provided whenever business owners make efforts towards proper succession planning. In entrepreneurial research, one of the main areas of interest relates to succession issues affecting family businesses and possible solutions. Entrepreneurial researchers acknowledge that for proper succession to take place, the appropriate supporting infrastructure should be provided.

Cultures and values play a critical role in determining the success of a business. For example, Chinese family enterprises share some characteristics. The Confucian society, which is the basis of the Chinese cultural framework, places the family at the heart of all human relationships. On the other hand, from the point of view of economics, the business enterprise is essentially an economic entity and not a family asset. In such a situation, the Chinese entrepreneur is forced to adopt a pragmatic approach to ensure the success and survival of his family enterprise. Nevertheless, this duo phenomenon is faced by all family-run businesses in the contemporary world. There is always a need to balance issues of the business with those of the family.

In the Arab world, succession planning also remains a problematic issue for many family-run businesses. Some of the reasons underlying these problems are different from those of non-Arab countries. For instance, some Arab countries are governed by the Islamic Law known as Sharia. Sharia guides all aspects of the Muslim’s life, including familial obligations, religious observances, daily routines, and financial dealings (Paisner, 1999). For instance, Sharia provides a legal framework for guiding all business operations, including the succession process.

In Saudi Arabia, for example, many family-run businesses encounter constraints in attempts to comply with Sharia when handling matters of inheritance, particularly the ability by one individual to have the freedom to transfer a family business one generation to the next. In Western countries, the owner of a family business can select a successor for a non-publicly traded business as well as transfer ownership to this successor. This transfer may take the form of a direct inheritance upon the founder’s death or it may be through a trust established during the founder’s lifetime or upon his death. It is imperative for entrepreneurial researchers to make a comparison between the succession laws of the West and those of the Arab world.

However, in both the succession law of the West and that of the Arab world, two crucial issues are addressed (Lee, 2004). First, the laws provide a framework for the distribution of family wealth among all heirs and to avoid the emergence of conflict. Secondly, they ensure that a balanced system is established in which it is impossible for the wealth to be accumulated into one entity. The last goal obviously is in conflict with the aim of ensuring the survival of a family business. The Sharia inheritance law, for instance, binds all family business owners. One of the countries where this law is operational is Saudi Arabia. The law allows for only a third of the net estate of the owner to be bequeathed to the business. Such a provision continues to have far-reaching implications on succession planning for family-run businesses in Saudi Arabia.

Indeed, family businesses continue to fascinate entrepreneurial researchers because they thrive in an environment where two ecosystems with conflicting characteristics (family and business) have to exist in a state of mutual dependence. Nevertheless, there are certain crucial dimensions that contribute to cohesiveness in both the business and the family. Some of these dimensions include succession planning, recruitment of non-family professionals, rewards and remuneration planning, ownership structure, retirement planning, conflict resolution, and family vision. According to research evidence, these dimensions tend to be strained whenever the environment within which they operate comes under pressure. With regard to succession, pressure sets in whenever the family decides that time has come for the next generation to take over all business management roles.

Today, interest in corporate governance continues to grow even among family-run businesses. This interest has influenced many family enterprise owners to hire non-family members to top management positions. The objective is normally to increase the level of professionalism, thereby increasing its competitiveness at both the local and international level. Aspects of corporate governance are important even for those family-run businesses that have already managed to carry out a transition from one generation to another. This is because even among these enterprises, major differences tend to exist in terms of the quality of leadership across generations, family unity, response to various environmental forces, and overall business performance.

A unified command within the family contributes to a better response to environmental changes (Sharma, 2003; Ward, 1987). For instance, when economic liberalization started influencing many economies around the world during the early 1990s, family unity was a major factor in determining the extent to which family-run enterprises responded to the new business environment (Sharma 2003). The orientation nurtured within family settings turned out to be a critical factor in nurturing competitive orientation in all the activities of the business.

A major advantage of mutual family-business dependence approach is that it leads to the establishment of a balance business portfolio. In such a scenario, it is normally easy for a provision to be made for various trusteeship roles as far as the business is concerned. Once trusteeship roles are clearly defined, this creates a strong building block on which future generations can perpetuate and oversee further business growth.

Some families adopt a conservative approach while others choose to be very aggressive in efforts to oversee continuity in their businesses. However, conflicts arise whenever younger generations choose to venture into areas that do not traditionally fall within the realms of the family’s interests. For instance, a family that has for decades specialized in real estate may encounter dissenting views from younger family members, who may seek to invest in rapidly growing businesses such as financial services, information technology, and food processing. Moreover, the older generation may not be willing to provide the degree of autonomy and freedom being demanded by the younger family members in their entrepreneurial pursuits.

One of the reasons offered for the existence of challenges relating to succession planning in family businesses is the lack of entrepreneurial qualities among some family members. The argument made here is that the entrepreneurial qualities possessed by the founding family members may not necessarily exist in subsequent generations. However, this notion has been rejected in the face of evidence of willingness by younger family members to achieve entrepreneurial prowess. The social environment in which these family members grow up exposes them to numerous entrepreneurial tendencies. However, in many cultures, the founding members restrict the younger entrepreneurs from experimenting too much and risking the family wealth.

In many countries, one of the most challenging things for the founding family member to do is to let go and hand over the overall management of the business (Carlock, 2001). In most cases, the founder continues to play a crucial decision-making role in the family business throughout his life. This poses numerous problems for the successor, who finds it impossible to take full charge of the firm’s operations because of the sheer presence of the founder. Most founders refuse to let go of the management tasks because they are simply not sure whether to trust the successor or not (Chrisman, 1998).

This background analysis of the issue of succession planning in family-run businesses puts into perspective various crucial issues. The main ones include family-business conflict, differences in cultural influences on succession planning, and the role of entrepreneurial qualities of younger family members. In most contemporary societies, the values and goals of the family institution tend to be in conflict with those of the business institution. Achieving a balanced portfolio in a family business is a difficult undertaking, and this may explain why most of these businesses fail to survive beyond the second generation.

Research aims and objectives

The aims and objectives of this paper include:

  1. To compare succession planning strategies adopted by family businesses in different parts of the world.
  2. To determine whether the succession-related decisions favor male heirs thereby leading to sexism
  3. To explore various cultural factors influencing the preference for male heirs in the succession planning process in different parts of the world.
  4. To investigate the future prospects of various approaches that family-run businesses use to undertake succession planning in the context of today’s globalized world.
  5. To examine whether there is an internationally accepted succession planning approach for use by family-run businesses in managing transition from one generation of male or female owners to the other.

Research hypothesis

This paper hypothesizes that challenges relating to succession planning constitute the biggest challenge for founders of family-run businesses in the contemporary world. moreover, cultural factors are the main hindrance to the process of managing intergenerational succession in family owned businesses. For this hindrance to be overcome, family members need to work in collaboration with all stakeholders during the succession planning process.

Statement of the problem

A major problem that the present paper sets out to address is the challenges relating to succession planning as one generation of family owners transfer the ownership to a new generation. The seriousness of this problem has been expressed by the researchers who estimate that only thirty percent of family-run businesses in the world survive past the second generation (Miller, 2003; Tatoglu, 2008; Dahlan & Klieb, 2011). However, there is a lack of enthusiasm among researchers to identify strategies for use by family-run businesses in cross-cultural contexts to ensure continued success even after transitioning to younger generations (Dahlan & Klieb, 2011).

The lack of enthusiasm in research intergenerational succession on family-run business is also evident in the small matter of defining the term “family business”. The main aspects discussed in the definitions of these concepts include control by family members, sustainability across generations, majority shareholding by family members, and domination of the daily management team by family members. Many definitions provide a combination of these characteristics.

In many cases, an enterprise is considered a family business when one of the following conditions is met. The first condition is that a single family owns fifty percent of the company’s voting shares; the second one is that the firm is effectively being controlled by a single family group; the third condition is that a sizeable proportion of the senior management in the firm hails from the same family (Smyrnios & Romano, 1994). In all these definitions, it is evident that the existence of a business entity leads to an interaction between two institutions, family and business (Davis, 1983).

Another problem, according to Sharma (2003), is that a significant overlaps exists between the activities relating to the succession process and those relating to succession planning. With succession planning, there is always an expectation that the succession process will proceed without major hitches and disagreements between family members. However, there are disagreements on the ideal preparation period, although it is generally assumed to range between five and ten years (Sonfield & Lussier, 2004). This period may even be longer depending on the period it takes for the family to groom the potential successor for the future job as the head of the business.

Evidence from studies show that in most cases, succession planning is not carried out in due time (Sharma, 2003; Bjuggren & Sund, 2001; Dutta, 1997). Lateness in undertaking succession planning increases the risk of failure in business transfers. Such failure leads to loss of jobs, crucial business assets, and business opportunities. It is not clear which factors contribute to delays in the start of succession planning.

The ways in which succession planning is carried out in different parts of the world also need to be examined. Such an investigation is critical in creating a better understanding of the different social, cultural, economic, and political circumstances within which family-business owners have implement succession plans. However, some problems may be assumed to prevail among all owner-managers of family businesses. For example, the owner may lack awareness of the importance of undertaking succession preparations at the right time. Some owners may hold the mistaken view that succession planning is not necessary for their businesses.

Moreover, it is not clear which factors continue to be given the most emphasis in entrepreneurial research as far as succession planning in family-run businesses are concerned. To examine issue, it is necessary to examine how succession processes have been carried out in different parts of the world. In these successions, it is imperative for the size of the firm to be put into perspective. The presupposition here is that as a firm grows in size and operational complexity, it becomes more challenging for the current owner-manager to hand over the running of business activities to a new family member.

The issue of preference for male heirs in the succession planning process has also raised heated debate among entrepreneurial researchers (Barrett & Moores, 2009).  According to Barrett & Moores (2009), successful chief executive officers of family businesses go through four major stages while they are on the learning journey to corporate leadership. The first stage requires them to simply “learn business” while the second stage entails “learning ‘our’ business”. In the third stage, they “learn to lead ‘our’ business” while in the fourth stage, they “learn to let go of ‘our’ business” (Barrett & Moores, 2009). Barrett & Moores (2009) observed that in each of the stages, a difficult paradox had to be encountered. The paradox could only be managed but could not be made to disappear. The most crucial thing in the study, however, was that the chief executives of the family businesses were in most cases male.

In the US, family-owned businesses have been growth in terms of both jobs and revenue. Women have been observed to be in a leadership in this growth. This evidence was provided by the American Business Survey of 2007; this survey indicated that more women continue to assume leadership positions in family businesses than in non-family companies (Duh, 2010). In this survey nearly a third of all family start-up business owner indicated that the businesses may have a female successor in the future (Duh, 2010). The impression created is that although family businesses in the US continue to be male-dominated, there are more female leaders of these businesses than ever before.

In other regions of the world, the problem of male domination as far as succession in family-run businesses has triggered a major debate. The debate is ongoing with focus being on comparisons of different regions of the world. For instance, Curimbaba (2002) highlights the issue of female heirs in the Brazilian Southeast region, particularly their professional experiences.

According to Harveston & Davis (1997), the issue of “owner gender” should be accorded a lot of attention in debates on succession planning in family-run businesses. However, Harveston & Davis (1997) do not address the issue of preference for male heirs; rather they examine differences between male- and female- managed businesses during succession planning processes. The central problem that the present paper sets out to address is that preference for male heirs in the succession planning process.

Chapter 2 literature review


In this section, focus is on various aspects of succession planning. The succession planning processes of family-run businesses in different regions of regions of the world are explored. The objective is to identify the main practices, cultural influences, and other factors that influence the choice of male and female heirs as successors in family-run businesses.

Overview of succession planning in family-run businesses

            Many challenges continue to be faced in the management of succession planning in family-run businesses. Some of the main challenges include work-life balance, rivalry between employees and owners, and conflict between family members regarding the succession process. In many cases, these challenges have contributed to the demise of family-run businesses.

Some issues require highlighting in order to guide the process of analyzing various aspects of succession planning in the present paper. The main issues include succession as a long-winding process, the role played by the founder, perspectives of the next generation, analysis from different perspectives, and features of effective successions.

Main challenges faced during succession planning

The succession of various members of senior positions marks a critical point in all organizations. One of the reasons why firms cease to exist is problems relating to management succession. When incompetent managers are appointed to senior positions in a business organization, it is almost certain that the business enterprise will not survive. In the context of family-run businesses, it may be even more challenging to ensure that the succession process is successful. This is a long process in which all the stakeholders of the business should be involved.

The succession process cannot succeed without proper planning. During the planning it is common for family-business conflicts to occur (Sharma, 2003). Sometimes, the succession decisions being made are normally based on the needs of the family and not the requirements of the business requirements. The incompatibility causes serious problems, and business processes are affected in this process. Moreover, the choice of successor is likely to be based on the values of the family and not the capabilities of the chosen successor (Aronoff & Ward, 1992).

Whether the personal selected as a successor is a male or a female family member, the inherited control tends to be questionable in case the family-run business is publicly traded. Misalignment normally exists as far as the interests of the family and those of other shareholders area concerned, leading to the emergence of serious problems (Jaffe & Lane, 2004). The founding family may lack trust in the leadership of outsiders, whom they may think lack the capability to maintain the values and objectives of the family. Yet the professional managers are normally the best-placed people as far as fostering the growth needed by external capital is concerned (Bocatto, 2011). On the other hand, the outside public may not trust the family’s values and objectives, making them to be cautious of investing in the company’s stocks.

According to Pérez-González (2001), family heirs hurt the performance of firms. Pérez-González (2001) adds that businesses with inherited control tend to go through major declines in terms of return on assets, a problem that is not encountered by unrelated chief executive officers. In Pérez-González’s (2001) view, the main reason why family ties hurt business performance is that they limit the scope of competition within the labor market.

The role of founder in succession planning

Many scholars argue that the responsibility for making a provision for succession lies with the founder or owner of the family business (Handler, 1994; Gallo, 2004). According to Handler (1994), family firms normally represent an overlap between of various systems. The role-set of the founder or the members of the next generation may be conceptualized as a subset of the overlap. In this role-set, a stable collective pattern may be thought to exist in which different people play their respective parts (Handler, 1994).

Curimbaba (2002) presents a framework describing the process through the level of influence of the business founder keeps changing. According to Curimbaba, an adjustment process takes place, whereby the founder and next-generation family members undertake mutual roles. In this regard, succession is seen as a multiple-stage process in which the founder plays a central role. Curimbaba (2002) argues that at any given time during the lifespan of the business, the founder is either increasing his involvement or decreasing it. Central to this progression is issues transferring decision-making power, authority, leadership experience, and equity.

At first, the founder-owner gradually transitions from being a sole proprietor to being a monarch. As a sole proprietor, he is typically the main decision maker and the sole member of his family working in the organization. As a monarch, the founder-owner starts having preeminent power over other members of the organization. The next phase takes him to the position of an overseer-delegator. Finally, the founder becomes a consultant who has more or less become retired or disengaged from the organization (Curimbaba, 2002; Watts, 2004).

At the same time, the family members belonging to the next-generation concurrently go through an entirely different process, whose phases contribute to the completion of the role-set. They move from people with “no role” to members with undefined roles. They then move to being helpers and later on managers. Finally, they become the chief decision makers and organizational leaders (Curimbaba, 2002).

The main problem with many family-run businesses is that the founder never accepts to move beyond the stage of the monarchy; he insists on remaining at the helm of the organization. Corresponding changes in the role-set occur with regard to the next-generation family member, who never graduates from being a helper. The implication here is that it is upon the founder to authorize the progression of the heir. Many theorists have focused on the characteristics of founder-owners (Pérez-González, 2001; Harveston & Davis, 1997; Vera, 2005; Hornidge, 2004). On the basis of this focus, most of the characteristics have tended to be founded in the need for power and achievement. Other issues highlighted include internal locus, a sense of indispensability, and the desire for immortality.

The issue of founder resistance has been widely explored in terms of its influence in determining who becomes the successor of the family-run business (Osheron, 1980; Levinson, 1971; Vaillant, 1977). In many studies addressing founder resistance it is argued that most of the problems relating to the succession process operate at the individual level (Osheron, 1980; Levinson, 1971). In this case, the individual is the founder of the business. Such scholars adopt the psychosocial perspective, in which case they cover many individual-level factors such as emotional, personal, and developmental characteristics of the founder-entrepreneur (Osheron, 1980; Levinson, 1971).

From this perspective, the psychosocial researchers point out that the owner’s psychological characteristics contribute greatly to succession problems (Osheron, 1980; Levinson, 1971). Moreover, social factors contribute significantly to the development of the founder as an adult as well as his behavior as an organizational leader. There is also a suggestion that the succession problems encountered are closely tied to various psychological issues that initially motivated the founder-owner to start the business. In this case, similarities are identified between succession problems and the childhood experiences and backgrounds of the founders. This is evident in stories about “the great escape from abject poverty”, “parents that ran away”, and “the sudden death of the guardian” (Kets de Vries, 19985). Such memories create a “romantic family link”, such that the business becomes a crucial link between the present circumstances and conflicts of identity that occurred during childhood (Kets de Vries, 19985). To address the problem of resistance among founders, it is necessary to begin by appreciating their personal and family-related experiences and how they influence their present circumstances.

Family-run business successions in Western countries: The case of Portugal.

Family-run businesses in Europe generally adopt the Western culture of succession from the founder to the next-generation family members. The predominantly Christian culture in countries such as the UK, Italy, France, Sweden, and Portugal has a tremendous influence on the succession planning processes of many family-owned businesses (FOBs). Most previous studies on the succession planning processes of family-run businesses in Europe has focused on three main issues: structural forms before, during and after succession; interconnectedness of business and family issues; and the succession process. The planning process is viewed as one that encompasses planning, selection of an heir, founder resistance, and preparation of the heir (Handler & Kram, 1998).

In Western countries, it is normal for an entrepreneur to view a business as personal properly. Such an entrepreneur may remain ambivalent about the issue of business participation or takeover by members of his family despite the fact that the business may conventionally be considered a “family business” (Walter, 2003). In such situations, many researchers appear interested in simply helping the independent entrepreneurs to undertake psychological adjustments when passing on the family enterprise to the next generation (Walter, 2003).

In Portugal, there is a tendency for many businesses to have one of family orientation or the other. This family orientation is largely a reflection of the existence of more complex forms of large, family-run businesses across the country. Nevertheless, a formal process of succession planning seems to occur in Portugal (Poutziouris, 2000b). The succession process begins with resistance to succession. The resistance arises because the founder tends to have a strong psychological bond with the organization.

Once the founder has overcome the resistance, he embarks on the planning process. This is followed by the selection of the heir. Cognitive biases tend to have a strong influence on whether the person selected will be a male or female relative (Howorth & Ali, 2001). Even in the context Portuguese family-run businesses, there is no homogeneity in the process of selecting heirs. The cultural homogeneity of the country does not corresponding to homogeneity in considerations for the choice of successors. The factors considered range from tradition and family objectives to pure emotions and rational business criteria.

As one would expect, Portuguese family-run businesses tend to portray a high degree of interaction between the business and family members (Howorth & Ali, 2001). Therefore, it becomes common for family problems to “interfere” in the business; it is also common for one to come across a family that “lives the business” (Howorth & Ali, 2001). This is a demonstration of inseparability between family and business. This inseparability is also portrayed by the fact that in many Portuguese family-owned businesses, long-standing employees are accorded the treatment of honorary family members. It is surprising that although a complex scenario of interweaving of business and family appears to exist in many Portuguese family-run firms, there is little evidence of family-business conflict. This is perhaps because of the existence of a paternalistic culture.

Regarding the choice of male and female heirs, some Portuguese firms have a tradition that allows only sons to succeed the founder of the business (Lansberg, 1999). Evidently, literature on Portuguese family-run firms shows evidence of sexism. Male founders appear to be conspiring with male heirs to lock female family members out of the succession race. This has been a cultural practice, which may not change in the foreseeable future. Moreover, whereas Anglo-American literature mentions the issue of father-son rivalry, Portuguese literature highlights the issue of cooperation between the father-founder and the son-heir (Lansberg, 1999).

Family-run businesses in Asia

Traditionally, most Asian societies have held the view that the paths to succession in family businesses are defined majorly along the lines of male heirs. The main reason for sidelining female heirs was that once they became married, they would no longer have a role to play in their own families any more. Daughters and wives participated mainly at the periphery of the family business, and they mostly undertook informal activities (Long, 2004).

However, according to Daphne (2008), all this seems to be changing; with the economic recovery taking place in most Asian countries, there is a broader participation of women, particularly daughters, in both the running of family businesses and facilitation of the succession process. This is a major step ahead as far as the process of empowering women is concerned, particularly given that Asia is known for its high-net-worth business families (Daphne, 2008).

According to Daphne (2008), the most drastic changes in the succession traditions in Asian family businesses have occurred during the past twenty years. Globalization has also contributed to the trend towards changes in the way the succession process in family businesses is carried out. Just like in other parts of the world, a major issue for the founders has been on how to look for the most effect methods of inducting the next generation into the work of managing the family business empires and estates (Long, 2004).

Today, most Asian economies are dominated by family businesses. With the advent of globalization, most of these businesses have started spreading their spheres of their influence to other regions of the world. As they continue to do so, new challenges emerge, such that the managers have to keep reconciling business dynamics with family values and objectives. Such problems, however, are not unique to Asian families; they are faced by family-run businesses in all parts of the world.

However, one of the most document issues relating to family-businesses in Asia is succession. This is because the content has a poor record of succession planning in family businesses. This record has traditionally been so poor that there is an old Chinese saying that says that “family wealth will never pass through the third generation” (Daphne, 2008). Empirical evidence indicates that successions in family businesses in Asia are typically short-lived and value-destroying (Carlock, 2007).

Another major problem is founder resistance. In a study of publicly listed business organizations in Taiwan, Singapore, Hong Kong, and Japan, Daphne (2008) found out that the average age of the founder at the time of transition to heir between 1996 and 2006 was 79 years. This is an indication of a tendency among patriarchs to put off the process of succession planning until they are very old. This tendency may be attributed largely to the value-destroying nature of Asian successions, particularly in Taiwan and Hong Kong (Fan, 2006).

These problems present a clear picture of the type of challenges women will continue to face as they seek to transform the family business scene in today’s era of globalization. In most cases, these women belong to the Western-education category of second and third generations. The general situation is one whereby there is a need to put into perspective the cultural and historical positioning of each family business before deciding on the best succession process. Fan (2006) notes that with this information in mind, the business owners can understand the necessary changes that they need to put in place to facilitate a successful transition.

Regarding father-daughter succession, studies indicate that there is a rapid rise in female entrepreneurship, particularly in Asia (OECD, 2000). It is anticipated that in the near future, the number of women inheriting their parents’ business empires will increase dramatically (OECD, 2000). The same case applies to aspects of ownership of businesses by women. Moreover, there is evidence to show that more women are rising along the ranks of family-run enterprises (OECD, 2000).

The increase in the number of women becoming heirs in family-run businesses may be attributed to the fact that alternative businesses structures have become more readily acceptable in Asia. It is becoming increasingly acceptable for women to pursue the goal of economic self-sufficiency. Traditionally, the position of CEO in Asian businesses was the reserve of fathers and other male members of the family. However, in the contemporary context, mothers and daughters are increasingly being viewed as being capable of handling the challenges that come with this position.  Moreover, in some instances, sons tend to be impatient with the long process of taking over the family firm. In contrast, most daughters tend to enjoy the sense of shared responsibility as well as working alongside their fathers (Messervey, 1998).

However, the challenges facing women as they go through the succession process tends to be characterized by numerous challenges. For instance, some fellow female members of the family develop an attitude of jealousy and resentment in the process (Messervey, 1998). Moreover, women are conventionally expected to put in extra efforts to prove their ability to handle challenging business responsibilities (Messervey, 1998).

Furthermore, when a decision is made for a non-traditional succession strategy to be adopted, for example one that involves a women becoming a successor, those who feel that they deserved to succeed the founder become upset (Danco, 1982). In some cases, the issue of deviating from tradition is raised by the male members who would have benefitted from the succession process as a way of justifying their position that the succession decision was inappropriate.

The extent to which succession by women will become culturally acceptable depends a great deal on how the women prove that they are capable of steering the family business towards the path of success. With continued management success by female successors, the number of family-run business being led by women will continue to increase. This may eventually make succession by female family members a culturally acceptable practice (Sherman, 2002).

An imperative question at this point relates to the various aspects that make a woman fit to take over her family’s business. Some of the most critical factors such as education and experience are crucial. However, according to Sherman (2002), women are better positioned to run things within the contemporary business climate. Sherman (2002) based his view on research findings showing that women conventionally perform better than or in the same way as men with regard to leadership qualities. The research findings also indicate that women are more skilled in aspects of communication and collaborations (Sherman, 2002). As a company reaches the maturity stages, these abilities become increasingly useful.

Nevertheless, any efforts to bring about parity between genders in issues of succession planning have been viewed as an affront to the traditional authority of the husband in the Asian family-run business. This is evident in the way a large number of daughters continue to rise through numerous family businesses that contribute significantly to local economies in Asia (Kim & Cavusgil, 2004). In this case, the way gender roles have traditionally been defined continues to change. At the same time, a new set of expectations has been emerging to replace the traditional conceptions. These expectations represent a society in which there is more flexibility regarding attitudes to the role of daughters in the management of the family’s business empire. The break with the tradition in Asia is evident in the fact that a broader group of members of the family, including younger siblings and daughters, continue to be considered whenever a new overseer for the family business is being chosen.

According to Long (2004), a major problem is that the roles and responsibility of female heirs tend not to be properly defined. Despite this shortcoming, which to a certain extent also happens to affect male heirs, empirical evidence indicates that women derive numerous benefits from work experience gained from outside the context of the family business (Long, 2004). This experience gives the women some credibility, which contributes to the avoidance of rivalry with other members of the family.

Traditionally, issues of father-son succession in big family-run businesses in Asia have intrigued outsiders. However, in recent years, many daughters have been climbing the corporate ladder in the context of many lesser-known family-controlled businesses. Such women have had to encounter problems such as gender bias and gender stereotypes (Daphne, 2008). Despite these challenges, two major factors have contributed to the improvement in the position of female heirs in the Asian family-business context; namely increased opportunities for higher education and the emergence of a younger generation of father-founders who accept women within their workforce (Mollman, 2005).

Role of mothers and daughters during succession: The case of China’s family businesses

The recent increase in the international economic strength of China may be viewed as a recent phenomenon that continues to unfold in different parts of the world. However, many people may not know that this success is strongly founded on the values of the family business, which has been at the heart of the country’s commerce for centuries. Today, the family business appears to have reemerged to influence the destiny of an economy that is positioned to take the position of leadership in the present new global century (Davis & Kirby, 2010).

In this Chinese family business, mothers and daughters have not been left behind. They continue to play a critical role during the succession process of the country’s family-run businesses enterprises. One of the best ways of understanding this role is looking at the influence of Confucianism in the Chinese society. Confucianism is a Chinese philosophy that provides guidelines for acceptable behavior in society. Chinese families make use of sayings, stories, and special terms to entrench Confucian ideals in society. As a result, Confucianism continues to imprint an indelible mark in the Chinese society, and this is evident in issues of succession in Chinese family-led businesses.

In this ideology, aspects of filial piety, honesty, loyalty, and sincerity are addressed (Yan & Sorenson, 2006). It also emphasizes on a reciprocal relationship between superiors and their subordinates. Moreover, paternalism is a very common phenomenon. There is preference for values relating to trust and personal friendships as opposed to formal contractual relationships. Networking is considered an excellent opportunity for family business leaders to enter into alliances and ventures.

According to Yan & Sorenson (2006), Confucianism addresses four dimensions of founder resistance, namely individual, family, environmental, and organizational dimensions. The ideology recognizes the family as the basic social unit. In this regard, a collectivist society is rooted for in Confucianism. The family is regarded as more important than any single individual. The will of the individual is subordinated whenever it is viewed against that of the family group. Moreover, a child is not just viewed as an individual; rather he is a member of a specific family. From a tender age, children are taught about the importance of restraining their individualism with the aim of maintaining harmony within the family.

Confucianism also puts a lot of emphasis on the relationship between the parent and the child. This relationship is considered reciprocal in nature. Children have to be submissive to their parents. On the other hand, parents have to treat all their children with care and kindness. Additionally, the child is required to maintain deep respect to all other senior family members. Similarly, young children have to show a lot of respect to older siblings. This behavior is supposed to be maintained throughout one’s life.

As far as social relationships outside the family are concerned, Confucianism identifies two crucial domains. One of them is the relationship between the ruler and the person being ruled. The other is the relationship between friends. In the first domain, a hierarchical relationship has to be maintained, whereby the ruled must be submissive to the ruler.

Regarding family properly inheritance, Confucianism teaches that younger and older brothers are not equal in terms of their relationship. However, as far as their rights to family property are concerned, the principle of equality must be observed at all times. To uphold this principle, the co-parcenary principle is followed; this principle requires equal sharing of ownership by all sons in the family (Yan & Sorenson, 2006).

The rationale for equal property distribution is that since all family members undertake all types of work together, every son is entitled to an equal share of the rewards. There is a traditional assumption that at one time or the other, daughters will get married and become entitled to a share of their husbands’ inheritance (Yan & Sorenson, 2006). When families share property and remain together, they form a large clan (Walter, 2003).  The resulting extended family forms one of the most crucial preconditions for the formation of complex family-run businesses, some even with overseas interests (Walter, 2003).

However, the Confucian philosophy in some instances perpetuates sexism. For instance, it states that the greatest chances of success can be achieved by choosing the oldest son to become the successor (Wang, 2008). According to Wang (2008), this assertion in some ways sidelines women. For instance, in cases where the first-born is a woman and the second born is a man, the founder may choose the second-born as the successor of the family business. However, there is scanty literature on the precise ways in which Confucianism continues to determine whether the successor will be a male or female member of the family.

However, there is abundant literature on the issue of centralization of power through family ownership and control. This is an enduring feature of Chinese family-run businesses, which strongly influences the choice of successor. This creates a phenomenon that Wong (1988) refers to as “entrepreneurial familiarism”, whereby there is minimal reliance on outsiders for strategic, technical, and managerial skills. Family members dominate issues relating to management and decision-making. Professional managers are relied on only in crucial issues such as apportioning and allocation of resources (Wong, 1988).

There is also abundant literature on the collectivist nature of the Chinese society, which stands in sharp contrast to individualist Western societies. In China, the primary social group is the extended family while in the US it is the nuclear family. It is not surprising, therefore, that whenever a Western entrepreneur loses control of his business, he fears that he will also lose financial security (Walter, 2003; Mickelson & Worley, 2003). The extended family members in a typical Chinese settings may include uncles, aunts, grandfather, grandfather, in-laws, and in some cases even close family friends. The Chinese Confucian value of taking care of older parents is adhered to by all members of the society. This drastically reduces the fear among older parents that they are going to lose financial support once they hand over the control of family-run businesses. In the individualistic Western society, the basic family unit comprises exclusively of the father, mother, and children.

Lansberg (1999) points out that in the individualistic society, the identity is attributed to the individual while in the collectivist Chinese society it is attributed to the family or clan figure. Even when Chinese youngsters are allowed to control a family business, they are expected to demonstrate their fathers, if only as a demonstration of respect (Mickelson & Worley, 2003). According to Messervey (1998), the impression created is that in the Chinese society, women who get the opportunity to take the position of successor have a greater chance of success because they represent the identity of the extended family. This is in contrast to women who head family business in an individualistic society such as the US, where they have to nurture their own unique identities as individuals. However, this issue has not been explored in detail in literature. Few researchers have examined the influence of the nuclear-family identity in helping female successors achieve success in family-run businesses (Fan, 2006).

Succession planning in Latin America

Women successors in Brazil’s family-run businesses

In Brazil, family-run businesses do not play as important a role as in most Asian countries such as India, China and Indonesia (Halkias, 2001; Ramachandran, 2010; Khanna, 1997). However, this is not to say that family-run businesses (FRBs) have no dominant position in the country’s corporate scene; on the contrary the exact opposite is true. In fact, according to Villares (2010), this domination is seen by some as a threat to Brazil’s promise as one of the world’s fastest growing economies. This threat is seen to take the form of the weak corporate governance that comes with FRBs. Without a proper corporate governance structure, many FRBs struggle to attract investment, particularly from foreign sources.

According to Morris (1997), there are fundamental differences between those businesses that are owned and managed by a family on the one hand and those that are not controlled by a family on the other. These differences manifest themselves in aspects of time horizons relating to management, implications of failure of the business, and degree of employees’ job security (Morris, 1997). Other differences relate to accountability for the process of making decisions, and the impact of the family values on business values (Morris, 1997).  Morris (1997) argues that the succession planning process is the most significant aspect of all these differences. In other words, the way executive succession occurs determines how all the aforementioned differences will play out (Morris, 1997).  This is particularly the case with regard to unique aspects of intergenerational succession in the context of family-owned businesses.

According to Villares (2010), FRBs in Brazil are associated with the so-called by-gone behavior that has in many ways stymied economic progress. In Villares’ (2010) view, some of the things that family-owned businesses have to put into consideration to improve corporate governance include minority rights, and the role of the board of directors in decision-making. In a 2012 study, Edileusa Godói-de-Sousa (2012) found out that international investors have in recent times been demanding a premium of twenty three percent for investment in stocks in Brazil because of corporate governance issues.

Halkias (2001) observes that in Brazil, succession in the context of family business is widely regarded as a “male issue”.  Additionally, very few studies have been carried out to address the needs of women during the succession process (Halkias, 2001). Another important observation is that the tendency to exclude Brazilian women from the succession planning process may have an underlying regional dimension (Villares, 2010). According to Villares (2010), many Brazilians, particularly those of Italian origin, have a tendency of denying their daughters the opportunity to be elevated to the position of business partners in their businesses. This translates into low visibility for women throughout the succession planning process. Moreover, Brazilian women are in most cases prevented from land inheritance. In some situations, all they are allowed to have is some compensation, in most cases financial, which is not equivalent in value with the compensation received by their male counterparts.

According to Curimbaba (2002) not much is known about Brazilian daughters as successors. However, in an attempt to scratch the surface as far as this aspect of Brazilian succession planning literature is concerned, Curimbaba (2002) suggests three categories of female successors in Brazilian business organizations; namely the “anchors”, “the invisibles”, and “the professionals”. The “anchor” females are those from families where there is a predominant number of female members who play an essential part in ensuring business continuity. Some form of adequate preparation is required; this gives them a sense of autonomy and responsibility. The “invisible” women, on the other hand, come from families where male descendants predominate, who are not prepared for succession. For this reason, the male descendants enter and leave the company at will, and they do not demonstrate great commitment to the company’s objective. The “professionals” interact in a professional manner; they differentiate between business and family and are constantly seeking merit and competence (Curimbaba, 2002).

Despite the challenges that female successors face, they tend to count on one thing: their relationship with the father-founder, which is normally founded on mutual respect (Villares, 2010). Such relationships play a crucial role in streamlining the process of succession from a male founder to a female-daughter heir. However, father-owners also need to pay attention to the daughters’ managerial potential to avoid putting the company in incapable hands (Villares, 2010).

Father-daughter succession Colombia

It is imperative for the situation in Brazil to be compared with that of Colombia, which is also a Latin American country. Just like Brazil, Colombia is a collectivist society. Extended families come together to own businesses and to decide a successor when the time comes for the founder to retire. To ensure the continued survival of their business empires, the family members participate in various social activities, politics, and business contracts. This is supported by the Colombian culture, which is founded on a cultural and economic hierarchy of sorts.

According to  Gomez-Betancourt (2007), the succession mechanism in Colombia is determined by four main factors: security, experience, property distribution, and culture. Security is the only unique factor compared to other countries discussed in this literature review. This is because in recent years Colombia has been experiencing a huge wave of violence, kidnapping, and terrorism. The concern for safety by the founder is normally a major deciding factor to use intergenerational succession, sell the business, or hire a professional management team. On the bigger picture, however, the typical female successor in Colombia must have worked hard “to make things happen”, thereby winning herself a position as a successor (Gomez-Betancourt (2007).  Whenever a daughter insists on being given an opportunity to head a family company, it is generally upon the father-founder to give in to these demands as well as the managerial capabilities of the daughter are proven. This is enough proof that gender parity in succession issues in Colombia is as big a problem as in Brazil (Villares, 2010).


Several conclusions may be drawn from this literature review. It is evident that succession in family-run businesses is a long-winding process. Some of the main issues arising in literature on this subject include the role of the founder in succession planning and the succession process, next-generation perspectives and features of effective successions. Some of the challenges arising during the succession planning process include conflict between family and business values, work-life balance, rivalry between employees and owners, and conflict between family members regarding the succession process.

The founder plays a critical role during the succession planning process. However, the problem of founder resistance poses a major challenge in virtually all succession planning processes around the world. This is largely because the founder tends to have strong psychosocial and personal links with the business, and he fears that it may be severed upon handing over of management processes to a successor.

In Western countries, a formal succession planning process seems to be relied on, though there is scanty literature to expound on this phenomenon. In other regions, this seems not to be the case. A high level family-business interaction exists universally in all family-owned businesses. Moreover, sexism exists in all parts of the world through preference for male heirs. The only major differences include the way it is perpetuated during succession planning, the extent of male-heir preference, and what is being done to address this problem.

In Brazil and Colombia, male founders tend to conspires with male heirs to lock out female heirs. In the West, founder resistance is a serious problem although there is an elaborate process for preparing heirs for succession. Today, FRBs are a threat to Brazil’s economy. This is because although they dominate the economy, they lack proper corporate governance. However, like in Asia, women, continue to play an increasingly crucial role in the country’s family-run businesses. This may be attributed to the existence of good relationships between them and their father-founders. In recent times, FRBs have been slowing down in terms of influence. Moreover, they continue to be a largely male affair; there is a low visibility for women throughout the succession planning process. Across the border in Colombia, most literature focuses on factors determining the choice of succession mechanism. The main factors highlighted include security, experience, property distribution, and culture.

In China, the record of succession is extremely poor, and wives and daughters have traditionally been at kept at the periphery of succession. However, in recent times, women are increasingly becoming the preferred heirs because of their patience, mutual respect with father-founders, and collaboration abilities. Paternalism is also a major feature of family-run businesses in Asia, particularly China.

Chapter 3: Research Methodology

One of the most crucial preliminary steps in rolling out a research methodology is defining the problem that the paper sets out to address. In the present paper, the subject under investigation relates to succession planning in family-run businesses in various parts of the world. This paper differs from all the other papers written previously because it addressed aspects of preference for male heirs in the context of family-run businesses in three different regions of the world: the Western world, Asian continent, and the Latin American region.

The objective is to find out the extent to which sexism continues to be perpetuated in companies operating in each of these three regions through preference for male heirs. To achieve this objective, it is necessary for the paper to explore several issues, including different factors influencing succession planning in different countries, factors determining the choice of succession mechanism, areas where women out-power men during the succession process, and the importance of family-run businesses in various economies.

Research design

This paper made use of a qualitative research method. Three companies were selected in each of the aforementioned regions: the West, the Asian continent, and the Latin-American region. Structured internet interviews were carried out; fifteen interview questions were constructed on the basis of the issues raised in the literature review. The theme of these questions was simple; focus was on the plans that the business owner would put in place once he or she exited the scene as the overall corporate leader.

Three companies were purposively selected from each of the three regions. These fifteen interview questions were used as a guide for interviewing founders of these three companies. Asia was represented by an Indian-based company called Madvani and Madvani Group. This FRB was founded by two brothers; namely Calo and Joqimu. Calo was selected as the interviewee for purposes of the present research. In the West, the company selected is called  MaxiLeti Inc. a Portugal-based family-run business. The business was founded by two brothers who had 14 children between them. One of the brothers is deceased, and the company is in the hands of second generation of owners. These owners comprise of nine cousins, all of them male, whose ages range between 53 and 60 years. This has created a complex web of ownership ties. The interviewee selected was one of the nine cousins named Guti. In Brazil, the name of the FRB selected is called Rema group. the interviewee’s name was Mata, the elder of the two brothers who founded the highly successful electrical-sector company.

The conventional instant messaging system was used to interview each of the three business founders. This system automatically records all the messages sent, such that they can be readily retrieved later on, transcribed, and analyzed. In the data analysis chapter, the interview responses are recorded and analyzed. This forms the basis for the chapter on interpretation of findings. A discussion of these findings is presented in light of the research questions presented in the first chapter and conclusions made.

Justification for qualitative research method

One of the main benefits of the qualitative research method is that it provides an in-depth picture as opposed to variable-based correlations, which constitute a major component of quantitative studies (Bird, 2002; Silverman, 2001).  However, in the qualitative method, the sensitivity of the participants is sometimes an area of concern (Elsbach & Bechky, 2009). For instance, in qualitative interviews, the interviewers sometimes have to use follow-up questions to address issues that may not have been clearly articulated. Such follow-up questions normally play a crucial role of ensuring that the interviewees understand the issues being addressed.

The qualitative method is also preferred by researchers because of the way in which it addresses aspects of objectivity. In most cases, different interviewees tend to harbor different perceptions relating to the issue under study (Connaway & Powell, 2010; Wilkinson & Birmingham, 2003). For instance, some founders of family-run businesses have deeply-held perceptions of male chauvinism. With this understanding, it is easy to preempt the responses that they will give regarding the issue of preference for male successors in FRBs. Such preemption puts the researchers in a position where he is prepared to pose the appropriate follow-up question.

The qualitative methodology also enables the researcher to get a clear picture of the responses that interviewees provide (Neergaard, 2007). The researcher is then able to quantify these trends for use in making conclusions. Without the use of the qualitative methodology, the task of deriving trends in respondents’ arguments would be difficult, thereby making it impossible for the objective conclusions to be reached.

Moreover, in a study such as the present one, the issues being addressed are of a form that makes it difficult for quantification to be done. For instance, as Neergaard (2007) points out, it is extremely difficult to examine the issue of sexism as manifested in the succession planning processes undertaken in various parts of the world using the quantitative approach. In contrast, the qualitative method, particularly the structured qualitative interview, provides an excellent platform for the analysis of a wide range of unquantifiable outcomes in their specific study-related and individual-specific contexts.

Justification for structured internet interviews

Structured internet interviews constitute one of the most preferred data collection methods today. We live in highly networked society that has been made possible by the emergence of internet technology. The internet has become an indispensable tool not only for social interactions and business but also for scholarly research processes. Whenever the interviewer finds it difficult to interview participants face-to-face because of time, geographical and financial constraints, the internet provides an excellent platform through which such communication is facilitated in real time.

Several advantages are achieved using structured internet interviews. One of them is that the interviewee answers question in an environment in which he has a sense of empowerment and control. The anxiety that comes with the face-to-face interview is done away with (Connaway & Powell, 2010). In situations where an instant messaging system is used, the interviewee views the interview session as just another online “social media” chat session. Connaway & Powell (2010) adds that in this form of interview, a better response rate is achieved, meaning that the findings obtained in the participant sample can be generalized to the population.

In the present paper, research costs, geographical distance, and time factors were crucial factors that made the qualitative internet interview method seem the best option. For instance, traveling to Portugal, India, and Brazil to meet with the founders of the selected family businesses would have been a very expensive undertaking. Moreover, it would have taken a long time to achieve this goal, and this would have impacted negatively on all subsequent research timelines.

In the internet interview method, the transport costs are eliminated. Instead, the participants only need to have computers and the necessary hardware and software components to facilitate online interviews. In most cases, these components are easy to access for anyone with a personal computer or laptop. For instance, in the case of instant messaging system, any interviewee with a personal computer or laptop can readily engage in a chat session with the interviewer without having to buy and install any additional hardware and software (Kaar, 2009).

At the time that has been agreed upon between the interviewer and the interviewee, the participants simply log in to the appropriate computer programs in readiness for the start of the interview (Kaar, 2009). In this environment, the interviewer tends to have a unique opportunity of asking follow-up questions at just the right time, thereby preventing the interviewee from veering away from the subject (Wilkinson & Birmingham, 2003).

Purposive sampling

The process of selecting an interviewee is one of the most crucial stages in a qualitative study. The researcher has to make a decision on which sampling method to use. One of the most commonly used methods in this respect is purposive sampling. This non-probability method contains some elements of bias. However, this bias contributes in a significant way to its efficiency. This is evident in the fact that the robustness of this method is maintained even when it is tested against methods that use aspects of probability such as random sampling (Tongco, 2010).

With the objective of the study in mind, the researcher is able to target the appropriate interviewee. For instance, in the present study, the objective is to explore the views of founders of family-run businesses regarding how they would under the succession planning process. With this in mind, two things need to be addressed; namely, proper identification of the founders and geographical considerations when purposively selecting the founders. Only three founders are needed, each of them representing three regions under study: the Western world, Latin America, and Asia. In the West, the country of choice is Portugal; in Latin America, the country of choice is Brazil; in Asia, the country selected is China.

It is unfortunate that purposive sampling, also known as judgmental sampling, is normally inadequately unexplained in most studies. Nevertheless, a good thing about this method is that no underlying theories are needed to explain it. In simple terms, it is upon the researcher to decide what should be known. On this basis, the researcher embarks on a journey of finding people who have the willingness to provide this information. In this way, the choice of this sampling method may be seen to be as important as the process of choosing the research topic itself. The underlying objective in this case is to ensure that succession behavior is understood from the perspective of the founder and not the actor’s predetermined views.

The main aspect of sampling technique relates to the choice of three family-run businesses and their respective founders. In India, the researcher selected a family business by the name Madvani and Madvani Group, which was founded by Gupta Shah. In Portugal, the family-run business is known as MaxiLeti Inc. and it was founded by Maximiliano Letioa. The third business enterprise was selected from Brazil, and its name is Rema Group. Rema Group was founded by a Brazilian named Leonardo Ranieri. All the names of the family-run businesses as well as their founders have been changed to protect the identity and privacy of the respective individuals and their family and business interests.

Chapter 4: Data analysis and Interpretation of findings
Overview of the family-run businesses

Madvani and Madvani Group (India)

The Madivani and Madivani Group was founded in 1924 by Gupta Shah. The business is now under the ownership of two  of Gupta’s sons, Calo and Joqimu. Calo’s son and first-born is called Padiro, while his daughter is called Christina, and both of them are married. Both Padiro, Christina, and their spouses have an interest in the firm, although Pedro is the only one involved in management in collaboration with  Calo and Joqimu.

MaxiLeti Inc. (Portugal)

MaxiLeti Inc. is a Portugal-based family-run business that was founded in 1965. It was also founded by two brothers. Between these two brothers, 14 children were born. In this family, the tradition was for boys to be inducted into the family business while all girls got married. Current, the family business is under the management of its second generation of owners. These owners comprise of nine cousins, all of them male, whose ages range between 53 and 60 years. Simply put, there is a complex ownership circle comprising of the nine cousins.

Shortly before his death, one of the brothers informed his six sons that they should never forget that the business belonged to them as well as to their uncle and all his sons. He warned them against becoming greedy as this would mean that they would be stealing the wealth of their own families.

Rema Group (Brazil)

The third FRB, known as Rema Group, was founded in Brazil during the 1960s. Since its establishment, the company has achieved significant growth. In fact, it is one of the leading companies in the electrical sector within the Brazilian market. Moreover, the company has already gone through a succession process in the past. In its sector of operation, which is the electrical sector, males have traditionally been the dominant group. The company specializes in telephone infrastructure. The company employs more than 1,000 people and it manufactures more than 3,000 different electrical products. The company’s production lines are spread across several Brazilian states, including Rio de Janeiro, Sao Paulo, and Parana. It also has representatives locally and in India, Africa, and the Middle East.

Rema group was founded by two brothers Breno aged ten and his elder brother Mata, aged 20. Breno insists that Mata made crucial contributions to the business in spite of his tender age. The business started in a small space measuring four meters by six meters, more or less like a small kitchen. Mata is responsible for creating the business and entrepreneurial vision while his younger brother is credited with the acquisition and proper utilization of the much-needed managerial abilities.

Preference for male heirs in the succession planning process

Madvani and Madvani Group (India)

In this company, there was a high level of interaction between business and family. Calo indicated that he and his brother Joqimu had put in place succession plans for their company. However, he pointed out that the company had not yet put in place formal succession rules. Calo also indicated that there were male heirs in the business but no female heir had been identified. The reason for this was that Calo and his brother preferred to have sons as successors. In Calo’s view, the main challenge for female successors is that they get married, thereby cease to be primary participants in the affairs of their original families.

However, Calo’s wife has on several occasions become involved in the affairs of the company. At one time, the wife played the role of matron of honor during the wedding of one of the company’s employees. In ordinary instances, this role is reserved for the sister to the bride. In this way, the Calo family intended to demonstrate that the employee was an honorary member of the family by virtue of his contribution to the business. Calo’s wife even paid for the newly-wed couple’s honeymoon travel tickets.

MaxiLeti Inc. (Portugal)

At MaxiLeti Inc., the Portugal-based company, the challenge of women ascending to the position of successor was even greater, given the complexity of the ownership web involving nine male cousins. In fact, it is with this in mind that one of the co-founders warned the cousins against engaging in greedy behavior during the succession planning process. These cousins, who form the second-generation owners, are aged between 53 and 60. It may be appropriate to point out that the succession planning process should be underway.

The interview answers given by Guti, one of the cousins, create an impression of male heirs who have conspired to lock out female heirs. Guti claimed that the company had put in place formal succession rules. He also reiterated that all his fellow “contestants” for the position of an heir were male members of the family. These cousins, just like it is the norm in the case of many FRBs in Portugal, expected that all the female siblings would get married, thereby cease to hold any significant interest in the company.

In an apparent show of sexism, Guti pointed out that the cousins found it hard trusting women with business leadership. The only situation that this interviewee was willing to accept a female heir is one in which the co-founders chose to bequeath their wealth to the female family member. Moreover, the cousins would readily grant the wish of the FRB founder to have the business be operated under the leadership of a particular female successor.

The sexist view was reinforced even more when Guti was asked about reasons for his preference for a male heir. He vigorously defended himself by insisting that he did not hold this view simply because he was a man; rather it was because male business leaders naturally overcome organizational challenges with much ease. Guti added that even in situations where women handle the stress that comes with business management in a professional manner, they have to do it at the expense of fulfillment of more important family roles such as homemaking, motherhood and parenting.

In the case of MaxiLeti Inc., some of the issues that lock female heirs out of the succession debate seem unrelated to sexism. Other than the strong tradition in which only sons qualify for inheritance in FRBs, there is also the small matter of how to divide the business equity among all the cousins. According to Guti, serious disagreements arose regarding the amount of value of the business that each cousin should get. Some of the factors that needed to be put into consideration include the shares that each of the fathers had held, the strategic direction of the company, and the need by all the heirs to meet the performance targets of all the company’s subsidiaries.

With all these factors in mind, it appears as if the succession planning process at MaxiLeti Inc. will be ongoing for a longer time than the cousins had anticipated. This could pose major problems for the FRB, particularly because there is also a serious problem of increased complexity.  The net effect may be a situation where the family-run business ends up being unable to maintain strategic direction.

Rema Group (Brazil)

The name of the interviewee for this company was Mata. Mata is the co-founder of Rema Group. He co-founded it with Breno his younger brother. Of particular importance for purposes of the present paper is an assessment of the place of women in the company’s succession planning process.  Mata pointed out that the company has already put a succession plan in place although no formal succession rules have been laid out. Incidentally, the lack of a formal framework for succession reeks of poor corporate governance. This is particularly worrying given that Rema Group is in a position of market leadership in the Brazilian electrical goods sector. Indeed, this weakness has been identified as one of the biggest threats to Brazil’s fast-growing economy. With such a lack of proper formal rules to guide the succession planning process, there is a high likelihood of women being denied their succession-related rights.

Nevertheless, the case of Brazil seems to be more favorable to women as far as chances of being chosen as successors is concerned. Mata said that at Rema Group, “female successors have the same (if not a greater opportunity) opportunity as male heirs” as far as the issue of choosing heirs is concerned. This comment is supported by literature indicating that in Brazil, daughters  have higher chances of succeeding their fathers, particularly when compared to the prevailing scenario in other parts of the world (Halkias, 2001).

            Moreover, in Mata’s view, one of the main challenges facing female successors is conflict between family roles and professional business duties. He also noted that one of the circumstances under which he would be willing to accept a female successor is when the successor in question has proven his worth and has fought persistently for his position. Another situation is where the female heir has “strong collaborative abilities and is a strategic thinker”. Mata also acknowledged that women in many cases contribute positively to the business by bring in new networks either through social interactions or professional engagements.

Additionally, Mata stated that he would readily give both male and female heirs equal consideration in the process of choosing heirs. Such a decision indicates that the problem of sexism in the succession planning process in Brazil is not as prevalent as in Portugal and India. From a theoretical perspective, this may be attributed to the collectivist nature of the contemporary Brazilian society.

Chapter 5: Discussion and Conclusions


From the analysis of the three family-run businesses, it is evident that different succession planning strategies are adopted in different parts of the world. It is also evident that male heirs are in most instances preferred by the founders of family-run businesses. This is an indication of male chauvinism and sexism, which goes against the inherent rights of women.

Different reasons are given for sidelining women in the succession planning process. In Portugal for instance, daughters are sidelined because it is widely expected that they will soon get married and join other families. In this case, male founders seem to be conspiring with male heirs to lock women out of the succession planning process.

Moreover, there is no uniform process of undertaking succession planning. The process differs from one country to another and from one culture to another. Regional differences also appear to exist. For instance, certain features may be associated with specific regions as far as the traditional practices relating to succession are concerned. For example, many Asian countries, the Confucian philosophy emphasizes on paternalism, and this is manifested in the succession planning process.

Various cultural factors influence the preference for male heirs in the succession process. They also lead to the creation of circumstances that affect the ability by women to become successors. For instance, in the Western society, the predominant individualistic culture forces women and daughters to portray individual identities even when they represent family-run businesses. In such a scenario, it becomes increasingly difficult for them to overcome business-related and family challenges. In most cases, their personal efforts count more than the support they get from various family members. This way, they have to fight more odds compared to their counterparts in collectivist societies such as China. In China, once a daughter expresses the desire to hold the family-business mantra, she has to position herself as a representative of the identity of the extended family or clan. This boosts her chances of being appointed the outright successor for the entire business empire.

In all parts of the world, family-led businesses should brace themselves for challenging times. As globalization continues to re-shape the modern world of business, family-led companies have to change their strategies. In family-run businesses, it is more difficult to bring about this change because the interests of the business are intricately intertwined with those of the family. This increases the risk of business-family conflict. In such a situation, the family may “interfere” with business, as pointed out in the case of the Portugal-based MaxiLeti Inc.

Similarly, the issue of family-business has been raised in Brazil. In Brazil, many foreign investors have been reluctant to invest in some of the country’s highly  influential family-run business because these families lack proper corporate governance. This is a crucial observation, particularly considering that it has been leveled by foreign investors in one of the fastest economies in the world.

Moreover, in each of the three countries examined, there is a lack of a clear policy and statutory framework for governance the succession planning process in FRBs. In the absence of local frameworks for succession in family businesses, women and daughters have little hope of getter greater succession-related opportunities, particularly in today’s male-dominated family-business environment. Even more problematic is the fact that no internationally accepted succession planning approach has been designed for use in guiding the succession planning process by family companies. This is a sad scenario, given that some of these family-run companies, particularly in Asia and Latin America are publicly listed and they continue to wield tremendous influence on local economies. Some form of regulation may be necessary in efforts to address the problem of founder resistance.


In summary, succession is truly a long-winding process in which the founder has a critical role to play. It is imperative for the founder to put into consideration the needs of the next generation of business owners. This awareness is of great importance if the family-run business is to continue maintaining its strategic focus. Whenever family members start squabbling over succession, crucial business matters take a back seat.

            It also helps to look at the issue of succession from different perspectives. One of the best ways to achieve this goal is by examining the succession planning processes of various countries. The circumstances that people find themselves greatly influence their succession decisions. For example, in Colombia, owners of family business are swayed by security considerations in determining how to choose successors. Founders tend to be constantly worried about the ability by the chosen successors to address frequent security threats appropriately.

Few researchers have addressed the issue of features of effective successions. This may be because complexity that accompanies efforts to determine which decision is acceptable and which one is not. In reality, a succession process that is hailed as successful in one culture may be dismissed as unsuccessful in another. Moreover, it takes a long time to assess the successor’s ability to steer the company in the right direction.

Some of the main challenges encountered in FRBs as far as succession is concerned include  rivalry between employees and owners, work-life balance, and conflict between family members over who should manage the company’s wealth and day-to-day operations. To avoid rivalry between employees and owners, the Madivani and madivani Group decided to elevate the most dedicated and long-serving employee to position of honorary family members. This strategy should be replicated to other countries, not just in Asia but also in the West. However, the success of this approach is more likely to occur in collectivist societies than in individualistic societies. It is not surprising, therefore, that the same approach has been successfully adopted in China (a collectivist society) and not in Portugal (an individualistic society).

In many collectivist societies, daughters who choose to demonstrate persistence tend to have greater chances of succeeding. Many researchers have dedicated a lot of attention to this phenomenon. There is consensus that daughters normally succeed in building a relationship of mutual respect with founder-fathers. The findings of the present study support this view. Daughters tend to be patient with the pace of their careers, and sometimes even take time to gain professional experience in outside companies. In contrast, many male heirs tend to be impatient, and thereby fail to take the time to understand the family business well. A case in point is Brazil, where this phenomenon has greatly contributed to a rapid increase in the number of daughter-successors in family-run businesses.

A formal succession process, such as the one Guti claims exists in Portugal may be of great relevance in today’s highly globalized world. It is also imperative for a culture of interaction between family members and professional managers to be maintained. However, one challenge that remains relates to the contention over the best way of striking a balance between the values and objectives of the family and those of the business. No agreement exists on the best way of striking this balance. For instance, it is not clear whether employment equality laws should cover issues relating to partiality of the succession planning process.

Family businesses ought to devote more time to relationship issues. The suggestion that Morris (1997) makes regarding the establishment of a “relationship charter” is an acceptable one. The “relationship charter” should be developed in such a way that it becomes an excellent vehicle for managing relationship issues in a strategic manner. The charter should enable the managers and founders ensure that relationships within the family are managed in just the same way as the relationships with customers and suppliers.

Moreover, the problem of sexism may be more deep-rooted than the founders of various companies may be willing to admit. It may be possible that the founders are only keen on engaging in public relations efforts. There is a need for further research to be conducted to examine this issue with the view to address the various conceptions that founders in various cultural settings have regarding the importance of gender equality during the succession planning process.

Despite efforts by founders to put their family businesses in the best hands during succession planning, family-run businesses around the world continue to have a poor record of succession. Only thirty percent of these businesses survive to the second generation. In China, there is even a saying that indicates that a family-run business never survives beyond the third generation. In each of the companies examined, efforts to carry out a succession planning strategy seem to have been far from successful. It is not clear what contributes to this failure. One line of argument would involve the assumption that the founders lack foresight right from the moment the business is created. Another line of argument may attribute the failure to founder resistance. An alternative point of view may attribute the failure to a wrong choice of successor and lack of knowhow in the preparation of heirs. All these lines of argument ought to be examined in detail through further research.

It is unfortunate that in the contemporary world, wives, daughters, and other female relatives may remain at the periphery of the succession planning process. Although some progress is being achieved through an increase in the number of women successors in countries such as Brazil and Colombia, on the overall, a grim picture is depicted, meaning that the much-needed collaborative abilities and patience of women and daughters may continue being unappreciated in family-run businesses.


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Appendix 1: Interview questions


Interview questions Calo’s answer (Madivani and madivani Group, India Guti’s answer (MaxiLeti Inc., Portugal)


Mata’s answer (Rema Group, Brazil)


1.     Do you have any succession plans in place Yes no yes
2.     Do you have formal succession rules no yes No
3.     are there male heirs in your business yes Yes yes
4.     are there female heirs in your business No. we prefer to have sons as successors No. All my fellow nine cousins are male (conclusion: conspiracy against female heirs) girls traditionally get married Yes. Female successors have the same (if not a greater) opportunity as male heirs
5.     Which challenges face female successors? They get married We find it hard trusting women with business leadership Conflict between family roles and professional business duties
6.     Under what circumstances would you be willing to accept a female successor? If decreed by founder If the co-founders leave instructions to that effect; when provisions are made by law The female proves his worth and fights for his position. If the female has collaborative abilities and is a strategic thinker, if female has professional qualification and outside expereicne
7.     What roles have female members of the family traditionally played in the business? They offer moral and professional support They provide “anchorage” by influencing the day-to-day decisions based on their knowledge of the family-business values They have created valuable networks; have also created a healthy link between family and business.
8.     Is male-heir preference a dominant practice in this society yes yes yes
9.     Why would you be motivated to prefer a male heir to a female one? To safeguard business legacy. Male heir is more suited to this job. Male heirs tend to overcome challenges with much ease without jeopardizing family roles. I would give both male and female heirs equal consideration. female
10.  How do you relate with female family members who work at the company They make the workplace a better place They work well, we respect each other Mutual respect
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