Determinants of family business performance: succession issues and experience as the potential mediators

• Main Authors: Wee Yu Ghee, Mohamed Dahlan Ibrahim
• Format: Book Section
• Language: English
• Published: International Business Information Management Association 2013
• Online Access: http://discol.umk.edu.my/id/eprint/8533/1/paper%2057.pdf; http://discol.umk.edu.my/id/eprint/8533/
• Institution: Universiti Malaysia Kelantan

The characteristics and importance, including the antecedents to performance, of small to medium-sized family owned firms to respective economies is widely known in business literature. While many have studied factors which determine the business performance of family-owned firms, none has investigated how succession issues (ranging from authoritarian owner, communication problem with siblings, incompetencies, motivation to succeed, differences in opinions and decision-making power) and succession experience on part of second or third generation owner (2GO/ 3GO) could affect the links to the performance of such firms. The purpose of this paper is to reaffirm various factors influencing family business performance among sixty family-owed firms situated in Northeastern of Peninsula Malaysia, and establish succession issues and experience as the potential mediators which are contributive to the business well-being. The main data source for the study was self-administered surveys of fifty-five 2GOs or 3GOs, of three major races (Malay, Chinese and Indian) in Kelantan, Malaysia. Descriptive, correlation and regression analyses were conducted to interpret findings. The research shows that management style, relationship among family members, values and beliefs and preparation of heir significantly influence family business performance in this context. Succession issues are found to have partially mediated and succession experience fully mediates the relationship among the antecedents with business performance. Both theoretical and practical implications as well as avenues for future research are discussed.