Analysis of Succession Planning and Sustainability of Family-Owned Enterprises in Nairobi Metropolitan, Kenya
DOI:
https://doi.org/10.70619/vol2iss2pp16-35Keywords:
Succession planning, sustainability of family-owned enterprises, identification of successors, successors capacity development, leadership commitmentAbstract
Family-owned businesses are very important in the world economy. These firms are helping to shape and define economies the world over. Between 50-60% of the workforce in industrialized nations is employed in family-owned businesses. However, in the 21st century, less of family-owned businesses are being formed. This study, therefore, sought to investigate effect of succession planning on sustainability of family-owned enterprises in Nairobi metropolitan, Kenya. The study specifically assessed the influence of identification of successors, successors' capacity development, and leadership commitment on sustainability of family-owned businesses. The study adopted a mixed research methodology where both qualitative and quantitative data were used. The target population comprised 313 family-owned businesses which are registered by the Association of Family Business Enterprises (AFBE). Stratified random sampling was used to select 176 respondents with help of Yamane formula. Data was analyzed using descriptive and inferential statistics. Regression results indicated that a unit increase in the identification of successors resulted in a considerable rise in the sustainability of family-owned firms by 0.197. A unit increase in the capability of the successors would result in a considerable rise in the sustainability of family-owned firms by 0.266. A unit increase in leadership commitment resulted in a substantial improvement in the sustainability of family-owned firms by 0.332. The study concluded that family members are engaged in identifying a successor; successors' training provided them with the necessary entrepreneurial and financial abilities to take the company to the next stage of growth, and leadership commitment has a key impact in improving the sustainability of family-owned enterprises was indicated by this study. The study recommends that family companies should utilize independent boards and experts to help them make judgments on who will succeed them throughout the selection process of a successor. Future company owners should provide their employees with enough training and development options, such as a mentorship program and on-the-the-job training. Succession plan should be time-bound and updated to be realistic and relevant to the current situations in business life so that it becomes an invaluable business tool to guide transgenerational business transition while ensuring sustainability.
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