SECURING THE LEGACY: EXAMINING THE CHALLENGES AND TRIUMPHS OF FAMILY BUSINESS SUCCESSION

Abstract

Family businesses constitute a substantial portion of the global economy, contributing significantly to GDP and employment. However, they often face challenges in ensuring intergenerational continuity. Despite their crucial role, most family businesses struggle to survive beyond the third generation. This highlights the significance of studying intergenerational inheritance in family businesses. The process of leadership transitioning from one generation to the next is complex due to the intertwined dynamics of family and business interests. Recent research on family business succession has made considerable progress, employing various perspectives and theories. Resource-based view (RBV) emphasizes the importance of resources and capabilities for maintaining business continuity. Agency theory focuses on governance challenges, particularly conflicts of interest between family managers and non-family shareholders. The stewardship theory highlights the role of non-economic goals in driving family leaders to act in the company's best interests. Understanding these theories is essential for comprehending why family businesses often opt for family succession over professional management. This paper explores the multifaceted nature of intergenerational inheritance in family businesses and sheds light on the complexities and opportunities inherent in this process.