1042-2587

Copyright 2004 by
Baylor University

Toward an Integrative
E T&P Model of Effective
FOB Succession
Isabelle Le Breton-Miller
Danny Miller
Lloyd P. Steier

Given that less than 10% of family owned businesses (FOBs) survive into the third gener-
ation, the issue of top executive succession has received a good deal of attention. Unfor-
tunately, the literature on the topic is fragmented, as it deals with different parts of the
elephant. This synthetic effort tries to put together the pieces to (1) derive a more encom-
passing model of what it takes for a succession to succeed, (2) determine the trends, con-
sensus findings, as well as the gaps in our conceptual and empirical knowledge, and (3)
suggest areas for further research.

T he literature on family-owned enterprise has focused a great deal of attention on

the unique challenges confronting this form of organization. One of the most central prob-
lems facing FOBs is the ability to ensure competent family leadership across the gener-
ations. Only one third of family businesses survive into the second generation, and only
about 10–15% make it into the third generation (Birley, 1986; Ward, 1987). Poor suc-
cessions are often the source of the problem (Miller, Steier, & Le Breton-Miller, 2003).
Certainly, profound challenges have been identified in assuring effective successions
even in public enterprises (Finkelstein & Hambrick, 1996). But the situation is far more
difficult in FOBs, where there is often a smaller pool of talent on which to draw, com-
plicating emotional factors in the incumbent-successor relationship, and complex social
ties with the family (Dyer, 1986; Lansberg, 1999; Miller, Steier, & Le Breton-Miller,
2003).
It is not surprising then, that over the years, much has been written about FOB suc-
cessions—and what it takes for them to succeed. The succession process is often con-
strued to encompass the actions, events, and organizational mechanisms by which
leadership at the top of the firm, and often ownership, are transferred. In going through
the helpful but disparate literature on succession, we were struck that different studies
appeared to be directed toward “different parts of the elephant,” each dealing with a
potentially important, but relatively small part of the problem. Thus some studies focus
on the qualities of the successor, others on the family context, and still others on the
incumbent. Even the more encompassing studies, as we will see, omit central dimensions

Please send correspondence to: Isabelle Le Breton-Miller at lebreton@[Link] and Danny Miller at
[Link]@[Link].

Summer, 2004 305

of the succession context and process, and neglect the long term, dynamic and iterative
nature of succession.
The aim of this research was to take a more comprehensive integrative approach. We
first examined the systematic empirical and theoretical literature on positive successions.
Then, by extrapolating, interpolating, and making logical connections among the studies,
we derived a preliminary integrative model of the succession process. From that model
it was clear that there were empirical and logical gaps in our knowledge and so we broad-
ened our search to include less frequently studied variables—those typically the subject
of more anecdotal literature that tracks successions as long-term, evolving, contextual-
ized processes. We incorporated these findings to derive a fuller integrative model, whose
scope, dynamics, and links suggest neglected areas that may be highly consequential to
the long-term viability of a succession, areas in need of more study. Their neglect repre-
sents gaps that can fruitfully guide the research agenda.

Scope and Method

Our concern here is not with all top management successions but those within family
businesses that have as a strong preference, although not necessarily an imperative, to
keep the leadership in the family. Our model, and some of the literature upon which it is
based, admits of multiple family and non-family leadership candidates, and generally
assumes the incumbent and favorite candidates are family members, or failing the avail-
ability of a competent contender, a bridge manager between family tenures.
To conduct a thorough review of the literature on succession in family-owned
businesses, we searched the exhaustive Proquest database of articles, using the key-
words family-owned-business and succession. We used the bibliographies of each
article identified as a bridge to other potentially relevant literature on the topic, includ-
ing books. Finally, we scanned the HEC Montreal university library for additional
sources.

Defining Success in Succession

The most common definitions of successful succession were
• The subsequent positive performance of the firm and ultimate viability of the
business;
• The satisfaction of stakeholders with the succession process (Cabrera-Suárez
et al., 2001; Dyer, 1986; Handler, 1990; Morris et al., 1997; Sharma et al., 2001).
Certainly, the drivers of these outcomes may differ. “Political” appointments may satisfy
family stakeholders but hurt the bottom line, whereas anointing a technically competent
but independent executive may stir anger among some controlling family owners.

The Dominant Focus of the Systematic Research

We examined more than 40 articles and seven books written on the FOB succession
over the last 30 years. These represent all the systematically empirical and theoretical
articles we could find on positive succession experiences, and the bulk of the anecdotal
pieces. We focus below on the subset of data that is systematically empirical—that is
based on rigorous methods and multiple subjects, and often connected to formal hypothe-
ses and statistical methods. These have the greatest validity and reliability. Also cited will

306 ENTREPRENEURSHIP THEORY and PRACTICE

Table 1

Variables in the Literature Mentioned the Most

N= %

Incumbent
• Motivation/Willingness 23 49%
• Quality incumbent-successor relationship (respect, understanding, trust, cooperation 23 49%
• Personality, needs 17 36%
Successor
• Quality incumbent-successor relationship (respect, understanding, trust, cooperation & closeness) 23 49%
• Motivation (interest, commitment to FOB perpetuation as a family value, freedom not to join FOB) 20 43%
• Management ability, competence, talent, experience, drive, credibility & legitimacy 17 36%

Nurturing/Development of successor(s) 13 28%

• Career development, early exposure to the business & growing involvement 18 38%
• Outside work experience 18 38%
• Apprenticeship (transfer of knowledge—explicit & tacit—& contacts) 16 34%
• Formal education program 15 32%
• Training program 12 26%
Family dynamics
• Collaboration, accommodation, team approaches rather than conflict-rivalry, harmony, quality of sibling relationships 17 36%
Hand-off/Transition Process/Installation
• Incumbent phase out/transition & new role 18 38%
• Successor phase in (COO, CEO, chairman) 13 28%
Ground rules & 1st steps
• Succession planning 16 34%
• Shared vision for the future to establish 14 30%
• To be established early, clearly, communicated & adjusted with feedback 13 28%
• Time frame & timing 12 26%
Board of directors 15 32%
• Composition 12 26%

be theoretical works that refer to such findings. We will then turn to the more anecdotal
later, to complete the picture.

Common Predictors of Successful Succession

Table 1 summarizes the relative frequency of the most common findings in all the
literature we reviewed (all cited in the references). In the most popular classes (17 to 23
out of the 48 studies), we find the categories of Incumbent attributes—characterized by
job motivation and willingness, quality of the relationship with the successor, and per-
sonality and needs, sometimes poorly specified. Another equally key category is that of
Successor, where again, relationships with incumbent, motivation, interest and commit-
ment, and management ability were found to be important. A somewhat less researched
but still focal category (12 to 18 studies) is that of Nurturing and Development of the
successor(s). Variables or dimensions such as career development, outside work experi-
ence, apprenticeship, formal education, and training program are often mentioned (26%
to 38% of the time) as being critical to successful succession. So are the qualities of rela-
tionships inside the family—collaboration, accommodation, team approaches, harmony,
and sibling relationships. Another often mentioned but thinly characterized category was
the establishment of Ground Rules for succession planning. Incumbent phase-out and

Summer, 2004 307

Successor phase-in are also often discussed, as is Board of directors and its composi-
tion. Below we summarize what the systematic empirical and theoretical studies have to
say about these most commonly researched variables.

Incumbent
Numerous studies have explored the attributes of the incumbent as predictors of suc-
cessful succession and as critical variables in succession planning. Ward (1987), in fact,
has claimed that the business owner is the most important factor in the success of suc-
cession. Three major themes appeared most often:

The Relationship between Incumbent and Successor. Cabrera-Suárez et al. (2001)

emphasized the importance of the relationship between the predecessor and the succes-
sor, arguing that an effective transfer of knowledge between the generations is vital. Dyer
(1986), Goldberg (1996), Handler (1990, 1992), Hugron (1993), Lansberg (1988), and
Ward (1987) all found a positive link between the quality of the relationship and the
success of the succession process. A relationship based on mutual respect and under-
standing is said to make individuals feel supported and recognized, and to create a vir-
tuous circle of trust and feedback. Learning can then emerge through an evolutionary
process that begins in early life at home and continues in the work relationship. Davis &
Taguiri (1989) note that the quality of this work relationship between fathers and sons
varies as a function of their life-cycle stages.

Incumbent Motivation. Dyer (1986), Handler (1990), Lansberg (1988), McGivern

(1978), and Ward (1987) all suggest the importance of the predecessor’s overcoming
anxiety about succession, moving beyond the denial stage, and being willing to confront
succession and let go. The incumbent must face normal fears such as losing control,
power, and even part of his or her identity and stature in the community (Potts, 2001b).
There is also the challenge of facing one’s mortality. Said one manager: “giving up the
company is like signing one’s own death warrant” (Barnes & Hershon, 1976, p. 107).
There is too the need to make emotionally wrenching choices from among one’s chil-
dren, siblings, and collaborators (Malone, 1989). Although these are psychologically
draining issues, Sharma et al. (2001) conclude that the predecessor’s inability to let go
is the single most cited obstacle to effective succession.

Incumbent Personality and Needs. It is not surprising, then, that Barach & Gantisky
(1995), Cabrera-Suárez et al. (2001), Dyer (1986), and Handler (1990) show the impor-
tance of the predecessor’s ability to delegate and let the successor make his or her own
decisions and mistakes. This they saw as vital for the successor’s development as a leader.
Handler (1990) also pointed to an incumbent’s capacity to trust and share as key in the
transition process. Barach & Gantisky (1995), conversely, emphasized certain inhibiting
characteristics incumbents might have in making a transition: a tendency to mistrust, to
control every detail, or to be negatively aggressive. They also note the traits the prede-
cessor should possess, like a mentoring, cooperative attitude, and openness to new ideas.
Indeed, Malone (1989) found that the more internal the incumbent’s locus-of-control, the
higher the level of succession planning.

Successor. The successor, of course, is the other key party in any succession. The rela-
tionship between successor and incumbent has already been discussed, but the literature
has uncovered other key factors.

308 ENTREPRENEURSHIP THEORY and PRACTICE

Successor Motivation. A willing and fully committed successor is vital (Barach &
Gantisky, 1995; Chrisman et al., 1998; Hugron, 1993; Potts, 2001b; Sharma et al., 2001).
From Handler’s (1992) findings, we learn that the more the opportunities within an FOB
mesh with a successor’s personal needs of career, personal identity, and life-stage, the
more likely the succession experience will be positive. In effect, satisfied successors
tend to be more personally invested, more enthusiastic, and more apt to feel they have
adequate responsibilities. They also have a distinctive sense of identity and feel good
about contributing to the FOB (Barach & Gantisky, 1995; Handler, 1990).

Successor Abilities. The successor’s proven skills, performance, and experience in

leading the organization were clearly linked to positive succession, and found to help to
garner credibility and legitimacy for the new leader (Barach et al., 1988, 1995; Chrisman
et al., 1998; Potts, 2001b). Chrisman et al. (1998) had 485 family business managers rank
a list of 30 positive successor attributes suggested in the literature. They found among
the most important attributes to be decision-making ability and experience, and superior
interpersonal skills.

Nurturing and Development. The training successors go through to acquire knowledge,

develop capabilities, and achieve credibility and legitimacy is said to be another vital
factor in effective succession (Morris et al., 1997). Ward (1987) discovered that the suc-
cessor’s development and preparation for a leadership role was one of the most impor-
tant factors among the successful FOBs that survived a succession. In fact, McGivern
(1978) reported that 45% of all business failures in the United States were due to incom-
petent new management.

Career Development. Early exposure to the business allows the successor to become
increasingly familiar with a company, its culture and values, and its employees. It also
provides the opportunity to develop capabilities needed by the firm (Cabrera-Suárez et
al., 2001; Barach & Gantisky, 1995; Barach et al., 1988; Goldberg, 1996; Ward, 1987).
It helps too for successors to build relationships and credibility by successfully moving
up the organizational ladder (Barach & Gantisky, 1995; Barach et al., 1988; Dyer, 1986;
Morris et al., 1997). Goldberg (1996) in his study showed that effective successors had
substantially more years of appropriate experience within the FOB than less effective
ones.

Outside Work Experience. Barach & Gantisky (1995) emphasized that many thriving
successors had rich experiences at other companies and jobs. These could help the suc-
cessor develop a knowledge base, sense of identity, self-confidence, and credibility
(Barach et al., 1988; Dyer, 1986). Ward (1987, p. 60) concluded, “all in all, gaining expe-
rience outside the business is one of the strongest recommendations that can be made for
successors. In all our interviews, no one who worked outside the family business regret-
ted doing so. Many who did not wished that they had.”

Apprenticeship. Dyer (1986, p. 128) highlights a classic training tool used by family
business: the mentor. Mentors act as counselors and instructors and “use their knowledge
of the culture of the business, the governing board, and the family to teach the neophyte
all the subtle nuances associated with being a manager in the family dominated enter-
prise”. But the best apprenticeships often begin at home. The transfer of knowledge—
explicit and tacit—may start at the dining table, subtly and imperceptibly, build up during
summer jobs at the company, and continue through a career at the FOB. That transfer,

Summer, 2004 309

we have seen, is facilitated when a close relationship exists between the successor and
the incumbent. The latter may pass on a set of values, “tricks of the trade,” specific
know-how and knowledge, as well as a valuable network of contacts (Cabrera-Suárez
et al., 2001).

Formal Education. Morris et al. (1997) found that the education of a successor was pos-
itively correlated with a smooth transition and post-succession performance. Similarly,
Goldberg (1996) discovered that the most effective successors held college degrees while
the less effective ones had only a high school diploma. For Dyer (1986, p. 27) “the college
or technical degree is the first hurdle that potential successor must overcome.” He
reported that FOBs like DuPont and Levi Strauss encouraged their young family members
to attend one of the top U.S. universities because they believed that would signal intel-
ligence and leadership, and provide both skills and credibility.

Training Program. FOBs are said to benefit from a formal leadership training plan
with clear goals, time frames, and outside review. Plans may include stages in functional
training, decision-making experience, general management skills and profit center
responsibility (Churchill & Hatten, 1987; Ward, 1987). A variety of experiences and tasks
are deemed essential to any well-designed program (Dyer, 1986).

Ground Rules
We classified succession planning and shared vision into a category we call ground
rules, although this category has not been sufficiently developed in the literature (see our
discussion of gaps which follows). Some of the most important literature on succession
stresses different guidelines that have to be set early on to guide the process.

Succession Planning. There is some consensus that succession must be anticipated long
in advance, and managed as a planned process (Ambrose, 1983; Barnes & Hershon, 1976;
Dyck et al., 2002; Dyer, 1986; Handler, 1990; Lansberg, 1988, 1999; Malone, 1989;
Sharma et al., 2001; Sonnenfeld & Spence 1989; Trow, 1961; Ward, 1987). “Succession
planning means making the preparations necessary to ensure the harmony of the family
and the continuity of the enterprise through the next generation. These preparations
must be thought of in terms of the future needs of both the business and the family”
(Lansberg, 1988).

Shared Vision. Sharing views about the ultimate goals of the business is believed
essential to effective succession (Barach & Gantisky, 1995; Barnes & Hershon, 1976;
Chrisman et al., 1998; Dyer, 1986; Dyck et al., 2002; Lansberg, 1999; Potts, 2001b;
Sharma et al., 2001, forthcoming; Ward, 1987). For Lansberg (1999, p. 5): “what drives
all successions is a vision of the future, hammered out over time, that embraces the
aspirations of both the senior and the junior generations as well as those of their fore-
bears. . . . A compelling vision of the future [is] necessary for negotiating the passage to
the next generation. . . . The individual Dreams of different generations [must] be woven
together into a shared, collective Dream.” Dyer (1986, p. 133) claims that to assure a
favorable transition, the family must have common views concerning equity and sharing.
They must formulate “superordinate goals” that everybody will agree on and strive to
achieve: “goals and objectives that bind the family together.”

310 ENTREPRENEURSHIP THEORY and PRACTICE

Other Variables. There are a number of other recurrent empirical findings that do not fit
neatly into the above categories but are nonetheless quite prevalent.

Family Harmony. Family harmony is said to help the succession process as it ensures
greater trust, mutual understanding, and knowledge among the participants (Churchill &
Hatten, 1987; Dyer, 1986; Handler, 1990; Malone, 1989; Potts et al., 2001b). Such
harmony also aids in the development of a shared vision (Sharma et al., 2001, forth-
coming). Morris et al.’s (1997) empirical findings confirm that the quality of the family
relationship is a more dominant predictor of a successful transition than either succes-
sion planning or the preparation of heirs.

Phasing In and Out. A mentoring relationship in which two parties work together for
some time is found to be both common and useful in succession (Dyck et al., 2002;
Handler, 1990). Ward (1987) notes that the shift of power and authority typically takes
five to seven years, while Dyer suggests that the incumbent needs to move gradually
away from active involvement in the FOB for a favorable succession to occur (Dyer,
1986). A smooth phase-out is facilitated when incumbents have a plan to do so and
possess some vision of a future outside the business (Ward, 1987). It also helps if they
go on to develop interests outside their FOBs, new challenging activities, for example,
philanthropy, or even a new career (Dyer, 1986; Handler, 1990; Lansberg, 1988; Potts et
al., 2001b; Sharma et al., 2001). The incumbent needs also to find other ways to satisfy
his personal and psychological needs (McGivern, 1978). Having a clear transitional role
in the firm for the incumbent after transferring power may be useful as well. The bound-
aries of the predecessor’s new role should be very clearly defined and monitored care-
fully by both parties to ensure the independence of the successor’s actions. In short, clear
roles for both parties internally and externally will help the succession process to be a
success (Lansberg, 1988).

Board of Directors. An active and well-designed board with clear responsibilities and
authority, and which includes outside members contributing unbiased expertise, is said
to be potentially useful in succession, but only if the incumbent is ready to listen to their
recommendations. The board could help launch and monitor the succession process, and
guarantee the enforcement of the succession plan and the interests of the owners (Barach
& Gantisky, 1995; Churchill & Hatten, 1987; Dyer, 1986; Lansberg, 1988; Malone, 1989;
Potts et al., 2001b; Sharma et al., 2001).

Synthesizing the Findings

Anchoring a General Model of Best Practices

We attempted to integrate these most thoroughly researched findings using logic and
a timeline. First we took the variables that related to activities and processes, laying them
out in a time sequence—e.g., ground rules should come before nurturing, which comes
before the hand-off or transition. Then we specified the context of the model—which
includes the principal actors—successor and incumbents, and the FOB and family context
in which they operate. The result is our preliminary model presented in Figure 1. All of
these components of the model—processes, actors, and context, and their interaction—
can influence the success of a succession. If we look at the figure, the bold outlines of a
model are there. But there are clearly many gaps in the systematic literature—empirical

Summer, 2004 311

Figure 1

Preliminary Model For Successful FOB Successions

INCUMBENT FOB CONTEXT SUCCESSOR

(quality relationship with successor, • Board of directors (quality relationship with incumbent,
motivation, personality, needs…) motivation, management competence…)

SUCCESSION PROCESS (management & ownership)

Ground rules & 1st steps Nurturing/Develop- Hand-off/Transition

ment of successor(s) Process/Installation
• Shared vision for the future to establish
succession planning • Formal education program • Incumbent phase out/transition & new role
• Training program • Successor phase in (COO, CEO, chairman)
• Apprenticeship (transfer of knowledge
—explicit & tacit—&contacts)
• Career development, early exposure
to business & growing involvement
• Outside work experience

FAMILY CONTEXT
• Family dynamics (collaboration-quality of relationship, trust, openness,...)

and logical. Most empirical studies, for example, look at only a few variables at a time;
and they concentrate on things that are easier to research and to measure. They also seem
to dwell more on the actors than the context in which they must act—strategy, industry
dynamics, and so forth, and are more about personal qualities than organizational
processes. Indeed the stages of succession are often studied discretely rather than as part
of a multi-phased evolutionary process that needs to take place over many years.

Gaps in the Research

In order to build up our model, we began to broaden our search to include rich anec-
dotal accounts of the succession process and variables only rarely if ever explored by
systematic empirical and theoretical studies (Dyck et al., 2002; Emley, 1999; Forbes,
1990; Hugron & Dumas, 1993; Lansberg, 1999, etc.). These studies have often been con-
ducted by practitioners, and the under-reported variables they address are reported on
Table 2. The variables point the way to promising areas of research for subsequent empir-
ical studies. They make very clear that there are several processes and factors, arguably
vital to successful FOB successions that the research has significantly under-emphasized
or even ignored. We describe these below and make the case for why they should be
included in any complete normative model of FOB succession, or at least investigated
empirically. The text that follows can be read by researchers as hypotheses and sug-
gestions for further research, and by managers as possible factors to consider in formu-
lating their succession processes.

312 ENTREPRENEURSHIP THEORY and PRACTICE

Table 2

Variables in the Literature Mentioned the Least

N= %

Social context 0 0%
• Culture 1 2%
• Social norms 1 2%
Family context 2 4%
• Family-firm interface is positive 1 2%
• Adaptability 2 4%
—Family council/meetings 4 9%
• Frequency & Composition 2 4%
• Mission & Family strategic plan 3 6%
• Norms/values 3 6%
• Rules/policies inside the FOB 5 11%
—Family dynamics 6 13%
• Openness 3 6%
• Respect 3 6%
• Spouse/mom leadership 4 9%
• Shared values 4 9%
Industry context 4 9%
FOB context 3 6%
• FOB form/ownership 3 6%
• Previous succession experiences 4 9%
• Board of directors—Frequency 6 13%
• FOB formalization (process, structure . . .) & FOB size 6 13%
Ground rules & first steps 1 2%
• Governance guidelines (rules for ownership, board, council) 0 0%
• Selection criteria 2 4%
• Rule for choice (primogeniture, etc.) 4 9%
• Identifying potential successor(s) & TMT 4 9%
• Range of candidates (family, in-laws, extern) 6 13%
• Succession task force (key people/major stakeholders: TMT, board, company veterans, counselor, family) 6 13%
• Career plan for bypassed non-family members & family members 6 13%
Nurturing/Development of successor(s)
• Previous employment with the business 3 6%
• Establishing gaps between FOB needs & prospective successors abilities 5 11%
Selection 6 13%
• Selection of the CEO and TMT 1 2%
• Design of a formal & legitimate process: 5 11%
• Final selection criteria 3 6%
• Selection committee ( jury, rules) 4 9%
• Person (talents, desire) and firm fit 6 13%
Hand-off/Transition Process/Installation 5 11%
• Criteria for successor performance 1 2%
• Bridge manager interim 2 4%
Transfer of Capital
• Partition of shares 3 6%
Incumbent
• Gender 2 4%
• Age 5 11%
Successor
• Personal & financial investment 2 4%

Summer, 2004 313

Setting the Ground Rules
Studies of failing successions have shown that disputes arise in families and among
executive ranks because of confusion about the ground rules of selection. Yet there has
been little research done on just what those ground rules should be. At a minimum, they
might need to encompass the following: who is to participate in the succession task force,
who are to make the choices, using which criteria, with which possibilities of appeal,
with what procedures for continual evaluation and selection, and from what population
of candidates? For what positions are these selection rules to apply—chairman, presi-
dent, CEO, all key vice presidents or executives? Managers would do well to consider
these issues long before the need for selection arises, and start establishing leadership
and ownership partition plans. Researchers may want to investigate the succession plan-
ning arrangements that work best in different contexts.
• A few studies suggest that the rules of the game and processes for succession must
be communicated early and clearly (Ambrose, 1983; Ward, 1987). Stated plainly and well
in advance, the process and rules of the game will eliminate much of the indecision, inse-
curity, uncertainty, and delay. “The family continuity is intended and planned” (Ward,
1987, p. 64). For Dyck et al. (2002) there must also be a level of agreement on the mode
of succession. For example, major stakeholders must agree on what positions, rights, and
ownership assets will be given, when, and on what basis.
• Rules to establish the time frame and timing of succession are also central. Handler
(1990) discovered that a slow and subtle process of role adjustment between the incum-
bent and successor is key. The health, educational progress, and age of the parties are
also crucial timing factors. Some researchers and practitioners recommend planning the
succession well in advance, some even mention a time frame of 20 years or starting the
moment a CEO assumes his or her job (Barach & Gantisky, 1995; Forbes, 1990; Ward,
1987). But the competitive environment must influence the timing of a succession. A
stable environment may allow for a gradual and safe hand-off process, while a turbulent
and hostile one may demand a far speedier handoff as an incumbent may become obso-
lete very quickly (Dyck et al., 2002). Dyer (1986) suggests the importance of timing a
succession to coincide with when the successor is well prepared and the business is in
good condition.

Development of Successors
The literature appears to skirt a very key aspect of successor development, namely,
establishing the gaps between the needs of the different executive positions (CEO and
TMT) and the abilities of the prospective successors. Such an assessment is needed to
be able to chart the development plans for the potential successors in the talent pool
(Fleming, 2000; Fischetti, 1997). A progress review of these gaps is another important
process in a successful succession. A firm’s needs and its potential candidates’ abilities
evolve with time, and so their development plans need periodically to be adjusted.

Successor Selection
Little is said about how and when potential successors should be evaluated as their
careers develop. Again, there is too little appreciation that the process is a highly con-
tingent one that defies universal standards, and is something that must take place over
many years. Potential factors that need to be considered in successor selection are (1)
who should be performing the evaluation and selection, (2) what criteria they should be

314 ENTREPRENEURSHIP THEORY and PRACTICE

using, (3) when and how to carry out the assessment, and 4) the range of positions to fill
(Fleming, 2000; Neubauer & Lank, 1998; Osborne, 1991). Specific issues to decide may
include:
• Choice of outsiders (consultants, outside board members) to be involved in selec-
tion and appraisal sometimes to offset dysfunctional family biases. One might ask what
kinds of outsiders might contribute the most to the selection process, when they might
be brought in, and the level of influence they should be accorded. The Rothchild family
enlisted Benjamin Disraeli to tour the empire and interview promising family executives
and suggest the jobs they might fill.
• Business strategy, competitive challenges, and a firm’s pool of managerial talent
all have an impact on the talents demanded of a successor (Aronoff, 1998; Aronoff &
Eckrich, 1999). These factors must be considered in formulating selection and appraisal
criteria and every attempt must be made to tailor the person to the challenges of the job.
These challenges need to be understood in depth by those making the selection. More-
over, long lead times may be required to improve the candidate-job match and tailor the
person to the position. Tailoring may take the form of shaping the roster of candidates,
determining the training they are to receive, and shaping the composition of the top man-
agement team and board that will ultimately support the new CEO.1
• Frequently, the research assumes that there is one heir apparent from the family.
But many FOBs have found it expedient to extend the pool of candidates both within and
even outside the family. Expanding the selection to brothers, sisters, cousins, and even
interim outsiders (i.e., bridge managers) who can take over pending the availability of a
more competent or prepared family member may make the choice of an appropriate suc-
cessor much easier. It can also give firms resilience when something unexpected happens
to an heir apparent, or when circumstances in the family or competitive environment
render that heir inappropriate for the job.
• Selection of a successor is often viewed as a discrete episode, and worse, many
firms leave selection until after the death or forced departure of an incumbent. As noted,
however, selection is a far more effective process if it is planned and monitored over
many years (Handler, 1990). It may for example, benefit from multiple periodic appraisals
during which a set of appraisers get to know the strengths and weaknesses of a number
of candidates—and uncover which talents are evolving and lacking in the talent pool.
This information should have explicit training implications—or suggest a strategy for
broadening the pool of successors.
• There is also the issue that most studies consider only CEO successions, whereas
succession of a whole host of top management positions needs to be planned to ensure
complementarity and an appropriate repertoire of skills on the top management team.
One of the most important degrees of freedom in family enterprises is the ability to put
several strong executives on a top management team or board to support the new CEO.
• Finally, selection is best effected by a legitimated process—wherein the rules and
criteria are clearly understood by family members, candidates, and other managers, and
there is broad agreement on these well in advance of the succession. Succession also
benefits from a context of talented and prepared candidates shaped to the demands of the
job. Again, it seems, we are back to setting ground rules and having long time horizons.

1. Research suggests that CEO demographics such as age, education, social and professional background,
and so forth have a good deal to do with the behavior they exhibit, and hence the contexts in which they are
apt to perform best within (Hambrick & Mason, 1984; Miller, 1990; Miller, Lant, Milliken, & Korn, 1996;
Miller & Shamsie, 2001). It might be useful to discover how these findings extend to FOB successions.

Summer, 2004 315

Transfer of Capital
There are two aspects to succession in FOBs—leadership transition and ownership
transition. Although it is not our focus, we should say that the transfer of capital often
needs to be done in parallel with leadership transition, and it is every bit as important to
plan for it well in advance (Barach & Ganitsky, 1995; Forbes, 1990). Some have sug-
gested that stock distribution should start immediately after a succession in order to
empower the new leader, augment his or her status, and minimize the burden of estate-
related taxes (Churchill & Hatten, 1987; Lansberg, 1988; Pott et al., 2001b).

Feedback
Succession, too often is viewed as a linear process. In fact it is filled with uncertainty
and surprises that may demand frequent re-calibration at different stages. Changes in the
potential of different candidates may alter the field of front-runners; changes in family
needs and goals may change who is apt to be the most appropriate candidate. Evolution
in strategy and industry context too may reshape successor requirements (Danco, 1982;
Dyer, 1986; Osborne, 1991).
But even if none of these things changed, succession might still best be viewed as a
longitudinal process with many occasions for adjustment in the light of emerging cir-
cumstances. This may encompass alterations in ground rules, choice criteria and evalu-
ation standards in the light of evolving needs of the family, transformations in the business
and its competitive environment, and trends in the performance of a roster of candidates
and incumbents. Even after succession firms would benefit from appraisal of both incum-
bents and other executives to assess their efficacy as managers.

FOB Context
We already mentioned that a firm’s strategy should influence the kind of leadership
it seeks. It is a key consideration in developing the talent pool and selecting appropriate
candidates. So, of course, are the health of the company and its culture, and the com-
plexity of the administrative task as determined by such things as size, diversity, and so
forth (Davis & Harveston, 1998; Dyck et al., 2002; Fischetti, 1997; McGivern, 1978).

Family Context: Family Councils

The FOB literature has long recognized the importance of a family council in han-
dling family disputes, giving advice, and the like (Churchill & Hatten, 1987; Lansberg,
1988; Ward, 1987). But it has been ignored in general as a potential source of intelligent
input in the succession process. Inevitably, the succession decision involves not only com-
petency but elements of preference, power, and politics. In FOBs even if a successor has
great competence, he or she may be an inappropriate choice if that selection will result
in conflicts with or among influential family members. Family councils may help ensure
that successors meet both competency and social criteria. They also constitute an impor-
tant forum for developing consensus around key issues.

Industry Context
The way an industry is evolving may be a critical driver of the type of managers
needed to lead a firm—and whether such a person is apt to be found within the family

316 ENTREPRENEURSHIP THEORY and PRACTICE

(Churchill & Hatten, 1987; McGivern, 1978). There are traditional industries in which
the way of doing business does not alter much across the years or even the generations.
Here, apprenticeship in a family may constitute excellent training that long sustains its
utility; so family members trained within the business may be especially apt to become
excellent managers. In other contexts, the market changes very quickly, and so training
by an old guard within a business will be insufficient, and maybe even a liability. Those
circumstances may make training in competing organizations or in firms that are leaders
in a related industry advantageous. The succession literature has so far paid too little
attention to the industry context in determining the qualities required of a successor (Dyck
et al., 2002).

Social Context
There is a cultural parochialism in much of the work on succession—even though as
a social and family process it is heavily influenced by cultural norms such as primogen-
iture, patriarchy, estate division conventions, and so on. In an age when businesses are
increasingly multinational it is clear that the guidelines and processes for effective suc-
cessions must be conditioned to the international cultural circumstances in which a firm
finds itself (Lansberg, 1988). An effective succession plan for a culture in which primo-
geniture cannot easily be breached might have to pay special attention to training the heir
apparent. North American contexts may have more degrees of freedom and allow the
compilation of a broader slate of potential candidates and place more emphasis on select-
ing from among them according to technical competence rather than social connection.

The Full Model Described

Taking into account these under-explored variables, we went back to build up the old
Figure 1: the result is Figure 2, which seems to tell a more complete story, one that fills
in critical gaps. The components of this more complete model now can be summarized
as follows. As we can see, the non-family context includes the industry and competitive
environment of the organization, which constrains and drives its strategy, organization,
and governance policies. The FOB itself impacts the succession process by virtue of its
strategy and the extent to which it requires a particular kind of executive to implement
it. The ownership structure and board composition too will determine who might be
acceptable as a suitable successor, both in terms of talents and in terms of kinship and
personality.
Within the business context also are the primary actors within the firm—the main
ones being the incumbent CEO and the successor or set of potential successors. Clearly,
the quality of the relationship with the successor, the personality of the incumbent, and
his or her behavior in training and nurturing a successor will be of great importance. So
might be his or her own objectives concerning corporate mission, retirement, succession,
and so forth. The characteristics of the successor clearly will also be a critical factor, with
management ability, experience, motivation, age, personality, and compatibility being
primary.
We should note that all our context descriptors vary in the degree to which they can
be controlled or manipulated by managers: factors such as social and industry context
will tend to be givens that serve to constrain or direct the choice of successor or the suc-
cession process. Others such as the board composition might be both a constraint and a
variable that can be manipulated to improve the succession process.

Summer, 2004 317

Figure 2

Integrative Model For Successful FOB Successions

INDUSTRY CONTEXT (competitive structure, regulation…)

INCUMBENT FOB CONTEXT SUCCESSOR

• Board of directors (composition, frequency)
(quality relationship with successor, (quality relationshipwith incumbent,
• Strategy (strategic planning) motivation, management ability-competence…)
motivation-willingness, personality, needs…)
• Previous succession experiences ∑ Organizational culture & design
• FOB formalization (processes, structure…) & FOB size
• FOB form/ownership (controlling owner, sibling partnership, cousin consortium)

SUCCESSION PROCESS (management & ownership)

Ground rules & 1st steps Nurturing/Develop- Selection Hand-off/Transition
• Shared vision for the future to establish
ment of successor(s) • Design of a legitim ate process:
Process/Installation
succession planning including: - Final selection criteria
• Establishing gaps between needs
- Selection criteria - Selection committee (jury, rules) • Incumbent phase out/transition & new role
& prospective successor abilities
- Range of candidates (family, extern) • Person (talents, desire) and firm fit • Successor phase in (COO, CEO, chairman)
• Formal education program
- Rules for choice (primogeniture, etc.) • Selection of the CEO and TMT • Bridge m anager interim
• Training program
- Identifying potential successor(s) & TMT • Criteria for the performance of the successor
• Apprenticeship (transfer of know-
- Governance guidelines (rules for
ledge—explicit & tacit—& contacts)
ownership, board, council)
• Career developm ent, early expo-
- Leadership partition plan & transition Transfer of capital
sure to the business & growing
- Ownership partition plan
involvem ent
- Succession task force
• Outside work experience • Partition of shares: one controlling owner,
- Time frame & timing
• Incumbent personal interactions division between siblings equally or not, or
✔ To be established early, communicated &
in the successor preparation between cousin—VS—who is the FOB leader
adjusted with time, experiences, feedback

Performance/Evaluation—Feedback (monitoring the process)

... ...
Time & Timing

FAMILY CONTEXT
• Family dynamics (collaboration-harmony-team approach-quality of relationship, trust, openness, shared values, respect, spouse/mom leadership...)
• Family influence on business decisions, commitment to the business & importance of family funding
• Family Council/M eetings (frequency, mission, norms/values, rules/policies, roles/responsibilities/privileges/rights)

SOCIAL CONTEXT (Culture, social norms, ethics, religion, laws…)

At the bottom of the model lies the other aspect of context—namely the family
context, which in turn is embedded in the social context. Clearly social norms, laws, and
values have a profound influence on the relationships of the family, and the differentia-
tion and prerogatives inherent in family roles. The family context includes the dynamics
of the family—the relationships, trust, respect, and roles of its membership. It also
includes the governance vehicles used by a family to manage capital and control or influ-
ence the FOB.
At the heart of the model are the stages of the succession process itself. We were
able to discern four critical stages, each influenced by both family and business context,
each unfolding in sequence, and each linked by feedback that can change behavior. The
first stage is to establish ground rules: to create a vision for the future of the business,
set up a process for succession planning and monitoring, and determine the range of can-
didates. Also to be established are rules for selection, guidelines for training, and roles
of owners, managers, and family members in directing that process. Timing guidelines
and communicating them early are important components of such ground rules—all of
which will need to be adapted as the business and family evolve.
The second stage is nurturing and development of the group of people who are
potential successors (perhaps including multiple family members and also non-family
members). Attention must be given to formal education, on-the-job training, career devel-
opment, outside work experience, and so on. There is a continual need for performance

318 ENTREPRENEURSHIP THEORY and PRACTICE

monitoring in order to determine which candidates are doing well, how their training
needs must be redirected, and how to expand or contract the pool of candidates.
The third stage is that of selection. Partly the rules of selection have been established
in the first stage, but these will inevitably be revisited. Selection will tend not to be a
binary decision but a series of decisions on who is in the running, for what position, for
when and with what team of other actors and directors in place.
The fourth stage is that of a final hand-off to the chosen successor: the timing and
nature of the phasing out incumbent, the augmenting of the role of the new CEO, and
the decisions concerning potential bridge managers. A key part of the fourth stage is the
transfer of capital between or within generations.

Comparing Empirical Anecdotal and Theoretical Studies

We thought it might be useful to more formally compare the different research

approaches to studying the FOB succession process. Thus the sample was split into three
groups according to the nature of the research data used: empirical, anecdotal, and the-
oretical. By empirical we mean a systematic gathering of quantitative or qualitative data,
generally from a significant sample of observations. Anecdotal studies are also empiri-
cal but not systematically so. They are based on the impressions and experiences of the
writer, often a practitioner or consultant making use of a rich case example. Finally
theoretical studies are those that develop models from reasoning and argument rather
than data or observation. To sharpen the contrasts we deleted 7 of the 48 studies that
were either hard to classify or that used multiple research approaches. All these succes-
sion articles are coded in the references section as E (empirical), A (anecdotal), and T
(theoretical), respectively.
We found striking differences in the foci of the different studies. From Table 3 we
can see that anecdotal studies are the ones that best cover the bases of our model. It is
they that best address the under-explored categories of context and process. Indeed, the
table suggests that in the systematically empirical and theoretical work, these categories
are even less investigated than our aggregate results would suggest. It also indicates that
there is a good reason to undertake such investigation as experienced practitioners keep
signaling the importance to beneficial successions of company and family context as well
as process elements such as ground rule setting, nurturing, and selection. In many cases,
their real life experiences with complex succession challenges have made clear to them
the importance of these issues.
Looking at Table 3 in greater detail we can see that the FOB context variables of
board of directors and the strategic planning process were more often signaled as impor-
tant factors in the anecdotal studies than in the empirical and theoretical ones. The same
is true for family context factors such as family council activities, composition, and plans.
Differences were even more pronounced for the succession process. Anecdotal studies,
for example, often discuss the importance of succession planning and the accompanying
guidelines for choice, leadership transition and ownership partition. They also flag the
need to address these issues early. Unfortunately, the empirical and theoretical studies
rarely if ever address these issues. Nurturing and development of successors too are given
much more play in the anecdotal studies, with more emphasis given to providing expe-
rience outside the business to potential successors. Finally, the selection process is never
addressed in the empirical literature, and only very rarely in theoretical work, while it is
flagged as critical in fully one third of the anecdotal articles.

Summer, 2004 319

Table 3

Variables in the Literature Mentioned by Type of Study

Type of study

Empirical Anecdotal Theoretical Pearson

Variables in the literature N = 20 N = 12 N=9 Chi-Square

0—TIME & TIMING 15% 17% 33% 1.29

I—INDUSTRY CONTEXT 0% 0% 33% 11.51**
II—SOCIAL CONTEXT 0% 0% 0% n.a.
—Culture 0% 0% 0% n.a.
—Social norms 0% 0% 0% n.a.
III—FOB CONTEXT 0% 0% 22% 7.48*
—Board of directors 10% 50% 33% 6.36*
• Composition 15% 42% 22% 2.92
• Frequency 0% 33% 22% 7.20*
—Strategy 5% 25% 11% 2.81
• Strategic planning 15% 42% 0% 6.19*
—Previous succession experiences 15% 8% 0% 1.63
—Economical/financial situation 10% 8% 44% 6.12*
—Culture, organizational climate, org. design 0% 8% 44% 11.69**
—FOB formalization (processes, structure . . .) & FOB size 15% 8% 22% 0.80
—FOB form/ownership 5% 8% 11% 0.37
—Incumbent 0% 0% 0%
• Quality incumbent-successor relationship 30% 50% 78% 5.80
(respect, understanding, trust, cooperation & closeness)
• Motivation/Willingness 25% 67% 44% 5.41
• Personality, needs 30% 33% 56% 1.83
• Age 15% 0% 22% 2.66
• Gender 5% 0% 11% 1.37
—Successor 0% 0% 0%
• Quality incumbent-successor relationship (respect, 30% 58% 67% 4.34
understanding, trust, cooperation & closeness)
• Motivation (interest, commitment . . . to FOB 40% 50% 33% 0.62
perpetuation as a family value, freedom not to join FOB)
• Management ability, competence, talent, experience, 25% 33% 22% 0.39
drive, credibility & legitimacy
• Personality, needs 25% 8% 33% 2.10
• Personal & financial investment 10% 0% 0% 2.21
IV—FAMILY CONTEXT 0% 0% 22% 7.48*
—Family dynamics 20% 8% 11% 0.93
• Collaboration, accommodation, team approaches 30% 33% 56% 1.83
rather than conflict-rivalry, harmony, quality of sibling
relationships
• Trust 10% 17% 11% 0.32
• Openness 5% 17% 0% 2.42
• Information sharing 5% 25% 22% 2.93
• Conflict resolution process 5% 17% 22% 2.04
• Spouse/mom leadership 10% 8% 0% 0.94
• Respect 10% 8% 0% 0.94
• Shared values 5% 8% 11% 0.37
—Family influence on business decisions, commitment to 10% 25% 44% 4.38
the business & importance of family funding
—Family council/meetings 0% 17% 0% 5.08
• Frequency & Composition 0% 17% 0% 5.08
• Mission & Family strategic plan 0% 17% 0% 5.08
• Norms/values 0% 17% 11% 3.32
• Rules/policies inside the FOB 0% 17% 11% 3.32
• Roles/responsibilities inside the FOB 0% 25% 22% 5.46
—Family-firm interface is positive 5% 0% 0% 1.08
—Adaptability 5% 0% 11% 1.37

320 ENTREPRENEURSHIP THEORY and PRACTICE

Table 3

Continued

Type of study

Empirical Anecdotal Theoretical Pearson

Variables in the literature N = 20 N = 12 N=9 Chi-Square

V—SUCCESSION PROCESS (management & 0% 17% 11% 3.32

ownership)
—Ground rules & first steps 0% 0% 0% n.a.
• Shared vision for the future to establish 15% 42% 22% 2.92
• Succession planning including: 25% 67% 11% 8.51*
• Selection criteria 0% 8% 11% 2.09
• Range of candidates (family, in-laws, extern) 5% 25% 11% 2.81
• Rules for choice (primogeniture, etc.) 0% 25% 0% 7.82*
• Identifying potential successor(s) & TMT 0% 25% 0% 7.82*
• Governance guidelines (rules for ownership, board, 0% 0% 0% n.a.
council)
• Leadership partition plan & transition 0% 42% 22% 9.41**
• Ownership partition plan 5% 42% 22% 6.47*
• Succession task force (key people/major 10% 17% 0% 1.63
stakeholders: TMT, board, company veterans, outside
counselor, family)
• Career plan for bypassed non-family members & 5% 25% 11% 2.81
family members
• Time frame & timing 5% 33% 22% 4.47
• To be established early, clearly, communicated & 10% 42% 22% 4.39
adjusted with feedback
—Nurturing/Development of successor(s) 10% 67% 11% 13.72**
• Establishing gaps between FOB needs & 0% 17% 0% 5.08
prospective successor abilities
• Formal education program 20% 50% 22% 3.54
• Training program 15% 33% 22% 1.47
• Apprenticeship (transfer of knowledge—explicit & 20% 50% 56% 4.70
tacit—& contacts)
• Career development, early exposure to the business & 30% 42% 44% 0.75
growing involvement
• Outside work experience 20% 58% 33% 4.90
• Incumbent personal interactions in the successor 10% 42% 22% 4.39
preparation
• High performance standards asked in the FOB as an 10% 33% 22% 2.65
employee
• Previous employment with the business 10% 0% 0% 2.21
• Guidance, supervision, mentoring 5% 33% 22% 4.47
—Selection 0% 33% 11% 4.65
• Design of a formal & legitimate process: 5% 25% 0% 5.08
• Final selection criteria 0% 17% 0% 7.8*
• Selection committee (jury, rules) 0% 17% 0% 5.08
• Person (talents, desire) and firm fit 5% 17% 11% 1.18
• Selection of the CEO and TMT 0% 0% 0% n.a.
—Hand-off/Transition Process/Installation 0% 17% 11% 3.32
• Incumbent phase out/transition & new role 15% 50% 44% 5.11
• Successor phase in (COO, CEO, chairman) 0% 25% 56% 12.52**
• Bridge manager interim 0% 8% 0% 2.48
• Criteria for the performance of the successor 0% 0% 11% 3.64
—Transfer of capital 10% 25% 22% 1.41
• Partition of shares 5% 17% 0% 2.42
—Performance/Evaluation—Feedback (monitoring the 10% 25% 22% 1.41
process to adjust)

** .01 (9.210); * .05 (5.991)

Summer, 2004 321

 We would be more heartened if empirical and theoretical researchers were beginning
to devote more attention to filling these gaps. Unfortunately, as we can see from Table
4, things seem to be exactly the opposite. Many of the neglected context and process
factors have been more neglected in the 1990s than the 1980s. A quick perusal of the
proportions on the table shows a decline between these two decades, almost across the
board—for the majority of the variables in our model. This suggests an increasing spe-
cialization of research into the succession process. While such specialization can be useful
for understanding some aspects of succession in depth, it risks a de-contextualized, static,
and deterministic view of the process. Succession is complex, dynamic, and multifac-
eted, and its successful evolution may be contingent on numerous contextual and process
factors. Only broadly construed research can reveal the workings of these subtleties. The
one optimistic sign from Table 4 is that so much more work is now being done.

Table 4

Variables in the Literature Mentioned by Period of Publication

Period of publication

60–79 80–89 90–99 00–02 Pearson

Variables in the literature N=4 N = 11 N = 24 N=9 Chi-Square

0—TIME & TIMING 25% 36% 13% 33% 2.91

I—INDUSTRY CONTEXT 25% 9% 4% 11% 1.99
II—SOCIAL CONTEXT 0% 0% 0% 0% n.a.
—Culture 0% 9% 0% 0% 3.34
—Social norms 0% 9% 0% 0% 3.34
III—FOB CONTEXT 0% 9% 0% 22% 5.76
—Board of directors 25% 45% 25% 33% 1.38
• Composition 0% 55% 25% 0% 9.33*
• Frequency 0% 0% 21% 11% 3.88
—Strategy 25% 27% 13% 11% 1.48
• Strategic planning 25% 36% 13% 11% 3.12
—Previous succession experiences 0% 18% 8% 0% 2.53
—Economical/financial situation 0% 27% 13% 33% 3.14
—Culture, organizational climate, org. design 25% 9% 13% 22% 1.06
—FOB formalization (processes, structure . . .) & FOB size 25% 18% 13% 0% 2.15
—FOB form/ownership 25% 0% 8% 0% 3.89
—Incumbent
• Quality incumbent-successor relationship 25% 55% 50% 44% 1.23
(respect, understanding, trust, cooperation & closeness)
• Motivation/Willingness 25% 55% 42% 67% 2.46
• Personality, needs 25% 45% 29% 44% 1.22
• Age 0% 27% 4% 11% 4.64
• Gender 0% 9% 0% 11% 2.87
—Successor
• Quality incumbent-successor relationship (respect, 25% 45% 54% 44% 1.57
understanding, trust, cooperation & closeness)
• Motivation (interest, commitment . . . to FOB 25% 45% 38% 56% 1.28
perpetuation as a family value, freedom not to join FOB)
• Management ability, competence, talent, experience, 25% 55% 25% 44% 3.11
drive, credibility & legitimacy
• Personality, needs 0% 18% 25% 22% 1.47
• Personal & financial investment 0% 0% 4% 11% 1.71

322 ENTREPRENEURSHIP THEORY and PRACTICE

Table 4

Continued

Period of publication

60–79 80–89 90–99 00–02 Pearson

Variables in the literature N=4 N = 11 N = 24 N=9 Chi-Square

IV—FAMILY CONTEXT 25% 0% 0% 11% 6.77

—Family dynamics 0% 18% 13% 11% 0.90
• Collaboration, accommodation, team approaches 0% 27% 42% 44% 3.44
rather than conflict-rivalry, harmony, quality of sibling
relationships
• Trust 0% 18% 21% 0% 3.22
• Openness 0% 0% 13% 0% 3.34
• Information sharing 0% 18% 21% 0% 3.22
• Conflict resolution process 25% 18% 17% 0% 2.10
• Spouse/mom leadership 25% 9% 4% 11% 1.99
• Respect 0% 0% 13% 0% 3.34
• Shared values 0% 9% 13% 0% 1.82
—Family influence on business decisions, commitment to 0% 9% 29% 22% 3.21
the business & importance of family funding
—Family council/meetings 0% 18% 8% 0% 2.53
• Frequency & Composition 0% 0% 8% 0% 2.18
• Mission & Family strategic plan 0% 9% 8% 0% 1.23
• Norms/values 0% 9% 8% 0% 1.23
• Rules/policies inside the FOB 0% 27% 8% 0% 4.84
• Roles/responsibilities inside the FOB 0% 27% 13% 11% 2.19
—Family-firm interface is positive 0% 0% 4% 0% 1.06
—Adaptability 0% 0% 4% 11% 1.71
V—SUCCESSION PROCESS (management & 0% 0% 8% 11% 3.57
ownership)
—Ground rules & first steps 0% 9% 0% 0% 3.34
• Shared vision for the future to establish 25% 36% 21% 44% 1.91
• Succession planning including: 50% 45% 25% 33% 1.74
• Selection criteria 0% 9% 4% 0% 1.21
• Range of candidates (family, in-laws, extern) 25% 18% 13% 0% 2.15
• Rules for choice (primogeniture, etc.) 0% 18% 8% 0% 2.53
• Identifying potential successor(s) & TMT 0% 9% 8% 11% 0.46
• Governance guidelines (rules for ownership, board, 0% 0% 0% 11% n.a.
council)
• Leadership partition plan & transition 0% 27% 25% 22% 1.41
• Ownership partition plan 0% 27% 21% 22% 1.33
• Succession task force (key people/major 25% 18% 8% 11% 1.19
stakeholders: TMT, board, company veterans, outside
counselor, family)
• Career plan for bypassed non-family members & 0% 27% 8% 11% 3.03
family members
• Time frame & timing 25% 45% 17% 22% 3.15
• To be established early, clearly, communicated & 0% 36% 29% 22% 2.17
adjusted with feedback
—Nurturing/Development of successor(s) 25% 36% 29% 11% 1.75
• Establishing gaps between FOB needs & 0% 18% 8% 11% 1.23
prospective successor abilities
• Formal education program 25% 27% 33% 33% 0.29
• Training program 25% 36% 21% 22% 0.91
• Apprenticeship (transfer of knowledge—explicit & 25% 36% 42% 11% 3.19
tacit—& contacts)
• Career development, early exposure to the business & 25% 55% 38% 22% 2.52

Summer, 2004 323

Table 4

Continued

Period of publication

60–79 80–89 90–99 00–02 Pearson

Variables in the literature N=4 N = 11 N = 24 N=9 Chi-Square

growing involvement
• Outside work experience 25% 55% 42% 11% 4.60
• Incumbent personal interactions in the successor 25% 18% 29% 11% 1.57
preparation
• High performance standards asked in the FOB as an 0% 36% 13% 22% 3.66
employee
• Previous employment with the business 0% 9% 0% 22% 5.76
• Guidance, supervision, mentoring 0% 36% 21% 11% 3.13
—Selection 25% 9% 13% 11% 0.70
• Design of a formal & legitimate process: 0% 9% 8% 22% 1.87
• Final selection criteria 0% 0% 4% 22% 4.96
• Selection committee (jury, rules) 0% 9% 13% 0% 1.82
• Person (talents, desire) and firm fit 0% 18% 8% 22% 1.94
• Selection of the CEO and TMT 0% 9% 0% 0% 3.34
—Hand-off/Transition Process/Installation 25% 9% 8% 11% 0.99
• Incumbent phase out/transition & new role 25% 55% 29% 44% 2.27
• Successor phase in (COO, CEO, chairman) 25% 45% 21% 22% 2.29
• Bridge manager interim 0% 9% 4% 0% 1.21
• Criteria for the performance of the successor 0% 9% 0% 0% 3.34
—Transfer of capital 0% 27% 21% 11% 1.89
• Partition of shares 0% 0% 8% 11% 1.57
—Performance/Evaluation—Feedback (monitoring the 0% 36% 25% 0% 5.33
process to adjust)

** .01 (11.341); * .05 (7.815)

Conclusion

After more than 30 years of investigation, there is clearly an emerging consensus on

some of the elements that are expected to be important to successful FOB successions.
As we can see from Table 1 and Figure 1, the most evidence concerns characteristics of
successor and incumbent, nurturing/development of successor(s), family relationships,
hand-off of power, shared vision, succession planning and the presence of a board of
directors with strong outsiders on it. A good number of these variables are only partially
subject to manipulation. Absent especially from the empirical and theoretical research
and the normative models (versus the richer anecdotal accounts) are controllable factors
such as ground rules, selection, nurturing, and family councils. As we have argued, these
processes and actors can play key roles in assuring the health of successions, especially
in the face of uncertainties that so often derail the process. Succession is not an accident
nor an event but a sophisticated process occurring over a very long period of time. It is
a long-term dynamic issue that requires an ability to constantly adapt in the light of evolv-
ing circumstances. This is particularly true in today’s dynamic business environments.

324 ENTREPRENEURSHIP THEORY and PRACTICE

Other neglected factors, sometimes reflecting these uncertainties, are trends in industry
competitive and social contexts: factors businesses ignore at their peril.
Although the literature covers thoroughly some of the major components of the
model, there appeared to be serious gaps in describing both aspects of the context and
the stages of the succession process. It was as though we had a set of dots of data sepa-
rated by gaps in empirical and conceptual knowledge. The most glaring gaps were in
areas such as the broader business and social context, establishing ground rules and eval-
uation criteria for the process, and adjusting the process in the light of feedback. This
made for a rigid, de-contextualized view of succession, one ever less appropriate to
today’s dynamic and multicultural business environment. We tried to fill these gaps with
context, actors, and processes that appeared to be potentially important, erring always on
the side of inclusion to derive as complete a model as needed to explain successful suc-
cession under a wide variety of potential conditions.

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Isabelle Le Breton-Miller is a Senior Research Associate at the University of Alberta and CEO of Organi-
zational Effectiveness Research, Inc., in Montreal.

Danny Miller is a professor at HEC Montreal and holds the Chair in Family Enterprise and Strategy at the
University of Alberta.

Lloyd Steier is a professor at the University of Alberta.

328 ENTREPRENEURSHIP THEORY and PRACTICE