Generational Differences in Levels of Control Held Among Family Businesses Approaching System

The article, "An exploration of the generational differences in levels of control held among family businesses approaching system" authored by De Pontet, Wrosch and Gagne examines the levels of perceived and objective control held by successors and incumbents in the family businesses assessed. The central hypothesis in this research is that, although control in businesses mostly remains with incumbents, the indicators of success readiness show otherwise. According to this study, succession readiness has a more reliable correlation with the level of control of the successors. The methodology of the study advances this assertion, and the results of the study confirm this hypothesis.

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The authors of this article have developed a clear hypothetical relationship between the variables examined. Firstly, they recognize that there have been previous studies on leadership succession in family businesses. The basis of this research is the evident failure of most businesses upon succession and assumption of leadership by the successor. Managerial affairs and the single-handedness of family businesses are some of the hypothetical reasons perceived to cause frequent stumbling of family businesses upon the death of the founder or any other factor necessitating the transfer of leadership roles in the business. This is further complicated by the fact that family businesses are associated with the overlap of family management and firm ownership, yet the transfer of both ownership and management usually takes place concurrently.

De Pontet, Wrosch, and Gagne, in their article, aimed at describing the relationship between the succession variables and the sharing of power between different generations of ownership, perceived control and management. To test their hypothesis as stated above, they examined a sample of businesses controlled by families, whose leaders were beyond or at the age in which they could no longer be involved in the direct running of their businesses. Based on previous studies and other hypothesized information, the authors of this text were able to form an initial assessment of the influence of both the successors and the incumbent in the succession process. To develop their own model, the authors consider the control measures of each of the forms assessed, for both the incumbent and successor generations. This study examined if the different measures of succession readiness were related to the subjective and objective measures of control by each generation in the business. Considering the hypothesis of this research, it is evident that there is a logical flow from the hypothesized constructs. The relationships stated in the theoretical assertions are well developed towards finding the correlation between success readiness and the level of control of the successor of a family business. This is further aided by the use of relevant references in their study. For instance, in the literature review section, they have used many references referring to similar or related studies done in the past. This serves to strengthen the authenticity of the findings of this research and their usability in future academic research. Overall, the references used in the whole article are relevant to the hypotheses the researchers seek to advance in the study.

Construct validity is one of the important aspects which determine the reliability of the results of a study conducted on any subject. In this study, the variables examined include the effect of the incumbent's control of a business in the succession, the influence of the successor's control of the business on succession and the influence of the succession process itself on the succession of a business. The hypothesis being tested is as to whether the readiness to succession has more impact on the success of succession than the control of the business by either the incumbent or the successor. From the hypotheses, the readiness of a leader and his/her awareness on the need to hand over to the successor is correlated to a decrease in his/her controlling interest in the business. The net effect of this is a rather smooth succession as revealed in the results section. However, from the data collected in the study, it is evident that most of the family businesses owners are not keen on the need to prepare in advance for their retirements, leading to more failures of family-controlled businesses. Based on this, it is evident that these variables are actually aimed at examining the central hypothesis of the research and hence the criterion of the research is valid, and the results of the study have a high confidence index.

The variables in this research are subjected to an ordinal level of measurement. Therefore, in proving the hypothesis stipulated in the research, the authors, compare the various scenarios distinctively before coming up with the conclusion. For instance, in the data they have used, they compare the effect of incumbents having a clear succession plan and incumbents not having a clear succession plan on the success of the succession process. Furthermore, the units of analysis in the research are individual, and the responses collected from the companies involved are individual for each family business. Based on these, these constructs are valid for any relevant academically oriented research. Also, the correlations between the variables are clear and relevant to the hypothesis.

Conclusion

Conclusively, the authors of this article present the central hypothesis clearly and proceed to prove the hypothesis using detailed research on family businesses' succession. Therefore, it is a useful resource in future studies on succession processes in family businesses.

Reference

Brun de Pontet.S., Wrosch.C., and Gagne.M. (2007). "An exploration of the Generational differences in levels of control held among family businesses approaching system." ProQuest Central.