Succession planning within family owned businesses in accession countries: a case study of Iankov and Co, Bulgaria

Succession planning within family owned businesses in accession countries : a case study of Iankov and Co , Bulgaria

2007 TABLE OF CONTENTS

CHAPTER 1 4

INTRODUCTION 4

Section 1 . Introduction 4

Section 2 . Research Objectives 6

Section 3 . Research Hypotheses 6

Section 4 . Background on the Study 6

Subsection a . Overview of Family Businesses 6

Subsection b . Theories on Family Businesses 10

Section 5 . Structure of the Dissertation 13

CHAPTER 2 15

LITERATURE REVIEW 15

Section 1 . The Need for Effective Succession 15

Subsection a

. The Agency Relationship 21 Subsection b . Family Culture versus Business Culture 23

Subsection c . The Dynastic Family Firm 25

Section 2 . Challenges and Issues in Succession 27

Subsection a . Balancing Family and Business Issues 28 Subsection b Role and Participation of Family Members 30 Subsection c . Conflict Between Generations 33

Subsection d . Overcoming the Barriers 36

Section 3 . Challenges for the Incumbent and the Successor 42 Subsection a . The Perspective of the Incumbent 43 Subsection b . The Perspective of the Successor 48

Section 4 . Developing a Succession Plan 50

Subsection a . Potential Problems in Succession Planning 50

Subsection b . Planning for Continuity : A Recommended Succession Plan 52

CHAPTER 3 59

METHODOLOGY 59

Section 1 . Selected Research Methodology 59

Section 2 : Selected Research Strategies 62

CHAPTER 4 65

FINDINGS AND EVALUATION 65

Section 1 . Managing the Agency Relationship 68

Section 2 . The Roles of Incumbents and Successors in Succession Planning 72

CHAPTER 5 74

CONCLUSION 74

BIBLIOGRAPHY 81 LIST OF TABLES

TABLE 1 . Forces Within the 4 Subsystems in the Family Firm 47

TABLE 2 . Determinants of Successful Transition 49 CHAPTER 1

INTRODUCTION

Section 1 . Introduction

Family-owned businesses have often been a much overlooked in the study of business management and organisational development , in spite of the fact that the family institution has long played an integral part in economic activity and organisational life , with family members playing a pivotal role in company creation and development (Aldrich and Cliff 2003 Mokyr , 1985 Steier , 2005

A family business can be loosely defined as any business where majority of the ownership or control remains within a family , and wherein two or more family members are directly involved (Bowman-Upton , 1991 . Some of the most famous family businesses include the Marriott , Disney , Ford Nestle , Anheuser Busch , Ferrari , and Levi Strauss . Many family businesses are often key players in their particular industries , such as Dell , or Johnson Johnson . Compared to their non-family competitors family business are more than 5 profitable , achieve higher annual revenue and income growth , provide higher annual shareholder returns and are valued 10 higher by the equities markets (Vera and Dean , 2005

It cannot be denied that family is an integral aspect of organisational life and economic activity . As such , the role of family members in the creation and growth of a firm should be recognized (Aldrich and Cliff 2003 Mokyr , 1985 Steier , 2003 . It is erroneous to think that the influence of family on businesses is limited to small firms . For instance , in Standard and Poor 's...