Abstract:
The significance of the family firm in the South African economic environment is
growing each year. This increasing relevance is owing to growth experienced by family
businesses in South Africa. Family businesses are found to provide jobs to a large
unskilled population in South Africa, and in turn contribute to the stability and growth in
the communities in which they operate. However, family firms experience a 70% failure
rate in their second generation of operation and an 88% failure rate in their third
(Downes, 2011). It is found that one of the major issues in the failure rates of
subsequent generations of family businesses is due to the inability of family businesses
to manage the dynamics that influence the succession planning process.
The aim of this study is to provide insight into the family business’s characteristics,
dynamics and practices, primarily those characteristics that govern cross-generational
ownership. According to Adendorff and Boshoff (2011), Gupta and Levenburg (2010),
Papalexandris and Panayotopoulou (2004) and Taruwinga (2011), the organisational
culture is amongst the most important dynamics that influence succession planning.
This study therefore focuses on understanding the influence of culture on the
succession planning process of family businesses. Eight South African Muslim-owned
family businesses have been selected as the sample for the current study and
therefore provide a unique insight into the influence of culture on succession planning
in family businesses of religious commonality. A Rapid Ethnographic research
methodology was adopted to provide insight into the cultural elements of the
businesses.
Cultural elements were found to influence the planning for the handover, the selection
process of the successor, the training and development of the successor, the handover
process and the management stage of the businesses. The study found that certain
cultural aspects were influenced by religious practices and sentiments stemming from
the Islamic belief system. These cultural aspects were found to be the most influential
cultural elements in the succession planning process of South African Muslim-owned
family businesses. This study therefore implicitly provides insight into the strong
influence that religion has on organisational culture and ultimately on succession
planning of family businesses.
