Succession in the family business often comes with a few changes in the manner of doing business. This could because of the change in the thought process between the stalwarts of the business and the new generation taking over. Often the younger generation looks to bring in a change to match the market pace by modernising the facilities of the business (Blignaut, 2016). However, such changes are prone to certain risks, which can be avoided with prior planning. Also, the family business inheritance often depends on the relationship that exists among the parent and the sons (Blignaut, 2016), which naturally can be expected to be extended in case of a daughter too. Without proper planning, some issues that are detrimental to the future of the company may arise, which could be difficult to mitigate in the longer run.
In case of a daughter taking over a family business, the situation and challenges are not much different from a case of a son taking over a business (Tucker and Collins, 2013). Young daughters are also as much exposed to the family business from an early age as their brother, therefore, starts developing the skills that are necessary to handle the rigours of business.
However, succession in the family business has its own set of challenges, irrespective of the gender of the successor. Generally, researches reveal that successor in non-family businesses often takes some time in adjusting, and he/she usually try to put forward his/her supremacy to prove the legitimacy and expose the change of power from the earlier times. (Ashcraft, 1999; Gephart, 1991). On the other hand, family firms need to act on the legacy of the business, with a vision that is consistent with it (Poza and Messer, 2001). Therefore, the time required for a smooth family business succession is generally more, due to the complexity of the actions related to the change of managerial controls (De Massis et al., 2008).
In order to comprehend the role of different theories in the family business succession, several theoretical situations have been designed. These designs look at the challenges that the successor, as well as the business, might face at the time of change of power or ownership. Depending upon the time, situation and the capabilities of the successor, these theories are applied in order to find out the correlation between them and the process of taking over a business from their family members, which in this case is the transfer of power from the father to daughter.
In certain cases, family businesses often look to sort out the issue of family ownership through agencies. The succession process planning, in this case, depends on the agency literature, and the economic activity of the household. In adopting the theory, several instances of management of threats that may arise in case of family succession feud can be avoided. However, the fact that agencies can become a threat is often ignored. This paper studies the implications of the agency involvement in the South African family businesses and tries to prove the theory.
The research paper also consists of the examination of another theory associated with the family business succession, known as the field theory. This theory speaks about finding out the psychological factors related to the family member’s inclination towards a business owned by the household, and the cause of participation in it. The study looks to explore the reasons behind this behavioural aspect of the family successor, in order to understand their perspective towards the business, which may lead to finding out the future direction that the business would be taking. The understanding of the field theory will be depending on the socio-economic, as well as the other factors that are crucial in forming the entrepreneurs’ perception.
The family succession is driven by another technique and is known as the systems theory. This model takes all the external factors that play a role in the succession of business and tries to analyse it from the family perspective. Therefore, in order to understand the concept of succession, the systems theory proposes the conception of a three-circle theory, thus forming the basis of it. The primary objective is to understand the outsiders’ role, and the three-circle model has been defined for the family businesses (Davies, 2018). The three circles represent the three pillars of the business and consists of the Family, Business, and Ownership (Davies and Tagiuri, 1978). These three circle analyses the role of each of the pillar in determining the structure of the family business, and the ownership issues. The systems theory also analyses the role of the other family members, who may be participating in the business, and the extent of their influence or the ambition over the ownership issues.
The process of ownership transfer from father to the daughters needs to take up all these theories into the account. The study seeks to answer the primary research objective of finding out the challenges of the succession in the family business, and the effect of prior planning in arresting them. The research also looks to analyse the issue of gender bias, and gender-related effects of the change in the hierarchical structure in accordance with the South African family businesses.
This literature review forms the basis of the research, and the researchers would be exploiting the resources in order to reach a valid conclusion.
Reference
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