Family business success factors: management practices, relationship among members and succession experience

Family businesses comprise the predominant form of enterprise around the world, yet, until now, few
structured information is available on the unique and complex issues they face. This may be attributed to the
fact that only in the past 20 years that researchers have started to study and understand the core
fundamental idea: that family businesses differ critically from non-family business. In an attempt to explain
the success of family business in the context of Kelantan, one of the north-eastern corner of Peninsula
Malaysia, a state actively associated with small entrepreneurial belt of businesses, the question at the
forefront is: What are the key factors which determine the successful continuity of family business across
generations in Kelantan? This research identifies the key success factors by examining the management
practices of these family businesses; determining the potential growth and development; and addressing the
intergenerational-transition issues in family businesses. A total of 55 successors of family business
responded to the survey and gave useful insights on their journey in preparation of heir, management
activities, style and characteristics, relationship among family members and partners, business concerns
and challenges, succession experience and current business performance. Descriptive and correlation
analyses were done to compile and interpret findings. Overall, results refute the general postulation that
selection of successor is based on birth rank, education background and gender and that authoritarian style
dictates the management practices of such businesses. Puzzled findings from this study show that first
generation owner selected their successor based on competencies and many successors, while in the
presence of the founder or predecessor, enjoy full authority and freedom in managing their businesses.
Participative, as opposed to authoritarian style is reported. Findings also conclude that family business
performance are built upon the management activities, style and characteristics of business, relationship
among family members and partners, succession experience, business concerns as well as challenges. Both
theoretical and practical implications as well as avenues for future research are discussed.