Determinants of family business succession planning in Guinea

Abstract

The family business is the oldest type of business organizations worldwide. It has been the most reliable source of income for millions of families around the world and is the backbone of the world economy. In guinea, the family business has a tremendous contribution to the Guinean economy and its people by providing income to families, employment and tax revenue to the state. Despite its merit, family businesses have always had a major weakness, that is, its low survival beyond the first generation or, in other words, lack of continuity beyond the founder tenure. It is estimated that fewer than 6% of all family businesses across the world survive only up to the fourth generation. In guinea, many successful businesses in the past have ceased to exist after their founder’s death. This study investigated how factors such as the incumbent’s attributes, the successor’s attributes, the family relationship, the firm’s attributes, and the estate tax and polygamy practices affect the succession planning of Guinean family businesses. This is a cross-sectional quantitative study which used the primary data obtained through a survey. A total of 383 respondents participated in this study. The researcher used the theory of succession planning and mentoring, the resource-based theory and theory of family business rivalry. Structural equation model (SEM) was utilized to validate the model featuring factors influencing family business succession planning (FBSP). The findings of this study show that factors such as the incumbent’s attributes, the firm’s attributes, the polygamy practices and the estate tax do not have a significant influence on the succession, while the successor’s attributes and the family relationship have a significant effect on the succession planning. The polygamy practices are found to have an indirect influence on the succession planning through the family relationship. The findings have implications on the academic and family business community in guinea. The new generation of entrepreneurs will have to invest more time, money and efforts on the education and training of their potential successors and ensure that they maintain a healthy relationship based on trust and cooperation between family members. The new generation of entrepreneurs should be more aware of the consequences of polygamy and the possible harm to their businesses. This study has some limitations; therefore, a generalization of these findings should be done with caution as more studies are needed on the topic of family business succession in guinea.