Succession as a key element of sustainable development in a family-owned business

Summary

Abstract

A paper presenting the opinions of a wide range of practitioners speaks for the development of a specific organizational culture and social responsibility of family businesses. Succession and the longevity of a family business can raise some formal, organizational, financial or even psychological barriers. However, longevity represents a certain value that cannot be converted into acquires above. Entrepreneurs who have successfully gone through succession see a fundamental value in the longevity of their company. The advantage of family businesses is the long-term orientation of business activity and the desire to pass the business on to descendants. In the functioning of such an enterprise, “family logic” often dominates over “business logic”, family values over economic values. Such properties of family enterprises are closely correlated with the concept of sustainable socio-economic development, which is widely promoted today.

Keywords: family business, succession, plan of succession, family constitution, longevity, sustainable development

Introduction

Succession in a family business means a generational change involving the transfer of ownership, power and knowledge by its previous owner and manager (nestor) to his successor, provided that the family character of the company is preserved. It is transferring responsibilities (rights and duties, knowledge resources related to the management of the company) from the nestor to the successor. The primary intention of succession is to ensure the development of the family business and its survival in the market. We can define a successor as a member of the owner family in the second or next generation, who prepares for the generational change and works in the family business (PARP, 2014; Bar, 2018).

Today there are over 800,000 family businesses in Poland, accounting for approximately 90% of all business entities in the country. Over 261,000 people work in the top 100 largest family businesses in Poland. Today 2.4 million owners are registered in the Central Register and Information on Economic Activity (CEIDG). Approx. 520 thousand of them are over 60 years old (Ministerstwo Rozwoju i Technologii, 2023; Thier, 2020). Most of these people will soon face the need for succession.

Until recently, in Western Europe, the founders’ children took only 30% of family businesses over, 10–12% was taken over by grandchildren and only 3–5% by great-grandchildren (Family Business Yearbook, 2015; Deloitte, 2016).