Succession Planning in Black-Owned Family Businesses: A South African Perspective

Abstract

A significant number of businesses existing in South Africa originated as family-owned businesses and contribute substantially to employment creation, poverty eradication and wealth creation. However, globally the longevity of family businesses through generations remains a major cause for concern for all stakeholders. South African economy is characterised by a history of apartheid, where prior to 1994, the black majority only owned less than 5 percent of the businesses active in the economy. The economy is swiftly taking a turn and more black businesses are emerging. This study focused on understanding the factors that influence succession planning decisions in black-owned family businesses. The study followed an exploratory qualitative approach, using semi-structured interviews. Thirteen black family-owned business owners were interviewed. The key findings showed that possible successors in family-owned businesses regard the successor-related factors as the predominant drivers of management succession. The successor’s commitment to and interest in the business has a strong influence on decisions and criteria design across all the stages of the management succession process.