Breaking out or Breaking in? Exploring family dynamics in planning for succession

Abstract

The aim of this paper is to explore family succession and continuity in Punjabi-Indian ethnic family firms in the UK using stakeholder approach. The research objectives are to analyse how household dynamics can shape activities within small family enterprises within a specific cultural and sociological context, and to examine whether these later generation family firms actively involve family members in developing family businesses, that can be sustained beyond the current generation. The transition of ownership is crucial for small family business and extant literature indicates the differences between first and later generation family firms succession processes (Zellweger et al., 2011; Nodqvist et al., 2013). British-born second and third generation ethnic minorities are determining a new multicultural image of Britain and their methods of conducting business are somewhat different from their parents. Family firms literature indicates that second generation are more likely to “break out” by seeking professional salaried employment. Hence, succession in later generation family firms is a strategic issue, and all potential family stakeholders ought to be involved in the decision-making process (Rusinovic, 2008; Sharma, 2013). In this exploratory study of Punjabi-Indian ethnic minority family firms ten family firms based in Bedfordshire were recruited. In order to analyse the extent of second and later generations’ involvement in the business, a series of qualitative focus group interviews were undertaken with four to six family members of each ethnic minority business. In explaining our findings, we introduce a concept of “reverse break-out”, indicating that the later generation family stakeholders, show interest in being actively involved in shaping the family business. They show willingness to succeed and develop the business by diversifying away from cultural proclivity. Despite their aspirations to enter professional trajectory, the long-standing family business setting provides a platform for their ambitions to be realised. “Reverse break-out” actions of family members balance unstable and divergent stakeholder interests within Punjabi-Indian households. The unique dataset illustrated the power, influence and dynamics of relationships in the later generation family firms, as well as positive changes in family values and the impact of different family stakeholders have on succession planning.