Family business succession practices: the Philippine experience

Place

CEM Multi-Purpose Room UP Los Banos

Date

6-28-2001

Abstract

A family business is any business which is majority owned or controlling by a simple family. and in which two or more family members are directly involved. It is a complex, dual system consisting of the family and the business. Family members involved in the business arc part of a task system as well as of a family system. Succession is transferring of leadership to the next generation. In occurs in four phases: initiation, selection, education and transition. In the Philippines, there are a number of large family business, some of which have operated beyond the first generation. It is interesting to note that most of the companies represented by families are conglomerates and have stocks currently traded in the market. Yet, they are able to maintain their status as family corporations because either the leadership rests with the family or the family has retained majority shares of the company. In a family business, the management of change becomes more complex because family business owners manage not only their business but their family as well. It is therefore a common experience that family values and themes affect their changes in the business managed. This research study sought to determine family characteristics that affect succession outcome. Specifically, it described the structure and relationship in the family and business; analyzed the interaction of the family and business systems; determined the factors considered in choosing successors; and analyzed its implications. Three cases were highlighted in this study, one was on advertising and consultancy services; the second on fashion dresses marketing and the third on paper trading The researcher adopted the case method and conducted in depth interviews with CEO/managers of the three family businesses identified earlier. They were selected on the basis of accessibility and willingness to cooperate.

The family businesses were of corporate structure. The inter-generational relationship was described with cordiality and respect. The patriarch or the business founder assisted the successor solve the problems when they arose. Likewise, he helped solve family conflicts. The study revealed that family businesses started for a number of reasons, namely: as a hobby, as his own boss: as an entrepreneur. On the other hand, the retiring of the patriarch triggered leadership succession. The major selection criteria for succession were competence and primogeniture. Two of the throe family businesses did partial planning in relation to succession. One did not plan at all. The SFI scores of these businesses under study ranged from adequate to borderline. In general. we can conclude that family business succession is influenced by both the family system and the business system. The healthier the family (as opposed to dysfunctional) the smoother would be the leadership succession And the healthier iamb and smoother the succession. the healthier business wise the enterprise

Location

UPLB Main Library Special Collections Section

Call Number

Sp. Col.

Pages/Collation

40 leaves

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