Succession Planning in Family owned Business in India A study on Automotive Component SMEs

Abstract

Indian businesses date back to the latter half of 19th century, which also marks beginning of business in India. It is not surprising that family run businesses were amongst the first ones which currently accounts 95 percent of all Indian companies. Considering that one third of companies listed in FORTUNE 500 fall under this category, indeed, family businesses have undoubtedly cemented their place in world economy. In Indian context, very little references are available on succession planning. Succession planning has been very critical and crucial decision for almost all companies. newline newlineResearch Objective newlineThe study has two major objectives first to understand the pattern and practices of succession planning in Family Owned Business and second is to identify factors affecting selection of successor in succession planning of Family Owned Automotive SMEs. newline newlineResearch methodology newlineTo achieve objective of study it was extremely important to strategically plan was developed. After literature review, researcher can recognize the research gaps, which can be further filled, reframed, and further processed. Qualitative method of interviews was conducted, quantitative tool was applied to identify determinants dependent and independent variables were identified, hypothesis created and further tested as model fit by SEM. newline newlineFinding and Results newlineSuccession planning differs on the basis of size and type of business. Small enterprises are generally in first generation whereas medium enterprises are in second or third generation of succession. Factors affecting selection of successor in Family owned SMEs are Emotional Influence, Family Involvement, Extent of formal succession planning, Personality. newline newlineDirections for further research. The model proposed can be further tested to understand its application and critically analyze to integrate process of succession planning with successor selection, training and retention. newline newline