Succession in family versus nonfamily SMEs: What influence does it have on performance?

• Author: Jonathan Bauweraerts,Olivier Colot
• Date: 01 September 2014
• DOI: http://doi.org/10.1002/cjas.1285
• Published date: 01 September 2014

Succession in family versus nonfamily SMEs:

What influence does it have on performance?

Olivier Colot*and Jonathan Bauweraerts

UMONS

Abstract

The literature on family SMEs usually shows a negative

inf‌luence of succession on performance. Based on a behav-

ioural approach,we identify several advantagesof intrafamily

succession that enhance value creation. In order to conf‌irm

the positive impact of intrafamily succession on performance,

a matched pair research design is used to compare the effect

of succession between 102 family and nonfamily SMEs. Our

results indicate that intrafamily succession contributes to

value creation in family SMEs. Moreover,intrafamily succes-

sion leads to higher levels of performance in comparison with

nonfamily SMEs experiencing succession and ownership

transfer. Copyright © 2014 ASAC. Published by John Wiley

& Sons, Ltd.

Keywords: succession, performance, family f‌irm, SME,

ownership transfer

Résumé

Les travaux sur les PME familiales montrent généralement

que la succession exerce une inf‌luence négative sur la per-

formance de celles-ci. Dans cette étude, les effets bénéf‌iques

de la succession intrafamiliale sur le processus de création

de valeur sont examinés à partir d’une approche

comportementaliste. Pour mettre en évidence l’impact positif

de la succession intrafamiliale, l’appairage statistique est uti-

lisé pour comparer l’effet de la succession entre 102 PME

familiales et non familiales. Les résultats montrent que la

succession intrafamiliale contribue à la création de la valeur

dans les PME familiales. Par ailleurs, comparées aux PME

non familiales confrontées à la succession et au tr ansfert de

propriété, les PME marquées par la succession intrafamiliale

connaissent des niveaux de performance plus élevés. Copyright

© 2014 ASAC. Published by John Wiley & Sons, Ltd.

Mots-clés : succession, performance, entreprise familiale,

PME, transfert de propriété

There is prolif‌ic research on the inf‌luence of change in

management on f‌irm performance and on shareholder

wealth. However, these studies primarily address the impact

of change in management in managerial companies and are

often focused on the effect management change has on f‌irm

stock price (Denis & Denis, 1995; Huson, Malatesta, &

Parrino, 2004). The results of these studies generally show

that f‌inancial performance is inf‌luenced, positively or nega-

tively, by changes in management (Dherment-Ferere, 1998).

At the same time, many studies have attempted to ana-

lyze the inf‌luence of succession on performance of family

f‌irms listed in the stock exchange (Bennedsen, Nielsen,

Perez-Gonzalez, & Wolfenzon, 2007; Smith & Amoako-

Adu, 1999). Only recently has empirical research begun

focusing on this problem within family-owned SMEs

(Cucculelli & Micucci, 2008). The emergence of research

on family-owned SMEs is hardly surprising since these or-

ganizations constitute a sizable portion of the world econ-

omy (IFERA, 2003). In addition, a report by the European

Commission (2006) shows that one third of European SMEs

will undergo a succession between now and 2016. Since

succession is a critical event not survived by many family-

owned companies (Carlock & Ward, 2001; Kets de Vries,

1993), it represents an important issue requiring investiga-

tion (Miller, Steier, & Le Breton-Miller, 2003) that takes

into account the context in which family style organizations

evolve (Cucculelli & Micucci, 2008; Wennberg, Wiklund,

Hellerstedt, & Nordqvist, 2011).

We address this gap by proposing a comparison

between the performance of family and nonfamily-owned

SMEs that have undergone succession in a specif‌ic market,

namely that of Belgium. Although Molly and Laveren have

already outlined succession in family SMEs in this institu-

tional framework, our study differs in that instead of

Please note that this paper was submitted in French and was translated upon

acceptance as per the CJAS translation policy.

*Please address correspondence to: Olivier Colot, UMONS, Faculté

Warocqué Economie et Gestion, 20, Place du Parc, Mons, 7000, Belgium.

Email: Olivier.Colot@umons.ac.be

Canadian Journal of Administrative Sciences

Revue canadienne des sciences de l’administration

31: 149–159 (2014)

Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/CJAS.1285

Can J Adm Sci

31(3), 149–159 (2014)Copyright © 2014 ASAC. Published by John Wiley & Sons, Ltd. 149