A measuring instrument to predict family succession commitment to family business

Family businesses (FBs) are the most prevalent form of business throughout the world, and are highly pertinent in developing economies. The issue of succession in FBs has received some attention by researchers. Given that 15% of family businesses survives into the third generation, it remains an area of concern. In South Africa 80% of businesses in the formal sector are family owned. This article discusses the current level of knowledge in succession and commitment theories within a family business context. The different theoretical approaches to commitment include the behavioural, attitudinal and motivational theories. This article suggests that the motivational commitment approach must be used to predict successor commitment in the family business. A model is suggested to verify family succession commitment relationships and a measuring instrument has been developed based on the model to verify successor commitment.


Introduction
More than half the companies listed on the Johannesburg Stock Exchange (JSE) Limited in South Africa are family businesses.Estimations show 80 percent of the formal sector businesses are family owned, comprising almost 1.2 million businesses of which 330 000 are companies or close corporations and 870 000 sole proprietorships (Kruger, 2009).Approximately 30% of family businesses (FB) survives into the next generation, and 15% survive into the third generation (Astrachan and Allen, 2003).Supporting statistics revealed that three out of ten FB makes it through the second generation and only one out of ten makes it through the third generation.The biggest threat to FB is the lack of proper succession planning (Lambrecht, 2005).
The outcome of these statistics results in negative impacts on the economy and the growth of the economy (Chrisman, 2003).The South African Government aims for an economic growth of 4.5 to 6% in the medium to long term (The Presidency, 2006).Currently it holds and average of 4% growth (Info SA, 2009).Family-owned *Corresponding author.E-mail: wilfredukpere.ajbm@gmail.com.business should, therefore, be considered as significant to the well-being of South Africa and global economies.They have a unique potential to further economic growth and social stability within their respective countries (Cavusgil, et al., 2004).In this widely under-nourished field of study, there is a growing need to investigate the specific universal forces that lead to the superior performance and resilience of current FB (Kruger, 2009).

Problem statement
Only a meagre 30% of family businesses (FBs) continue into the next generation, and just about 15% of them progresses into the third generation.Supporting statistics revealed that three out of ten FBs makes it through the second generation and only one out of ten makes it through the third generation.The major challenge to FBs is the lack of proper succession planning.There is indeed a need to interrogate whether contextual factors of familial cultural socialisation is related to resulting commitment behaviours (RCBs) of the employed family member in the family business, and whether individual characteristics moderate this relationship.

Research questions
From the problem statement, the following research questions were triggered: (1) What is the relationship between individual characteristics and the RCBs of the employed family member in the family business?
(2) What is the relationship between familial cultural socialisation and the RCBs of the employed family member in the family business?
(3) What is the relationship between contextual factors and the RCBs of the employed family member in the family business?

Research objectives
The research objectives are as follows: (1) To establish the relationship between individual characteristics and the RCBs of the employed family member in the family business, (2) To examine relationship between familial cultural socialisation and the RCBs of the employed family member in the family business, (3) To understand the extent of the relationship between contextual factors and the RCBs of the employed family member in the family business, and (4) To develop a measuring instrument based on the model to verify successor commitment.

LITERATURE
The most critical challenges facing FB are family based issues rather than business based issues (Pistrui, 2005).FB deal with many similar issues to that of traditional companies, but if one adds family relations to the mix, it puts a twist on how ownership, management and growth are handled.The most crucial issues are identified as family communication, leadership succession and sustainability (Sharma, 2004).Literature shows that FB owners seek continuity in their FB from the next generations in their families (Corbetta and Montemerlo, 1999;Iannarelli, 1992;Kets de Vries, 1993;Llano and Olguin, 1986).According to the family business sustainability model (FBS) the successor commitment and the succession process are essential parts of a sustainable FB.Since the inception of this field of study, significant research efforts have been devoted to the topic of succession (Handler, 1994).The interest continues as revealed in the works of various authors (Burkart et al., 2003;Lee et al., 2003;Sharma et al., 2003).Earlier reviews revealed the importance of the study of the succession process in FB and described efforts devoted to describing perceived best practices (Bird et al., 2002;Sharma et al., 1996;Wortman, 1994).

Family business definitions
FB researchers are confronted by a definitional dilemma (Lansberg, 1988).Some researchers argue that FB is any business in which more than one member of the family is affected by business decisions.Under this definition, a proprietorship is a FB if the single owner discusses the business with his or her spouse at dinner.Others require that at least two members of the family are active in the management and/or ownership of the business.Still others consider a FB as one with family members from different generations active in the business.Some expect the family to be owners of at least 51% of the stock, while others believe the family simply needs to be able to exert its desires normally on major decisions.A number of definitions as cited in the work of Handler (1989) appear in Table 1.Closed analysis shows that the various authors have created definetions to fit within their realm of research; however all seems to agree that (1) the business must be run by one or more family members and (2) an expectation must be present that the FB will be passed over to the next generation.
For the purposes of this research, the following definition is proposed: "A family business is a business in which the majority legal ownership and control lies within a single family with expected intention that a younger family member irrespective of individual, cultural or contextual factors is committed to succeed the reigning current family member".

Family business success
An important direction for the future is to understand the extent of alignment in the definition of success used by key players of FB.The system of belief of stakeholder theory may prove useful in gaining such an understanding (Freeman, 1984).Perhaps, an alignment of stakeholders' perspective on what "success" means to them could be an important predictor of success of FB (Habbershon, et al., 2003), as such, an alignment can lead to agreement on appropriate mode and extent of involvement of key family and non-family members in the family-ownedbusiness (FoB).A mismatch in the definitions of success or goals that different stakeholders strive to achieve for the FoB could point toward a persistent source of conflict (Astrachan and McMillan, 2003).The concept of founder, next gene-ration and succession are clarified in the following discussion.

Reference
Definition of family business Barry, 1975:42 An enterprise controlled by the members of a single family.Barnes and Hershon, 1976:106 Controlling ownership rests in the hands of an individual or in the hands of the members of a single family.Alcorn, 1982:23 Defines a FM as a profit making concern that can take on any of the business forms e.g. a sole -proprietorship, partnership, or a corporation.If it is a public business the family must still be in control.
Interdependent subsystems (family involvement in the business) (Beckhard and Dyer, 1983:6) "The subsystems in the family firm system ... include (1) the business as an entity, (2) the family as an entity, (3) the founder as an entity, and (4) such linking organizations as the board of directors."Rosenblatt et al., 1985:4-5 Any business in which the majority ownership or control lies within a single family and in which two or more family members are or at some time were directly involved in the business.
Dyer, 1986:xiv A family firm is an organization in which decisions regarding its ownership or management are influenced by a relationship to a family (or families).
Stern, 1986:xxi FB is owned and managed by family members Davis, 1986:47 The business character is defined by the family members who manage it.
Generational transfer (Churchill and Hatten, 1987:52) There is an expectation that the next generation will take over Ward, 1987:252 Ward shares this sentiment that the expectation must be there that the business will be passed onto the next generation Lansberg, 1988:2 A business in which the members of a family have legal control over ownership.Donnelley, 1988:94 A company is considered a family business when it has been closely identified with at least two generations of a family and when this link has had a mutual influence on company policy and on the interests and objectives of the family.

Founders
Founders of an organization have a significant influence on culture, values, and performance of the organization (Collins and Porras, 1994;Schein, 1983).This phenomenon is due to the long occupancy of the founder in the FB and the centrality of their position in their family and the firm (Olson, et al., 2003).FB leaders possess a significant amount of tacit knowledge related to the business due to their long tenures (Lee et al., 2003).FB literature confirms the presence of this influence to be strong and that it continues for some time beyond term occupancy (Anderson et al., 2003;Garcia-Alvarez et al., 2002;Kelly et al., 2000;McConaughy, 2000).
It has been suggested that the performance of the next generation is likely to be based on the effectiveness with which this tacit knowledge and social networks, are transferred across generations (Cabrera-Suarez et al., 2001;Steier, 2001).The absorptive capacity of the recipient as well as the relationship between the source and the recipient was found to be important factors in the effectiveness of knowledge transfer (Cohen and Levinthal, 1990;Szulanski, 1995).Absorptive capacity has been defined as the ability to acquire, assimilate, transform, and exploit new knowledge; it is dependant on the existing level of knowledge and skills of the recipient (Szulanski, 2000;Zahra and George, 2002).

Next generation
Exploratory research on Western and Eastern cultures identified two variables, integrity and commitment to the business, as the most important attributes that the next generation must possess.Other variables identified are the ability to gain respect of non-family employees; decision-making abilities; experience; interpersonal skills; intelligence and self confidence (Handler, 1989;Chrisman et al., 1998;Sharma and Rao, 2000).The next generation's performance is significantly dependant on the level of their preparedness and their relationship with the senior generation (Goldberg, 1996;Morris et al., 1997).
There are behavioural and performance implications for the next generation should they want to pursue a career in their FB.Such a model to explain these implications were developed by Sharma and Irving (2005).
A majority of FB leaders have been found to be desirous of retaining family control past their tenure (Astrachan et al., 2002).Although the initial reactions to such preference were relegated to the propensity of FB toward nepotism, recent conceptual thinking suggests such preference to be a rational and efficient choice when the prevailing legal system accords low shareholder protection, such that separation of ownership and control becomes inefficient and when the family gains significant non-economic and reputational benefits from retaining the leadership within the family, and (3) the competitive advantages of a firm are based in individual knowledge that can only be transferred efficiently to family members or the most-trusted outsiders (Burkart et al., 2003;Lee et al., 2003).Both the FB leader and successor play critical roles in the succession process (Vancil, 1987;Sharma et al., 2003).

Succession
Significant differences in perceptions about the process of succession have been identified repeatedly (Alfred et al., 1997;Handler, 1989;Sharma, 1997), pointing towards the importance of engaging in processes that lead to development of collective beliefs (Astrachan and Habbershon, 1996).A study of 118 FB leaders revealed that the presence of a trusted successor who is willing to take over the leadership of the FoB must be identified to control the succession planning process.The appropriateness of successors' skills and experiences, timing, details by which succession will be achieved, and communication between the predecessor and successor is important for the success of the succession process (Dyck et al., 2002).It is generally agreed that this process extends over time and needs to be carefully planned (Davis et al., 1997;Davis and Harveston, 1998;Sharma et al., 2003).Continued research in the understanding of the extent of interest of next generation family members in their firms and the best mode of getting these individuals involved in the succession process is necessary (Fiegener et al., 1996).
An integrative model that describes the successful succession process which takes into account the contextual variables within the family, industry, and society was developed (Le Breton -Miller et al., 2004).
Although research needs to be directed toward subjecting this model to empirical testing, this effort is successful in providing a comprehensive conceptual framework to understand the succession process in FB (Sharma, 2004).Other efforts were directed towards understanding the reasons of succession failure (Deloitte &Touche,1999).In this case failure is defined as successor dismissal or firm bankruptcy (Dyck et al., 2002;Le Breton-Miller et al., 2004).
Based in this study of 16 failed successions, the core of failed successions was the misalignment between an organizational past and future (Miller et al., 2003).Three observed patterns of this alignment were conservative (attachment to the past), rebellious (wholesale rejection of the past), and wavering (incongruous blending of the past and present).Each of these patterns led to different performance implications (Le Breton -Miller et al., 2004).
Some researchers have made suggestions for adopting broader definitions of "success" of succession (Kaye, 1996) and differentiating between elements of a FB that should and should not be transferred across generations.In the past few years, questions have been asked about whether continuity of a FB is always a good thing?Although experience and intuition point toward a negative answer to this question, systematic conceptual development of this issue has not yet been undertaken (Drozdow, 1998;Kaye, 1996).

Successor-related research in South Africa
Successor-related factors that can influence the succession process in small and medium-sized FoB were empirically investigated in South-Africa.It was concluded that the willingness of the successor to take over the business is an important factor that influences both the satisfaction with the succession process and the continued profitability of the business.It was further concluded that a high external preparation level of the successor would have a positive influence on the continued profitability of the FoB.It was established that the relationship between the owner-manager and the successor had a significant influence on the respondents' satisfaction with the succession process, as well as on the continued profitability of the FoB (Farquhar, 1989;Venter et al., 2005).

Biographical factors
Biographical factors such as gender, birth order, age, race, education, assist to build up a profile of the FB respondent.Interactive relationships between, salient needs and FB commitment can be determined.

Organizational commitment theory applied to family business
Three categories of approaches to commitment theory evolved over time, namely: the behavioural, attitudinal and motivational schools of thought.The poor theoretical integration and poor theory building amongst these approaches were highlighted by Roodt (2004).
The behavioural approach to commitment identified a number of commitment behaviours such as "sidebets".The "side-bets" is the process of linkage of previous actions to a given action, which results in an individual to loose freedom in future behaviour.For example: where the employee does not change jobs because of a large pension or other benefits which he risks loosing (Becker, 1960(Becker, , 1964)).Little empirical evidence was found for the "side-bet" theory (Cohen and Lowenberg, 1990).The attitudinal approach includes three components of commitment, namely normative commitment, affective commitment and continuance commitment (Meyer and Allen, 1991;Mowday et al., 1979).The attitudinal approach assumes the conceptualisation as being multi-dimensional which poses problems in predictive models.From a conceptual perspective it does not meet the criteria of parsimony, clarity and precision.The attitudinal approach includes an affective as well as a cognitive component which creates a conceptual overlap with job attitudes.This approach also leads to contamination through cultural prejudices and influence (Roodt, 2004).

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The motivational approach is the third school ofthought in commitment theory and proposed by Kanungo (1982).It attempts to integrate the diverse perspectives as well as to overcome the most important limitations of the other approaches.Roodt (1991) identified some limitations of this model, and proposed a baseline motivational model for illustrating work commitment/alienation (Roodt, 2004).Regardless of the mind-set that forms the basis of their commitment, by its very nature, committed nextgeneration members will be compelled to join their family firms (Handler, 1990;Handler, 1992).However, the strength of the commitment-behaviour relationship will likely vary as a function of the basis of that commitment (Buchanan, 1974).Thus, the probability of pursuing a long-term career with the family firm might differ depending on the nature of the nextgeneration family members' commitment.There is reason to believe that the relations between commitment and discretionary behaviours will vary as a function of the basis of commitment (Sharma and Irving, 2005).Behaviours that go above and beyond the call of duty was identified as organizational citizenship (Organ, 1988), extra-role (Van Dyne and Cummings, 1990), and pro-social (Brief and Motowidlo, 1986).These behaviours are critical for effective organisation functioning and performance, although they are not specifically rewarded (Van Dyne et al., 1994).In the case of next-generation family members who will be future successors, these behaviours have a significant influence on the FB (Finegan, 2000).These individuals become the role models for the other non-family members in the business (Mazzola, et al., 2008).This sets the standards for acceptable norms of behaviour in the FB (Sharma and Irving, 2005).
The commitment of the successor towards the FoB has been identified as a key desirable attribute to predict the rate of success of the succession process (Astrachan, 2003).A model of antecedents and expected behavioural outcomes of each of these bases of commitment was developed (Sharma and Irving, 2005) and is based on the attitudinal approach of commitment.Since the motivational approach integrates the different approaches, the model proposed by Roodt (2004) was adapted in Figure 1 and served as a basis for this research.A discussion follows on these four bases of commitment.Normative commitment (based on perceived sense of obligation), affective commitment (based on perceived desire), calculative commitment (based on perceived opportunity costs involved), and imperative commitment (based on perceived need).
Normative commitment is based on an individual's feeling of obligation to pursue a course of action of relevance to one or more targets (Meyer and Herscovitch, 2001;Morrison, 1994) Roodt (2004) and Sharma and Irving (2005).
organizational commitment, an individual with high levels of normative commitment would feel obligated to remain with the organization (Meyer and Allen, 1991).Two factors that might be antecedents to normative commitment are: (a) familial norms related to gender and birth-order, and (b) institutionalization of norms (Sharma and Irving, 2005).From the literature two hypotheses has been proposed as follows: Hypothesis 1: There is a relationship between family individual factors (independent variable) and family member business commitment (dependent variable).Hypothesis 2: There is a relationship between family cultural factors (independent variable) and family member business commitment (dependent variable).
Affective commitment is based on a family member's strong identification with, and desire to contribute to, their FB.According to Sharma and Irving (2005) the affective commitment will likely contribute the strongest positive link with discretionary behaviours.A successor can experience affective commitment when they perceive an alignment between: (a) identity of self and that of an organization (Tajfel and Turner, 1985), and (b) career interests and opportunities available in the organization (Morrow, 1983;Reichers, 1985).FB has the added advantage to involve the successor from an early age in the business.The successor therefore receives hands on training within the business from other family members (Sciascia and Mazzola, 2008).Successor involvement can further be enhanced when; firstly there is an adoption of a formal and broad strategic planning process, and secondly the existence of either a business or an ownership purpose behind the realization of the strategic plan and thirdly the next generation successor is actually involved and not just an observer of the process (Brown, 1969;Astrachan et al., 2002;Zahra, 2003).Successors therefore have the potential to work with a superior commitment because they perceive firm performance as an extension of their own well-being (Sciascia and Mazzola, 2008) enhancing their identity of self and that of an organization (Tajfel and Turner, 1985).
The rationale behind this is because the involvement of the successor in the strategic planning process builds and/or reinforces the knowledge and skills, and in particular; industry and business knowledge, functional capabilities, and decision-making ability of the successor.In turn, this assists in the building of social and business networks inside and outside the company, together with credibility and legitimacy (Astrachan et al., 2003).This was identified as an important factor that helps FB to survive across generations (Chrisman et al., 1998) and because it contributes to the successor's career interests and opportunities, available in the organization (Morrow, 1983;Reichers, 1985).From this reasoning it follows that: Calculative commitment is based on perceptions of the cost involved with or the threatened loss of investments or value associated with not engaging in a particular behaviour (Herscovitch and Meyer, 2001).
People value dearly what they already possess or own (Issacharoff, 1998;Kahneman et al., 1990;Thaler, 1980).This propensity for possessiveness for an object and the perception of its value has been found to increase with the duration of ownership and the amount of invested funds over time (Issacharoff, 1998;Knetsch, 1989).Junior family members will perceive the FB to be a valuable asset due to the duration of ownership and the funds already invested into the business by senior family members (Shepherd and Zacharakis, 2000).The junior family member will then perceive that they will lose their status and/or value of their investment if they do not join the FB (Astrachan et al., 2003;Learned, 1995).
One of the various strategies that have been used to retain family labour within the firm are to pay family members more than their market value or earning power (Burkart et al., 2003;Leyton, 1970).This practice encourages dependence of these family members on the family firm as they get accustomed to a standard of living that they cannot support by pursuing a career outside the boundaries of their family firm (Aldrich & Cliff, 2003;Balshaw, 2004).Stewart (2003) referred to this strategy as a "golden handcuff."Regardless of the tactics used to tie nextgeneration family members into pursuing a career in their family firms.Economic investments are not the only benefits that the junior family member may lose by not joining the FB.Next-generation family business members may also fear the loss of investments that are social in nature.A successful FB can have significant accumulated wealth and potential for providing non-pecuniary benefits to family members.Examples of these benefits are participation in and the ability to influence social, political, and cultural events (Burkart et al., 2003;Demsetz and Lehn, 1995).
Significant research has been directed toward understanding social capital and its positive role in organizations and the success of an individual's career (Bolino et al., 2002;Lin, 2001).Social capital is defined as the "sum of actual and potential resources embedded within, available through and derived from the network" (Nahapiet and Ghoshal, 1998).Social capital is a highly important resource that provides information, resources, and access to markets, among other things (Sirmon and Hitt, 2003).One of the key benefits of FB is the possibility of the transfer of relationships or social capital across generations (Stewart, 2003).As this capital is important for the successful operation of existing firms or the creation of new ventures, pursuing a career in the family firm may be perceived as an important step to ensure continued support from the social networks of the previous generation and built-up social capital.
Imperative commitment is based on a feeling of selfdoubt and uncertainty of the ability to successfully pursue a career outside the family business.

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Individuals with high levels of imperative commitment perceive that they lack alternatives to a career in the family business.The underlying mind-set in this case is a "need to" pursue such a career (Vinton, 1998).In FB, the perception of not having career options available for them outside the FB can be caused by a limited exposure to alternate career paths, and/or perceived lack of marketable skills.
Hypothesis 3: There is a relationship between contextual factors (independent variable) and family member business commitment (dependent variable).
Sub hypothesis have been set but does not form part of the scope of this paper.The measuring instrument developed is based on the motivational approach, with a focus on the antecedents, individual factors, family cultural factors in relation to familial norms and values and contextual factors.Figure 1 illustrates a simplified adapted version of the baseline motivational model.

RESEARCH METHODOLOGY
Methodology used within this research was a qualitative review of existing literature based on the attitudinal commitment model proposed by Sharma and Irving (2005).The interviewing technique was used to establish face validity and understanding of the developed instrument in the correct context (Babbie, 1989;Bernard, 2000).

Measuring instrument
A self-administrative questionnaire divided into two major sections were used in this study: Section A: Antecedents to successor commitment in the family business (19 items) and Section B: Outcomes of successor commitment in the family business (12 items).

The composition of the instrument
Variables included in the study are based on the literature findings.Respondents rated their orientation on a 7-point numerical scale as reflected in the Appendix.This is a scale similar to a semantic differential except that numbers were used instead of the verbal descriptions.This type of scale uses bipolar adjectives in the same way as semantic differentials.It has been found that for educated populations a numerical scale is an effective measure of the true semantic differential (Zikmund, 2003;Kumar, 2005).
Section A: attempts to measure the antecedents to successor commitment in the FoB.

Reliability and validity of the instrument
As this is a newly developed instrument, no data is currently available.Care was taken in the development of the instrument in the Appendix.Factorial validity (sub-facet construct validity) of the instrument will be calculated on the data generated from this study.

PROPOSED VALUE OF THE RESEARCH
The proposed research will contribute to the family business literature, and will empirically test the antecedents as proposed in Figure 1.This research will further contribute to the body of knowledge of organizational commitment theory.This context aids in developing clarity with respect to the dimensional issues which have an effect on FoB (Sharma and Irving, 2005).Practical contributions will be that a commitment profile or index of family members can be developed once the model is empirically tested.This will then assist in clarifying career decision choices made by the next generation family business members, and succession decisions for successors (Sharma and Irving, 2005).

FUTURE RESEARCH
The measuring instrument developed is in the process of being empirically tested.It is suggested that other researchers adopt the instrument to check for cross cultural commitment factors.

CONCLUSION
Family-owned-businesses comprising more than 80% of businesses in various countries have the potential to further economic growth and social stability within their respective countries.There is a growing need to investigate the specific universal forces that lead to the superior performance and resilience of some FB (Kruger, 2009).The measuring instrument developed addressing the antecedents to successor commitment in the FB and the outcomes of successor commitment in the FB will add to the FB theoretical body of knowledge.

4.
Were you employed as a child (younger than 18) to help out in the Family Business?

Table 1 .
Alternative definitions of family businesses.
. In the case of Figure 1.A simplified baseline motivational model for illustrating work commitment/alienation.Adapted from Age of Family Business (in complete years) 10.Total Number of employees in Family Business 11.Total Number of Family Members employed in Family Business 12. Business Sector (Standard Industry Classification) (SIC) How many times was the Family Business transferred to a successor during its lifetime?14.Have you been earmarked to one day take over the management and control of the Family Business?