Project Abstract

Project Overview

<p> </p><p><b></b></p> <p><b>INTRODUCTION</b></p><p><b>1.1 &nbsp; &nbsp; &nbsp; Background to the Study</b></p><p>Context observations have indicated that family<br>businesses are common in Nigeria and their continuity has generated academic<br>debate and public discourse. Nevertheless, the factors orchestrating their<br>continuity are divergent and geographically diverse. In addition, the structure<br>and size of family owned firms varies depending on resource unitization and<br>industry, even though they are often perceived as small businesses. Empirical<br>studies (Hisrich &amp; Peter, 2006; Collins, 2006; Storey, 2008) have<br>attributed their continuity/survival to managerial depth or ineptness while<br>contextual factors and competition were identified and amplified by Porter<br>(1980, 1985) as well as Frederick (2008) who made references to internal<br>capabilities and external environment factors. &nbsp;</p><p>Family-owned businesses are the majority of all<br>businesses in the world (Heck &amp; Trent, 1999). The standard form of business<br>as it is known can be divided into two broad categories, namely family-owned<br>and non-family-owned businesses (Villalonga &amp; Amit, 2006). The active and<br>strong presence of family businesses is perceived in different nations as<br>catalyst for family welfare and socio-economic transformation (Hisrich, Peter<br>&amp; Dean, 2012). Abouzaid (2008) added credence to the discourse that they<br>constitute the world’s oldest and most dominant form of business organization.<br>The academic research and policy-makers’ interest in SMEs has grown due to<br>their role in the economy worldwide which an Ireland report asserted that 75%<br>of SMEs are family-owned businesses, while over 60% of all firms in most<br>nations are classified as family businesses (Timmons &amp; Spinelli, 2009).<br>Small businesses are expected to contribute in three areas: creating jobs,<br>promoting economic growth, and reducing poverty level in poor countries (Lint,<br>2012).</p><p>Family business research has been gaining impetus in<br>recent years (Chrisman, Kellermanns, Chan, &amp; Liano, 2010; De-Massis,<br>Sharma, Chua, &amp; Chrisman, 2012; Kellermanns &amp; Eddleston, 2010; Sharma,<br>Chrisman, &amp; Gersick, 2012) since they possess great potentials for<br>employment generation, improvement of local technology and development of<br>indigenous entrepreneurship within large scale industries as demonstrated by<br>the Central Bank of Nigeria (CBN). CBN, (2011) further articulated that SMEs or<br>family businesses have the capacity to reduce poverty, inequality disparity and<br>social vices and are catalysts of innovations, inventions and creativity;<br>stimulate indigenous entrepreneurship. Although<br>family businesses have the capacity to sustain the economy, yet their survival<br>and continuity has been of great interest to researchers. One of the key<br>research areas in the family business that has been discussed and still to be<br>investigated further is intergenerational transferability which Sharma (2004)<br>alluded to and can be addressed through knowledge management and succession<br>planning as a cushion for family business continuity.</p><p>Knowledge management is the achievement of the<br>organization is good by making the economic factors of production to be<br>productive. This is done primarily by facilitating the motivation of people to<br>tap into and develop their capacities (their core competencies) and to<br>stimulate their attitude to intrapreneurship (Beijerse, 2000). Besides this, knowledge<br>management includes the entirety of systems with which the accumulated<br>information within an organization can be managed and opened up (Beijerse,<br>2000). It is a sine que non for family business success in today’s global<br>economy for example, the more intangible<br>resources the business offers, the more possibility there is for creating<br>competitive advantage and core competence in family businesses (Seeley, 2000;<br>Lev 2002; Francis, 2014) and that is why a focus on knowledge management<br>consider people’s skills as the most important assets in ensuring continuity of<br>the small businesses most especially in advanced world.</p><p>Research on the important role of tacit<br>knowledge and technical expertise, which are intangible source of competitive<br>advantage to family businesses, has only been sparingly dealt with in<br>developing country like Nigeria. Therefore, the inability of family<br>business-owners to leverage on knowledge management practice and succession<br>planning frequently lead to disruptions and business discontinuity. Some<br>identified reasons for poor know-how sharing, transfer of competitive<br>intelligence, and knowledge to carry on the business are due to sudden death of<br>major leader, incapacitation, unplanned resignation or retirement (Morris,<br>Williams, Allen, &amp; Avila, 1997; Beckhard &amp;<br>Dyer, 1983). In addition, family<br>disputes with reference to inheritance could be disruptive if there is no<br>legally empowered successor within the family business.</p><p>Despite known tremendous contributions,<br>family-owned enterprises are facing the challenge of continuity, as 95% of<br>family-owned businesses do not survive the third generation of ownership<br>(Abouzaid, 2008). Related studies have also shown that less than one-third of<br>family businesses continue to the second generation and less than half of<br>second-generation family enterprises make it to the third generation when the<br>founder/manager retires or dies (Ogbechie &amp; Anetor, 2015). &nbsp;This problem is because of lack of succession<br>planning because, without effective succession planning there cannot be<br>generational enterprises (Onuoha, 2013). Succession planning is perceived as a<br>systemic, long-term process of determining goals, needs, and roles within an<br>organization and preparing individuals or employee groups for responsibilities<br>relative to work needed within an organization in the near future (Luna, 2012).</p><p>The lack of succession planning in Nigeria<br>is a serious issue militating against the survival of family-owned businesses,<br>as 94.2% of entrepreneurs do not have a succession plan (Onuoha, 2013). Despite<br>the challenge, posed by a lack of succession planning, most studies failed to<br>examine succession planning and its effects on the continuity of family-owned<br>enterprises in Nigeria. Few of the research conducted on succession planning tend<br>to focus more on the small and medium scale enterprises, paying less attention<br>to family-owned businesses. This situation is appalling considering the fact<br>that a large majority of SMEs are family-owned enterprises (European<br>Commission, 2009).</p><p>The purpose of succession planning<br>therefore is to minimize the gap and risk in the operations of the<br>organization, when key leader suddenly leaves the business. According to<br>Roberts (2002), the ultimate aim of succession planning is to promote the best<br>and brightest across the corporation by having the right person in the right<br>place at the right time for the right job. Another challenge in the family<br>business is the inability of the successor to acquire the past leader has<br>accumulated experiences, business intelligence, tacit knowledge, acumen and<br>technical skills to carry on the business. Little attention is given to<br>possible reasons why family businesses discontinue as against the situation in<br>developed nations like the U.S and Canada. </p><p>In Lagos State, some well-known family businesses<br>sprang up in the 1960s and the late 70s, however these businesses are no longer<br>in existence with examples: Bashorun M.K.O Abiola (Concord Group); Irawo Group of companies founded by the late<br>Chief Patrick Ayodele Irawo; Sunrise Group of companies founded by the late<br>Chief Ajibade Falodu, Balogun Group of companies founded by the late Alhaji Lai<br>Balogun; Sanusi Brothers Group of companies owned by the late Ayodele Sanusi,<br>and late Chief Augustine Ilodibe, group of Companies as documented by Newswatch<br>Time (2014). These businesses thrived while their founders were alive, but<br>folded up few years after their demise.</p><p>Therefore, one of the greatest challenges facing<br>family businesses in Lagos is post owner’ death business continuity;<br>uncertainty of the firm’s future beyond the founder. Lagos State as the<br>commercial hub of Nigeria economy from historical observations houses major<br>SMEs that are seen as family businesses with success and failure especially in<br>central part of Lagos city. The location is apposite judging from the aspect of<br>geography, demography, communication system, transportation, cultural diversity<br>and integration, and social system as compared to other locations. This work therefore intends to address the paucity through<br>a hybrid of succession planning and knowledge management as they relate to<br>family business continuity in Lagos State. </p><p><b>1.2 &nbsp; &nbsp; &nbsp; Statement<br>of the Problem</b></p><p>Cases of<br>family business failures are evident in Nigeria and particularly Lagos state,<br>despite the array of studies attributable to such area. In addition, ownership dilution; transfer of<br>both leadership and ownership tend to be seen as a phase in the company’s life<br>cycle, which form a part of managing continuity but less practiced by SMEs’<br>owner/managers. This stems out from owners’ emotional attachment or connection<br>with the business and thus transfers are often very problematic, challenging or<br>not considered at all as evidences suggest only 30per cent of family businesses<br>survive their founder (Kaunda &amp; Nkhoma, 2013). Family businesses in Lagos State are seen to<br>have large failure rate, or struggle to survive after a long time. One of the major issue to which this can be<br>attributed to is the rarity in proper knowledge management practice and<br>heritage struggle due to lack of or poor succession planning.</p><p>With<br>emphasis, a lack of proper knowledge management (KM) deters the creation,<br>accumulation, organization, reuse, retrieval, sharing, and transfer of<br>knowledge in organizations (Alavi &amp; Leidner, 2001) for the competitive<br>advantage. Knowledge is valuable and remains a competitive force that foster<br>business survival and the uncaptured tacit knowledge process, the knowledge<br>management and knowledge transfer poses a major challenge for the family<br>businesses continuity. &nbsp;Although,<br>Nigerian family business firms are acquainted with the concept of KM practices<br>(Suraj &amp; Ajiferuke, 2013; Suraj &amp; Bontis, 2012), not many efforts have<br>been made to examine the relationship between KM and their continuity.<br>Consequently, this lack of attention tends to undermine the prospects of<br>continuity of family business firms in Nigeria (Suraj &amp; Bontis, 2012).<br>Similarly, Ajaikaiye and Olusola (2003) reported that the attention given to<br>Nigeria’s KM system has been weak and unstable, and has consequently affected<br>its effectiveness and utilization. The lack of attention to knowledge<br>management capabilities by small family businesses can be evident in areas of<br>poor record keeping and information management; this pose a significant<br>challenge as owners of family businesses do not prioritize record keeping and<br>even where they keep records, they do not do it professionally (Adisa,<br>Abdulraheem &amp; Mordi, 2014). This leads to inability to produce information<br>on past activities and procedures as at when needed. </p><p>Handler (1990) wrote that succession in family businesses is<br>not a one-off process but is a continuous, multi-staged and reciprocal<br>interaction between the predecessor and successor. There ought to be concerted<br>effort between the incumbent and the likely successor in a bid to develop the<br>successor. Literature on family business succession emphasizes the importance<br>of the relationship between the successor and the incumbent in determining the<br>process, timing, and effectiveness of the succession (Brockhaus, 2004).<br>Succession planning has been essentially underplayed by small and family<br>businesses and this therefore affects the prospects of their<br>continuity. Many family businesses die because their leaders and even eventual<br>successors refuse to take risks, lack entrepreneurial skills have low<br>experience, lack the needed training and education (Ekeh, 2016). It is worthy<br>to note at this point that some problems of succession planning among family<br>businesses are internal which include lack of succession planning itself where they<br>never gave a thought to the need to prepare an acceptable successor in the<br>event of their exit, succession crisis, polygamy depending on the family structure,<br>management misfit, while others are external which are legal requirements, and<br>government provisions (Ogundele, Idris &amp; Ahmed, 2014).</p><p>The cost of failure to<br>take risks in family businesses is often underestimated coupled with the cost<br>in terms of time required to achieve and objectives. Lack of risk taking<br>reduces the potentials of the business thereby making to lack the capacity to<br>be managed properly by the owner let alone his successor hence succession<br>planning becomes an impossibility (Johnson &amp; Johnson, 2013). Also, the<br>absence of technical, human, conceptual and design skills shown by successors<br>of family business owners result in inability to efficiently demonstrate and<br>communicate with empathy, honesty and integrity thereby defeating the aim of<br>succession planning as evidenced with the family of Late MKO Abiola (Adisa, Abdulraheem &amp; Mordi,<br>2014). Another challenge is poor leadership experience among owners as well as<br>their successors. They lack the ability to build skills, increase self-awareness<br>and are unable to identify actions and methods for improvement This culminates<br>into lapses in leadership exhibited in the leaders’ inability to build trust<br>among followers, operate with questionable integrity, and failure to consult<br>others during the periods of decision making (Dyke, 2013).</p><p>The issues as identified above makes it a<br>challenge as well as threat to the continuity of family businesses as the<br>failure to take risks and poor leadership experience makes it difficult for<br>knowledge management and succession planning to be properly carried out. It is<br>against these issues that this study will be projected in order to demystify<br>the issues involved in knowledge management, succession planning and family<br>businesses continuity as well as proffering solutions to the threats identified<br>eventually.</p><p><b>1.3 &nbsp;<br>Objective of the Study</b></p><p>The<br>main objective of this study is to assess and determine influence of knowledge<br>management practice and succession planning on family business continuity. The<br>specific objectives are to:</p><p>1. &nbsp; &nbsp; <br>determine<br>the influence of knowledge management practices of the family business owners on<br>business continuity in Lagos State Nigeria;</p><p>2. &nbsp; &nbsp; <br>examine<br>the effect of succession planning on family business continuity in Lagos state<br>Nigeria;</p><p>3. &nbsp; &nbsp; <br>ascertain<br>the effect of knowledge management practices on profitability of family businesses<br>in Lagos state Nigeria;</p><p>4. &nbsp; &nbsp; <br>evaluate<br>the influence of knowledge management practices on growth of family business in<br>Lagos state Nigeria;</p><p>5. &nbsp; &nbsp; determine the joint effect of<br>knowledge management practices and succession planning on family business continuity<br>in Lagos State Nigeria;</p><p>6. &nbsp; &nbsp; assess the perceptual differences<br>among the respondents on family business continuity when grouped by the type of<br>industry and</p><p>7. &nbsp; &nbsp; evaluate the moderating effect of<br>length of time in existence on the relationship between knowledge management<br>practices and family business continuity </p><p><b>1.4 &nbsp;<br>Research Questions</b></p><p>The<br>research questions are based on the variables to be considered in this study.<br>Therefore, research questions to investigate are:</p><p>1. &nbsp; &nbsp; Does the dimensions of knowledge<br>management practices have influence on family business continuity in Lagos<br>State, Nigeria?</p><p>2. &nbsp; &nbsp; To what extent is the effect of<br>succession planning on family business continuity in Lagos State, Nigeria?</p><p>3. &nbsp; &nbsp; What is the effect of knowledge<br>management practices on profitability of family businesses in Lagos state?</p><p>4. &nbsp; &nbsp; Does knowledge management practices have<br>influence on growth of family businesses in Lagos state?</p><p>5. &nbsp; &nbsp; What is the joint effect of<br>knowledge management practices and succession planning on family business<br>continuity in Lagos State, Nigeria?</p><p>6. &nbsp; &nbsp; What level of perceptual differences<br>exist among the respondents on family business continuity when grouped by the<br>type of industry?</p><p>7. &nbsp; &nbsp; Does years in existence (length of<br>time in existence) have moderating effect on the relationship between knowledge<br>management and family business continuity?</p><p><b>1.5 &nbsp;<br>Hypotheses</b></p><p>Considering<br>the objectives of the study and the research questions, the following null<br>hypotheses were postulated and tested at α = 0.05 level of significance:</p><p>Ho1: &nbsp; &nbsp; &nbsp; Knowledge management practices have<br>no significant influence on family business continuity in Lagos State, Nigeria</p><p>Ho2: &nbsp; &nbsp; There is no significant effect of<br>succession planning on business continuity in Lagos State, Nigeria.</p><p>Ho3: &nbsp; &nbsp; There is no significant effect of knowledge management<br>practices profitability of family business owners in Lagos State, Nigeria.</p><p>Ho4:There is no significant influence of<br>knowledge management practices on the growth of family businesses in Lagos<br>State Nigeria.</p><p>Ho5: &nbsp; &nbsp; Knowledge management practices and<br>succession planning do not jointly have significant effect on family business<br>continuity in Lagos State, Nigeria.</p><p>Ho6: &nbsp;<br>There are no significant perceptual differences among the respondents on<br>family business continuity when grouped by the type of industry</p><p>Ho7: <br>There is no significant moderating effect of length of time in existence<br>on the relationship between knowledge management and family business continuity</p><p><b>1.6 &nbsp; &nbsp; &nbsp;<br>Scope of the Study</b></p><p>The research work<br>is designed to provide a discernment of the knowledge management practice and<br>succession planning of family businesses owners in Lagos state Nigeria. A survey design was adopted for this study.<br>The population of the study is given as 11,663 Small and medium enterprises<br>which are categorized as family businesses. &nbsp;The selected local governments are Apapa,<br>Ibeju-Lekki, Ikeja, Lagos-Island and Lagos Mainland. The choice of Lagos as the<br>location for the study is informed by the economic and strategic importance of<br>the state to Nigeria. Lagos state was chosen as the geographic scope of the<br>study because it has the largest number of companies in Nigeria and it is the<br>hub of the nation’s economic, commercial and industrial activities. Small and<br>Medium Enterprises(SMEs) have been considered as the backbone of the economy of<br>many countries including Nigeria and they play significant roles in development<br>and achieving sustainable economy (Aganga, 2014).</p><p><b>1.7 &nbsp; &nbsp; &nbsp; Significance of the Study</b></p><p>The<br>significance of the research study was drawn from its objectives, research<br>questions, and hypotheses such that when tested, they assist in Government<br>policies, society, and in the industry. This study is of benefit to the study<br>of management in the areas of entrepreneurship and family businesses. Great<br>insights were developed with respect to the different variables, constructs<br>under study and this should richly enhance students, and teachers approach towards<br>the discussion of family businesses with respect to knowledge management and<br>succession planning. The practitioners as well as managers of the family<br>businesses as emphasized would be able to understand how well they can manage<br>their businesses in order to ensure that they continue even after they have<br>handed over to their successors. It is very critical to note that the need for<br>continuity of family businesses is what prompted this study and therefore the<br>owners of such businesses ought to understand how best to ensure the longevity<br>of their businesses. Federal of Nigeria and Lagos State government would be<br>guided on the appropriate policy formulations that will help family business to<br>survive even into the near future. Policies on areas such as finance,<br>marketing, human resources and others. This will help to ensure that the owners<br>of family business gain the desired support in other to handle their business<br>properly for the sake of profit and continuity.</p><p>The<br>society is where these family businesses are located and if they function well<br>then, the society in turn will partake in their success in terms of quality<br>products, job creations, efficient services and other benefits that are accrued<br>to the society. It would also contribute to the body of knowledge and it is<br>anticipated to serve as groundwork for future research in the area of family<br>business continuity. In order to research on the constructs of this study, it<br>is necessary to operationalize the variables in this study. The variables in<br>this study are family business continuity (FBC) as dependent variable and<br>knowledge management practice (KMP) and succession planning (SP) as independent<br>variables:</p><p>Y = Dependent variable (family business<br>continuity)</p><p>X1<br>= independent variable one (knowledge management)</p><p>X2<br>= independent variable two (Succession planning)</p><p>Z<br>= Moderator Variable (Length of time of existence).</p><p>Y<br>= (y1, y2, y3, y4, y5, y6)<br>where y1 = profitability, and y2 = business growth</p><p>y3<br>= family culture y4 = communication y5 = employee satisfaction<br>y6 = family harmony</p><p>X1<br>= (x1a, x1b, x1c, x1d, x1e,<br>x1f) where x1a = knowledge creation, x1b =<br>knowledge capture, x1c = knowledge sharing, x1d =<br>knowledge transfer, x1e = knowledge application and x1f =<br>knowledge training.</p><p>X2<br>= (x2a, x2b, x2c, x2d, x2e,<br>x2f) where x2a = succession plan, x2b =<br>founders influence, x2c = competent of successor, x2d =<br>family values, x2e = family business stakeholders and x2 =<br>mentoring x2g = governance. Based on hypotheses we have the<br>following equations:</p><p>Y=<br>f (X1) or Y = f (x1a, x1b, x1c, x1d,<br>x1e, x1f) ……………. ………………….…………………H01</p><p>Y<br>= f (x2) or Y = f (x2a, x2b, x2c, x2d,<br>x2e, x2f)</p><p>Y<br>= β0 + β1x2a + β2x2b + β3x2c<br>+ β4x2d + β5x2e + β6x2f<br>+ e ………………………………..……. H02</p><p>y1<br>= f (X1) or y1 = f (x1a, x1b, x1c,<br>x1d, x1e, x1f)</p><p>y1<br>= β0 + β1x1a + β2x1b + β3x1c<br>+ β4x1d + β5x1e + β6x1f<br>+ e…………………………..………….. H03</p><p>y2<br>= f (X1) or y2 = f (x1a + x1b + x1c<br>+ x1d + x1e + x1f) …………………………………………. H04</p><p>Y<br>= f (X1, X2)</p><p>Y<br>= β0 + β6X1 + β7X2 + e<br>……………………………………………………………………….H05</p><p>YINDY1<br>= YIND2 = YINDi ……………………………………………………………………. H06</p><p>Y<br>= f(X1Z)</p><p>Y<br>= β0 + β8X1 + β9X1Z + e …………………………………………………………………….<br>H07</p><p>Where β0 = the<br>constant of the model</p><p>e<br>= error term</p><p>β1- β9 =<br>Parameters to be estimated</p><p><b>1.9 Operational<br>Definition of Terms</b></p><p><b>Family owed Business</b>: This<br>are established businesses in which members of a family have predominant<br>control, showing family succession and culture.</p><p><b>Management:</b>&nbsp;In business and organizations, the<br>function coordinates the effort of people to accomplish goal and objectives<br>using available resources efficiently and effectively. In this case, management<br>is used to mean senior management except otherwise stated.</p><p><b>Succession</b>: In this<br>study, Succession<br>is broadly defined as the replacement of the<br>leader of a family business by a successor, who must be a member of the same<br>family. Succession in this context will include both ownership<br>and management succession.</p><p><b>Succession Planning</b>: is a<br>process for identifying and developing internal personnel with the potential to<br>fill key organizational positions. Succession planning ensures the availability<br>of experienced and capable employees that are prepared to assume these roles as<br>they become available.</p><p><b>Knowledge management (KM):</b>&nbsp;is the<br>systematic process of finding, selecting, organizing, distilling and presenting<br>information, lessons learnt, and insights.</p><p><b>Business Growth: </b>The process of improving some measure of an enterprise’s success.<br>Business growth can be achieved either by boosting the top line or revenue of<br>the business with greater product sales or service income, or by increasing the<br>bottom line or profitability of the operation.</p><p><b>Profitability:</b>&nbsp;This is the return on assets of a company or<br>the capital employed in the business</p> <br><p></p>