The review of best recorded literature on the topic of family business succession unveiled not only specific processing and competency-oriented factors, but also other fundamentals related to the family business dinstictive structures, organizational performance, external environment and cultural uniqueness (Aronnoff & Ward, 2010; Benavides-Velasco et al., 2013; Carr et al., 2016; Garcia-Ramos et al., 2017; Gillinsky et al., 2008; Heinrichs, 2014; Jaskiewicz et al., 2015; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Rautamaki & Romer-Paakkanen, 2016; Stanley, 2010; Ward & Zsolnay, 2017; Wright & Kellermans, 2011). In this prism, and unlike the process factors which are fully controllable, the context factors were found partly subject to administration given that family business succession, as a socio-political process, is influenced by internal cultural norms and emotions, as well as from various externalities (Acero & Alcalde, 2016; Carr et al., 2016; Hofstede, 1980, 2001; Heinrichs, 2014; Hytti et al., 2016; Huber et al., 2015; Maco et al., 2016; Miller & Le- Breton-Miller, 2014). Consequently, the proper match of successor with family and competitive challenges together is critical to be forseen, and handled a priori, as businesses are operating in rapidly evolved industries (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Fuentes-Lombardo et al., 2011; Gillinsky et al., 2008; Heinrichs, 2014; Huber et al., 2015; Santiago-Brown et al., 2014).
81
In the light of the aforstated realities, the context factors and their connected variables were believed essential to any succession process (Acero & Alcalde, 2016; Amadieu, 2013; Aronnoff & Ward, 2010; Benavides-Velasco et al., 2013; Canella & Lubatkin, 1993; Carr et al., 2016; Cater et al., 2016; Emley, 1999; Fox et al.; 1996; Heinrichs, 2014; Huber et al., 2015; Hunt & Handler, 1999; Le Breton-Miller et al., 2004; Maco et al., 2016; Miller & Le-Breton-Miller, 2014). To this extent, the researcher arranged all the identified contextual factors in various research classes of the most frequent cited variables out of the 38 selected studies as follows: (a) 11 to 15, (b) 8 to 12, (c) 6 to 11, (d) 4 to 7, (e) 6, (f) 4 to 5, and (g) 4. The latter are explained and discussed in more detail below according to their citation importance in the literature reviewed (table 2.14):
1. The Family Dynamics (from 11 to 15 out of the 38 studies); 2. The Board of Directors (from 8 to 12 out of the 38 studies);
3. The Incumbent-Successor Pre-contractual Expectations (from 6 to 11 out of the 38 studies);
4. The Organizational Performance (from 4 to 7 out of the 38 studies); 5. The Transfer of Capital (6 out of the 38 studies);
6. The Organizational Size (from 4 to 5 out of the 38 studies), and; 7. The Organizational Age (4 out of the 38 studies).
Table 2.14: The Relative Frequency of Succession Context Factors and Variables Identified in the Literature
Succession Context Factors and Variables
Selected Studies for the
Review Total (n=38) Total (%) Family Dynamics
Idiosyncrasy and complexities 13 34
Ownership patterns and governance structures 15 40
Managing capital and role of influence/control 15 40
Helping successor to meet competency and social criteria, cultural characteristics and shared values
82
Table 2.14: Continued Total
(n=38)
Total (%)
Managing feuding and developing consensus around emerging issues
-Family councils
-Communication mechanisms and conduct
11 29
Board of Directors
Facilitate commencement and monitoring of the succession process, and assurance of the establishment of a succession planning
12 32
Board structure 8 21
Efficient management and governance practices -Selection-recruitment process
-Selection committee
8 21
Selection criteria and procedures 8 21
Incumbent-Successor Pre-contractual Expectations
Mutual expectations 11 29
Contractual issues 9 24
Fitting the right person to the right firm 11 29
Working together 7 18
Options of behaviour 6 16
Organizational Performance
Financial distress and negative externalities 4 11
Assessment of performance -Profitability and market share
-Social behaviour and long term orientation
7 18 Dissatisfaction-dismissal 7 18 Transfer of Capital Separation of shares 6 16 Organizational Size Business turnover 5 13 Business goodwill 4 11 Organizational Age Established business 4 11 2.7.2.4.1 Family Dynamics
Unavoidably, the successor selection involves not only competency and processing oriented issues but internal socio-political fundamentals of preference and power, as articulateed by the incumbent, the owning family, and the more or less independent directors (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Boeker & Goodstein, 1993; Canella & Lubatkin, 1993; Garcia-Ramos et al., 2017; Heinrichs, 2014; Hytti et al., 2016; Lussier & Sonfield, 2004; Maco et al., 2016; Miller & Le- Breton-Miller, 2014; Rautamaki & Romer-Paakkanen, 2016; Ward & Zsolnay, 2017). The particular context factor named “Family Dynamics” and its related variables were
83
identified in the most popular classes of 11 to 15 out of the 38 studies reviewed (table 2.15).
Table 2.15: The Relative Frequency of Variables Related to Family Dynamics
Succession Context Factors and Variables
Selected Studies for the
Review Most Typical- Supportive Articles Total (n=38) Total (%) Family Dynamics #1/#2/#5/#7/#15/ #16/#22/#23/#24 /#25/#27/#28/#2 9/#30/#31/#33/# 34/#36/#37/#38
Idiosyncrasy and complexities 13 34
Ownership patterns and governance structures
15 40
Managing capital and role of influence/control
15 40
Helping successor to meet competency and social criteria, cultural
characteristics and shared values
11 29
Managing feuding and developing consensus around emerging issues -Family councils
-Communication mechanisms and conduct
11 29
According to different influential researchers who have empirically looked at this part of the dilemma in family businesses (Acero & Alcalde, 2016; Aronnoff, 1995; Benavides-Velasco et al., 2013; Hammond et al., 2016; Heinrichs, 2014; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Rossi et al., 2012; Wright & Kellermanss, 2011), the role of the owning family is considered as one of the most fundamental context factors of family business succession, which is guided by dinstictive idiosyncratic elements, particular ownership patterns and governance structures (Carr et al., 2016; Garcia-Ramos et al., 2017; Heinrichs, 2014; Jaskiewicz et al., 2015; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Woodfield, 2010). The parallel family role is typically portrayed through capital managing which gives support to successor for best cultural fitting and solving of interpersonal disagreements on the basis of consensus (Benavides-Velasco et al., 2013; Cater et al., 2016; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Mora, 2006; Mowle & Merrilees, 2005; Rautamaki & Romer-Paakkanen, 2016; Stanley, 2010). Consequently, the most frequently cited variables that have been particularly discovered and closely associated to the dynamics of the family are discussed as follows:
84 Idiosyncrasy and Complexities
Optimistically, all parties of a given family business; the incumbent(s), the members of the owning family, the successor(s) and director(s), during their business engagement have a good reason to deal with a variety of aspects of succession in both operational and emotional state of affairs (Carr et al., 2016; Jaskiewicz et al., 2015; Lee et al., 2003; Maco et al., 2016; Miller & Le-Breton-Miller, 2014). There are different reasons implying such a need or even better, the necessity to overcome socio-political challenges and avoid emotional complications (Hammond et al., 2016; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Rautamaki & Romer-Paakkanen, 2016; Shepherd & Zacharakis, 2000). Likewise, instead of playing impractical power games and providing manipulated choices, the owning family has to bridge the family generations together with a focus to proficient governance, sustainable development and impartial leadership succession (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Davis & Fox et al., 1996; Garcia-Ramos et al., 2017; Harveston, 1998; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Santiago-Brown et al., 2014; Sten, 2007). To this extent, the family may serve the business as an unbiased steward; a “watchdog” of the succession process in order to stay away from deadly mistakes, feuding and partiality (Aronnoff & Ward, 2010; Brown, 2011; Covey, 2004; Hytti et al., 2016; Huber et al., 2015; Maco et al., 2016; Miller & Le-Breton-Miller, 2014).
Ownership Patterns and Governance Structures
The literature review identified that aside to the dinstictive idiosyncratic variable of every family business, the owning family has a significant role in the de- emotionalization of the business throughout impartial decision making and adoption of more formal governance practices (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Castanias & Helfart, 1992; Huber et al., 2015; Klein, 1988; Lussier & Sonfield, 2004; Rautamaki & Romer-Paakkanen, 2016; Ward & Zsolnay, 2017; Welch & Welch, 2006; Williamson, 1981). In this regard, the means of access from the restricted pool of family successors to the open market of prospective entrepreneurial talents is dependable to the willingness of a given business family to relinquish some control to non-family managers or even to outside investors (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Boeker & Goodstein, 1993; Garcia- Ramos et al., 2017; Hnatek, 2015; Klein & Bell, 2007; Schwartz & Menon, 1985; Wright & Kellermanss, 2011). According to Chalus-Sauvannet et al. (2015);
85
Heinrichs (2014), Jaskiewicz et al. (2015), and Lussier and Sonfield (2004) assertions, the chronic dilemma of business development versus family control could affect and moderate successor choice much more than any other context variable; nevertheless, the bigger and more versatile the family business, the more professionalism and outside to the family knowledge are required, as documented by Acero and Alcalde (2016), Garcia-Ramos et al. (2017), Jaskiewicz et al. (2015), Heinrichs (2014), and Ward and Zsolnay (2017).
Managing Capital and Role of Influence/Control in Succession Process The dual role of a certain business owning family, as vehicle to manage capital and moderating factor to control decision making, were well researched and discussed in the literature reviewed (Acero & Alcalde, 2016; Bizri, 2016; Boeker & Goodstein, 1993; Garcia-Ramos et al., 2017; Gilding et al., 2015; Jaskiewicz et al., 2015; Heinrichs, 2014; Wright & Kellermanss, 2011). According to Acero and Alcalde (2016), Jaskiewicz et al. (2015), Kristof-Brown et al. (2005), and Wright and Kellermanss (2011), controlling family shareholders often have different views from these of the incumbent and the probable successor, in managerial, organizational work-related and socializational issues. The participation of powerful family members in the ownership composition has a propensity to be decidedly idionsyncratic and attached to the original value system; thus, it plays a fundamental role in controlling the financials and transferring socio-emotional wealth to the next generation (Carr et al., 2016; Denison et al., 2004; Garcia-Ramos et al., 2017; Heinrichs, 2014; Maco et al., 2016; Miller & Le-Breton-Miller, 2014).
The decisive role of the owning family could, therefore, be further applicable to various aspects of succession related to the corporate governance, communication mechanisms, training plans, remuneration schemes, developmental options, and certainly, to the financial state of the family business (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Ward & Zsolnay, 2017). Given that there are different world views and beliefs among family members in managing a family business (Barbera et al., 2015; Huber et al., 2015; Kristof-Brown et al., 2005; Rautamaki & Romer-Paakkanen, 2016), the owning family might change the rule of the game in every procedural, contextual and emotional variable in succession process (Hnatek,
86
2015; Maco et al., 2016; Miller & Le-Breton-Miller, 2014; Stanley, 2010; Woodfield, 2010).
Helping Successor to Meet Competency and Social Criteria, Cultural Characteristics and Shared Values
On the basis of idionsyncratic and cultural characteristics of a family business, the owning family could assist the successor to meet both competency and social criteria, and thus, to create abilities to develop consensus on key issues (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Chalus-Sauvannet et al., 2015; Huber et al., 2015; Kristof-Brown et al., 2005; Rautamaki & Romer-Paakkanen, 2016). Consequently, Denison et al. (2004), Garcia-Ramos et al. (2017), Maco et al. (2016), and Miller and Le-Breton-Miller (2014) asserted that frameworks, plans and processes toward effective family business succession shall not only consider the organizational aspect, but have to concern about the socio-political context in which the incumbent, a potential successor and a business family are found to be placed. Therefore, a socio- political and family process such as business succession is heavily reliant to various cultural characteristics of the owning family (Garcia-Ramos et al., 2017; Hofstede, 2001, 1980; Hytti et al., 2016; Maco et al., 2016; Miller & Le-Breton-Miller, 2014). Accordingly, a number of family traditions such as patriarchy, matriarchy, primogeniture, and eventually, other cultural complexities might be helpful or lethal for both the family and the business, especially, in small family firms with less official procedures and many corresponding emotions (Acero & Alcalde, 2016; Benavides-Velasco et al., 2013; Carr et al., 2016; Fleming, 2000; Huber et al., 2015; Kristof-Brown et al. 2005; Maco et al., 2016; Miller and Le-Breton-Miller, 2014). Good and accommodating choices on behalf of the owning family were recognized of being impediments of deadly mistakes and catalysts of effective succession (Bizri, 2016; Garcia-Ramos et al., 2017; Jaskiewicz et al., 2015; Hammond et al., 2016; Heinrichs, 2014; Ward & Zsolnay, 2017; Wright & Kellermanss, 2011).
Managing Feuding and Developing Consensus around Emerging Issues The owning family was believed to monitor the entire succession process and adopt constructive measures in the direction of avoiding disagreements (Benavides-Velasco et al., 2013; Churchill & Hatten, 1987; Garcia-Ramos et al., 2017; Jaskiewicz et al., 2015; Heinrichs, 2014). According to Barbera et al. (2015), Huber et al. (2015), and
87
Thach and Kidwell (2009), good organizational behaviour in family businesses was revealed to be helpful in developing consensus around various emerging issues. More particularly, counseling and guidance in family councils and other corresponding gatherings, communication mechanisms and family rituals, were connected to the diminution of cultural contrasts and augmentation of trust and organizational performance (Carr et al., 2016; Huber et al., 2015; Jaskiewicz et al., 2015; Lansberg, 1998; Sharma, 2005; Ward, 1987; Ward & Zsolnay, 2017; Wright & Kellermanss, 2011).
In the light of the best available research information, as resulted from the systematic literature review concerning the factor named “Family Dynamics”, the following hypothesis was developed:
SH7: In the organizational context of family wineries in Cyprus, succession