Leaders' Slant on Succession in Family-Owned Small and Medium Enterprises (SMEs)

Abstract

The purpose of this chapter is to investigate the in-depth experiences of succession planning on the performance of family-owned small and medium enterprises (SMEs) in Sri Lanka and understand the reasons behind the failures of succession planning and how to overcome them. Drawing from in-depth semi-structured interviews with 10 (ten) Sri Lankan owners in private logistics sector were selected as the participants while employing the Leader-Member Exchange (LMX) theory to evaluate the viewpoints. The findings revealed that trust, loyalty, respect, and obligation are paramount important to the succession while lack of discipline, lack of practical knowledge, lack of self-awareness, lack of mental strength, lack of commitment given are found to be the main reasons for failures. Hence, mentorship, clear communication of expectations, freedom to follow in their parents' footsteps and allowing them to find their own passion within the business, encouraging the modern generation to gain practical experience can immensely aid in overcoming the challenges.