Effect of Succession Planning Strategies on the Sustainability of Family Businesses in Nigeria

Abstract

The study is a descriptive survey designed to investigate the effect of succession planning strategies on the sustainability of family businesses in Nigeria, using mentoring, training, job rotation, coaching, talent management, and internship as proxies of succession planning. The population of the study consists of 79,460 small businesses in 36 states of Nigeria and the Federal Capital Territory as captured in the database of small and medium enterprises in Nigeria. Multi-stage cluster sampling technique was used to determine the sample and the Taro Yamani formula for calculating sample size was used to arrive at the sample size of 390 small businesses. To provide for anticipated “no response”, a 5-scale Likert questionnaire for data collection was administered to 443 representatives of small businesses across the six geo-political zones of Nigeria, out of which 435 (98.2%) returned validly. The data collected was analyzed using frequencies, percentages, means, correlation, and multiple regression model coefficients to determine the effect of succession strategies on the sustainability of family businesses. 84.4% of the family businesses sampled say they engaged in succession planning, and 22.1% had a written succession plan. Results of analyzing data from the study indicate that mentoring, training, job rotation, coaching, talent management, and internship as succession planning strategies are positively correlated to the sustainability of family businesses in Nigeria with statistical significance. This is corroborated by the F-test result with the F calculated value of 202.5 and p-value 0.000 larger than the 2.01 critical F at 0.05 level of significance, implying that a significant joint impact of all the independent variables exists on the dependent variable sustainability. Further, the multiple linear regression model analysis at a five percent level of significance shows an R-squared of 0.802 which indicates that 80.2% variation in sustainability is attributed to all the independent variables. Consequently, the six hypotheses for the study were rejected as the findings of the study show a statistically significant effect of the succession planning strategies investigated on the sustainability of family businesses in Nigeria. The researcher concludes that effective succession planning will enhance the sustainability of family businesses potentially. The researcher recommends that founders, owners, and managers of family businesses in Nigeria should adopt effective succession planning strategies, with a written plan to make their business sustainable beyond their retirement or death.