Succession planning and performance of family businesses in Rustenburg and Soweto, South Africa

Abstract

i ABSTRACT This study explored succession planning challenges faced by family businesses in Rustenburg and Soweto, South Africa, and examined their impact on business performance. The motivation for this study stemmed from the recognition of the crucial role of succession planning in ensuring the long-term sustainability and competitiveness of family businesses. The purpose of the study was to identify the current succession planning procedures in place, understand the challenges encountered, examine their implications on business performance, and explore the effectiveness of government initiatives in supporting family businesses. The study utilised interviews as the primary method of data collection, targeting a sample of 10 family business owners from Soweto and Rustenburg. Thematic analysis was employed to analyse the collected data, uncovering key themes and patterns related to succession planning challenges and their impact on business performance. The findings of the study indicated that family businesses faced several challenges in creating effective succession plans, including a lack of awareness and knowledge about succession planning, family conflicts, and financial constraints. These challenges directly impacted the operational efficiency and competitiveness of family businesses, resulting in financial strain, operational disruptions, and limited innovation. Moreover, the study revealed mixed perceptions regarding the effectiveness of government initiatives, highlighting the need for further exploration to assess their influence on family business development and expansion. The practical contribution of this study lies in providing insights and recommendations for family businesses in Rustenburg and Soweto to enhance their succession planning efforts. Recommendations included fostering awareness and knowledge about succession planning, managing family dynamics and conflicts, addressing financial constraints through resource ii support, and leveraging government initiatives. By addressing these challenges, family businesses could improve their operational efficiency, competitiveness, and long-term sustainability. The theoretical contribution of this study was twofold. Firstly, it highlighted the importance of including both family and outside directors on the board of family businesses to maximise the benefits of family engagement while mitigating potential drawbacks. Secondly, it underscored the significance of cultural and contextual factors in shaping succession planning practices, emphasising the need for culturally sensitive approaches to ensure effective succession planning in diverse contexts.