The impact of business owners' conflict management and leadership styles on succession planning in family-owned businesses

Family-owned businesses are a large part of the American economy. Unfortunately, the majority of all family businesses fail before reaching the second or third generation. Although many possible explanations exist as to why so few family firms are unable to perpetuate themselves into future generations, succession planning has emerged as a key area of interest and a potential stumbling block for business owners, consultants, and researchers to pay attention to. Succession difficulties are often related to relationship problems, such as family conflict and leadership issues, rather than business problems. The purpose of this study is to investigate the relationships between family business owners' leadership and conflict management styles, their perceptions of the importance of succession planning and actually planning for succession, and the demographic variables of the business owners' age and the number of generations the business has been in operation. These relationships were studied using a national data set of (TV = 205) family business owners. A structural equation model was employed with leadership styles, conflict management styles, and the importance of succession planning as the primary constructs of interest. The results indicate that the overall fit of the model to the data was very good and that all the indicators of latent constructs had strong factor loadings. Significant relationships were found between a business owners' age and a controlling conflict management style, and between the number of generations the business had been in operation and flexible conflict management styles, cooperative leadership styles, and the perceived importance of succession planning on the part of the owner. It was also found that business owners who are flexible in their conflict management style are more likely to plan for succession than controlling conflict managers. In addition, business owners who employ either a cooperative or an autocratic leadership style plan for succession and perceive succession planning as being important, but they may do so for different reasons. The results are discussed in terms of implications for those therapists, counselors, and consultants who would work with and advise family business owners on how to improve their chances for success in the succession process