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Succession Planning

By | October 2010
Page 1 of 16
Succession Planning of Indian Family Owned Businesses
with special reference to Coimbatore

Succession Planning

The significance of succession planning to the success and continuity of business firms (Miller, 1993; Ocasio, 1999; Pitcher, Cherim, & Kisfalvi, 2000) more so for family businesses (Lee, Lim & Lim, 2003) is well known and therefore has been a thrust area of research. (Ramachandran, 2005)

Succession planning is all about finding the next leadership for the organization. The research on family owned enterprises found that the fundamental problem of family owned and run businesses is their ability to ensure competent family leadership across generations. (Le Breton-Miller, Miller, & Steier, 2004) The rate of survival of family businesses into the second and third generation has been about 30% and 10 to 15% respectively. (Birley,1986; Ward, 1987) The reasons attributed for the same are the smaller talent pool, complicating emotional factors between the incumbent and successor and complex social ties with the family. (Dyer, 1986; Lansberg, 1999; Miller, Steier, & Le Breton-Miller, 2003) The rate of survival and the reasons for successful survival of Indian family businesses is still a least deliberated topic. (Ramachandran, 2005)

Succession Planning appears to be one of the “Ten Commandments of Family Business” of Ramachandran (2005). The sustenance and growth of family owned businesses beyond two or three generations is not all that easy. Still many make it (Ramachandran, 2005) specifically, in the Indian context. Except for a few cases of failures, many Indian family businesses have seen more than two or three generations and more so in the case of Coimbatore region.

The Coimbatore Region

The geographical unit of Kongu Nadu of olden times comprised of present day, Periyar, Salem and parts of Madurai and Trichy districts. This part of the country was ruled mostly by tribal chieftains. The well known among them was an Irula,...
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