The Impact of Succession Planning on Product and Service Innovation at Family Businesses in Yemen.

Abstract

As increasing numbers of family businesses are emerging, the marketplace is in danger of becoming saturated with products that end users do not understand while competition between businesses becomes stiffer. For businesses that operate in a saturated space to access new opportunities, they need to continually invest in the development of new products and services via a process of creativity and innovation. However, in the contemporary business landscape, innovation has extended beyond being a means of gaining a competitive advantage to being a necessity. To achieve this objective, family firms need to develop an understanding of the factors that influence innovation in order to promote, preserve, and boost innovative practices. This research investigated the impact of succession planning on product and service innovation in Yemeni family businesses. Quantitative approach was employed for the purpose of answering the research questions and testing the underlying hypotheses. A survey questionnaire was utilized as the main instrument to gather the required data from the owners of family firms and organizations that the Yemen Tax Authority has classified as top taxpayers. The sample size consisted of 120 family businesses whose headquarters were located in Sana'a City, Republic of Yemen. Only 116 questionnaires were completed with no invalid data, representing a high response rate of 97%. The results show significant relationships between succession planning and its four dimensions; successor selection and training, post-succession business strategy, post-succession role of incumbent, dissemination of the succession decision with product and service innovation. In addition, the results of Regression analysis reveal that succession planning as the whole independent variable has a significant impact on innovation. Furthermore, results show that the four dimensions of succession planning; successor selection and training, post-succession business strategy, post-succession role of incumbent, and dissemination of the succession decision have a significant impact on product and service innovation. These results provide recommendations to the family business owners, at that they should establish strong and vested plans for succession. They should pay attention to the quality of training that is offered to potential successors. Family businesses should build and rely on "family constitution", which is considered as an important document that includes a definition of the basic values, vision, and general objectives of the company.