Succession and Ownership in Family Businesses

Abstract

Purpose: We assess the relationship between a potential change in the ownership structure and the change in the scope of control over managing a family business. Design/Methodology/Approach: Analyzing the data characterizing the 500 largest family businesses, correlations between variables were calculated to observe relationships that primarily affect the size of family shares in the company and family impact on management. Findings: The reduction of family shares is also associated with the loss of participation in the company's management board due to increased management board members. This may also result in the CEO changing to a non-family member, which further weakens company management control. Practical Implications: The analysis results show that as the family share in the family business decreases, it loses control over management. Thoughtfully planning and carrying out the succession process to maintain the family's ownership seems to be crucial. Originality/Value: The political transformation in the 1990s in CEE countries resulted in the creation of many private companies, most of which can be considered family businesses. After about 30 years of operation, many of them face transferring ownership and management to the next generation, which may determine their further development. In the case of family businesses, succession is often referred to as the main goal of this enterprise type.