A family affair: A quantitative analysis of third-generation successors' intentions to continue the family business

Abstract

Family businesses face a succession crisis where only 13% survive until the third generation (Lee-Chua, 2014). While there is sufficient literature on family business succession planning, research on the motivations behind next-generation engagement in family firms, especially for third-generation successors, is limited (Garcia, Sharma, De Massis, Wright & Scholes, 2018). Thus, the present study tested the model of Garcia et al. (2018)where perceived parental support and psychological control predict next-generation engagement, with family business self-efficacy and commitment to family business mediating this relationship. 118 third-generation successors were surveyed using established and newly developed scales based on previous literature. Mediation analysis showed that normative commitment partially mediated verbal encouragement and next-generation engagement, while affective commitment fully mediated parental psychological control and next-generation engagement. Results were also compared against 124 second-generation successors, revealing that there were no significant differences between generations. Combining these two datasets led to a new conceptual framework, where normative commitment partially mediated verbal encouragement and next-generation engagement, while affective commitment partially mediated parental psychological control and next-generation engagement. The results of the study can contribute to the enrichment of family business literature, particularly on the factors that influence the intentions of third-generation successors, and to the creation of effective succession plans.