Description or Abstract

Introduction

This empirical research study investigates the impact of non-family management succession on non-financial performance of family businesses in Nigeria. Family businesses often experience failure during generational transitions, largely due to the absence of structured succession planning and the fear of appointing non-family members to management roles when no suitable internal successor exists. Many family business owners exhibit reluctance to transfer leadership to non-family executives, primarily due to uncertainties regarding the potential impact on organisational performance. Organisational performance in family businesses is a multidimensional construct that incorporates both financial and non-financial dimensions. Financial performance indicators typically include profitability, liquidity (and solvency), market valuation, and growth (Hamann & Schiemann, 2021). On the other hand, non-financial indicators include alignment between family and business goals, continuity and succession preparedness, governance structures and controls, strategic agility, family stakeholder engagement, and socioemotional wealth (SEW), etc. While family firm owners prioritise comprehensive business performance, non-financial indicators frequently assume greater significance given their inherent complexity and challenges in quantitative assessment.

This study makes dual contributions to family business literature. First, it addresses a significant empirical gap by examining non-family succession in African family enterprises, a context that remains understudied compared to Western and Asian counterparts. Second, it advances performance measurement by employing a multidimensional framework that evaluates five critical non-financial dimensions: (1) succession preparedness and business continuity, (2) governance effectiveness (3) strategic adaptability, (4) family stakeholder alignment and (5) socioemotional wealth preservation.

Problem Statement

Extant research indicates that non-family managers can positively influence the financial performance of family firms, particularly those with below-average performance (Fang et al., 2021). However, assessing the impact of non-family managers on non-financial performance is more nuanced. Chrisman et al. (2014) highlights the challenges non-family managers face in aligning with the non-economic goals of family firms, which are often less tangible and harder to quantify. Furthermore, Zellweger et al. (2022) suggests that family managers may outperform non-family managers in achieving non-economic goals due to their intrinsic understanding of family values and objectives. These studies underscore the complexity of evaluating non-financial performance in family businesses and highlight the need for further research in this area. Given its strategic importance to the continuity of the family firm, non-financial performance is an important consideration in the choice of a successor for the family firm. However, evidence of the effect of non-family management on non-financial performance of the family firm is sparse. This study addresses this notable gap by examining the impact of non-family management succession on key dimensions of organisational performance in Nigerian family businesses.

Objective

The objective of the study is to generate insights into the role of non-family managers in shaping effective succession outcomes, thereby contributing to both theoretical advancement and practical application in the domains of entrepreneurship and family business management.

Methodology

This study employed a convergent parallel mixed methods design (Creswell & Plano Clark, 2017) to explore the effect of non-family management succession on non-financial performance of family firms in Nigeria. Data were collected through a structured survey of 113 firms and semi-structured interviews with 25 participants to ensure both breadth and depth of analysis. Participants were purposively selected based on formal registration and a minimum of five years in operation. The survey covered 24 items reflecting five non-financial performance dimensions: continuity and succession preparedness, governance structures and controls, strategic agility, family stakeholder engagement, and socioemotional wealth (SEW). Interviews provided complementary insights into these areas. The data will be analysed using suitable tools such as SPSS for the quantitative data (descriptives and regressions), while the qualitative data will thematically coded in NVivo to support triangulation.

Expected Results

The expected effect of non-family management on any of the organisational outcomes considered in this study is nuanced and could be either positive or negative, depending on contextual factors such as degree of autonomy granted to non-family managers, ownership structure, maturity stage of the firm, and the institutional environment. Where contextual factors are favourable, non-family management is expected to improve each of the components of non-financial organisational outcomes. Otherwise, non-family management may have a negative or mixed effect on organisational outcomes.

Practical Implications

Findings from this study will be of practical relevance to a many stakeholders, including family business owners, academics, non-family executives, and policymakers. Insights from the study will help business owners to navigate key succession strategies for transferring managerial responsibilities to non-family members, while also providing evidence-based findings to support the professional roles of non-family managers. Findings will also inform the development of educational curricula and regulatory frameworks that promote the sustainability of family enterprises.

Limitations and Suggestions for Future Studies

This study has two limitations. First, the sample size of 130 survey respondents and 25 interviewees is relatively small and may not adequately represent the diversity within the Nigerian family business landscape. Second, the mixed methods approach employed does not establish causal relationships neither does it provide information about the long-term effects of non-family succession. Future studies may build on this study by expanding the sample size across multiple African countries. This may also offer the opportunity to contrast this study’s findings with those in other emerging economies, such as Asia or Latin America, to discern regional patterns and divergences. In addition, longitudinal designs may be conducted to trace organisational trajectories before and after succession events to reveal long-term dynanmics.

Keywords

Succession, Non-family management, Non-financial performance, Corporate Governance, Strategic agility, Socioeconomic wealth (SEW)

Department

Center for Entrepreneurship & Innovation

Program

MENA Family Business Research Conference

Performance Date

2025-10

Content Type

Conference Proceeding

File Type

Transcript

Language

eng

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