Leadership Succession Planning and Family Owned Manufacturing Firms Survival, 2020

Abstract

Despite Tanzanian manufacturing firms increased by 50 per cent between the 1960s and early 1970s, only 13 per cent of the family-owned manufacturing firms survived up to 2015 due to lack of leadership succession planning. The objective of the study was to examine the effect of leadership succession planning on the survival of family-owned manufacturing firms. The study was undertaken in the Dar-Es-Salaam region using a sample of 384 senior leaders randomly drawn from 37 family-owned manufacturing firms. Research methods included a quantitative approach, a cross-sectional field survey, and self-administered questionnaires. The data analysis tool was multiple linear regressions. The findings show that succession planning variables, namely successor involvement in business management, training successor, and successor factors-work fit, each one has a significant positive effect on the survival of family-owned manufacturing firms. However, the internal recruitment of the successor has an insignificant positive effect on the survival of family-owned manufacturing firms. The study provides a coherent understanding of leadership succession planning variables and how they relate to the survival of family-owned manufacturing firms. The study also builds a foundation that the survival of family-owned manufacturing firms depends on the effective and efficient application of both Resource-Based Theory and Agency Cost Theory through succession planning.