Management Succession of Micro-Small and Medium Family-Owned Enterprises in Lebanon

Family businesses are an important source of wealth and job opportunities all around the world. Family-owned businesses play a big role in the global economy, which makes management of succession the most important issue facing them (Ibrahim et al., 2001). Many new family businesses encounter significant challenges of survival and continuity, where only 30% of them make it to the second generation. One of the main reasons behind the failure of transitioning one generation to the other is the absence of succession planning and/or succession management (Obianuju et al., 2021). Other reasons for failure, according to Paço, et al. (2021) include: the existence of unclear succession plans coupled with the absence of preparedness of successors (Miller et al., 2003), factors related to the individual family members’ characteristics, proprietors-related aspects, intra-family relationships, background and context, finances, operational and succession processes (De Massis, Chua and Chrisman, 2008), and agency problems between the owner and the potential successor (Sharma, Shua & Chrisman, 2003). This necessitates the establishment of family governance to lessen the conflict in family-owned firms and ensure a smoother succession process (González-Cruz et al., 2021).

In the Middle Eastern region family businesses constitute up to 90% of all businesses, and employ 80% of the workforce, and contribute up to 60% of the region’s GDP (PWC report, 2016). In addition, in the Middle East and Lebanon in specific, studies about family businesses and succession are very limited. In addition, there are no tailored succession planning models for employment in this region. Succession management models are non-existent at all, despite that family businesses in Lebanon constitute 95% of businesses in the private sectors there. The aim of the research was to build and verify a succession management model for family-owned micro-small and medium enterprises (MSMEs) in Lebanon, where constant efforts concentrating on the growth of the private-sector, which family businesses predominate, are made, especially during this economic depression (Daher, 2022).

Due to the insufficient family-businesses’ related data in Lebanon, this research relied heavily on the collection of empirical data (through an extensive survey) to deep dive into succession planning in Lebanese context. A survey was administered to 1100 micro small and medium family-owned businesses based on gaps identified from the literature review. Family business owners/successors from the eight governates of Lebanon participated using a non-probability judgmental sampling technique to explore factual, attitude and behavioural data related to the research. This data was analysed, and its results coupled with family business related themes constituted the foundation of the semi-structured interviews. These interviews were conducted face-to-face with family business owners and successors from first and second generation to explain further the findings of the survey and their opinions and attitudes. Data collected from interviews was analysed using thematic analysis, then triangulated along with the survey analysis with the literature.

Based on the research’s primary data findings and analysis, and the extensive family-business and succession planning literature review, the succession management model for family-owned MSME in Lebanon was built and re-viewed for viability amongst a purposive group of family MSME owners and managers to validate it.