Effect of Succession Planning Strategies on the Sustainability of Family

Businesses in Nigeria

AWOGBEMI JOHNSON AYOOLA, HAUWA LAMINO ABUBAKAR, MAY IFEOMA NWOYE,

CROSS OGOHI DANIEL

Department of Business Administration, Faculty of Management Sciences,

Nile University of Nigeria,

Plot 681, Cadastral Zone C-OO Research & Institution Area Nigeria, Airport Rd, Jabi 900001, Abuja,

NIGERIA

and the Taro Yamani formula for calculating sample size was used to arrive at the sample size of 390 small

businesses. To provide for anticipated “no response”, a 5-scale Likert questionnaire for data collection was

administered to 443 representatives of small businesses across the six geo-political zones of Nigeria, out of

which 435 (98.2%) returned validly. The data collected was analyzed using frequencies, percentages, means,

correlation, and multiple regression model coefficients to determine the effect of succession strategies on the

sustainability of family businesses. 84.4% of the family businesses sampled say they engaged in succession

planning, and 22.1% had a written succession plan. Results of analyzing data from the study indicate that

mentoring, training, job rotation, coaching, talent management, and internship as succession planning strategies

are positively correlated to the sustainability of family businesses in Nigeria with statistical significance. This is

corroborated by the F-test result with the F calculated value of 202.5 and p-value 0.000 larger than the 2.01

will enhance the sustainability of family businesses potentially. The researcher recommends that founders,

owners, and managers of family businesses in Nigeria should adopt effective succession planning strategies,

with a written plan to make their business sustainable beyond their retirement or death.

Key-Words: - Succession Planning, strategies, family business, sustainability, Nigeria

Received: February 2, 2023. Revised: October 19, 2023. Accepted: November 1, 2023. Published: November 11, 2023.

1 Introduction

Nigeria, a country noted for its violent cycle. Some

organizations have a position in history since they

have been there for a long time; as a result, they are

thought of as the most planned type of corporation.

According to data from the Family Firm

Association from 2017 that was shared by, [1],

family firms account for 66% of all linkages from

one side of the world to the other, transmitting

roughly 70% to 90% of annual gross domestic

product and creating 50% to 80% of jobs in most

supporters of the US economy as well as numerous

other nations' economies. The bigger number of

privately run companies neglects to pass unto the

supporters of abundance and business creation, [4],

[5]. In Nigeria for instance, [4], recommends that

private native endeavors utilize over half of the

confidential area labor force. Progression has been

seen as perhaps the main figure guaranteeing the

supportability of a family-possessed business. The

smooth change in administration and

proprietorship, [4]. Progression is one of the

unavoidable occasions in the existence of a

proprietor of a privately run company.

progression issues include giving possession to the

future and keeping the proprietorship inside the

family or the more distant family. At different

times, it might incorporate selling or shutting the

business. Since moving possession and progression

endurance and maintainability, [8].

present difficulties for privately run company

owners. Covertly run associations are something

past an endeavor for most select association

proprietors; thus, choices about the

predetermination of the business a large part of the

time have huge substance for the business

visionary, [9]. Furthermore, since various relatives

are consistently attracted to these choices,

members inside an association as those vital

participants leave their situations for whatever

reasons, like retirement, headway and wearing

down. From the perspective of, [11], progression

techniques are a head, significant length example of

picking targets, necessities, and occupations inside

the planet, [12]. Progression technique is a

significant variable that ought not to be ignored as

a component of the business cycle in small to

medium size family claimed organizations, [13].

This study examined how tutoring, preparing,

position turn, training, ability the board, and

2 Statement of the Problem

One of the most contentious subjects being studied

by select associations is the regulation of

development, which begins on one side of the

privately-run companies are the most predominant

corporate structure in the present commercial

center, where studies uncover that by and large,

quite a while back, just 8% of privately-owned

companies were claimed and overseen by groups of

kin, however, this has now expanded to an

expected 45%.

In Nigeria, just 10% of organizations

overviewed by PwC in its 2018 Nigeria Privately-

owned Company Review had a hearty, recorded,

(Dandies) in Nigeria that have either shut shop or

quit working appropriately at the death of their

proprietors/chiefs is because of what seems, by all

accounts, to be the absence of legitimate

progression arranging, [19].

From the assortment of writing, [20], [21],

[22], have explored the impact of progression

anticipate maintainability of family-claimed

organizations in Anambra, Lagos, and Ogun;

however, none of these specialists took a gander at

arranging procedures on the maintainability of

privately-run companies in Nigeria covering the

whole six geological areas of Nigeria. Progression

arranging is proxied by tutoring, preparing,

instructing, and the ability of the executives.

Manageability is estimated by the number of years

Notwithstanding the acclaimed commitments of

private companies to the development of different

economies, Nigeria's comprehensive, larger part of

the family-claimed organizations are stood up to

with comparable test in the space of business

congruity. The study, [23], With the dynamic and

tempestuous nature of Nigeria's business climate,

an expanding number of little privately-run

imperative drive, specialized information and

capacities to deal with the business judiciously,

[24].

been defined as "a relationship's conscious and

deliberate effort to ensure association sufficiency in

key positions, hold and build intellectual and

informational capital for the future, and draw in

individual advancement", [25]. There are two or

three perspectives that embrace the worth of

The course of development sorting ought to

help and upgrade the basic preparation and key

vision of a connection and give a chief beginning

stage to power and delegate improvement

programs, [27]. Without this essential obsession,

affiliations will experience issues remaining

noticeable at the most important spot of the

association, [29].

Development putting together had been

evaluated by various experts in the past utilizing

different go-betweens. [30], utilized tutoring;

preparing and work turn as degrees of development

arranging. Coaching and instructing were utilized

by, [31]. Getting ready was utilized by, [32]. The

study, [33], saw preparation and improvement. The

study, [34], utilized work improvement (limit the

which are the two essential players all the while. In

any case, while the relationship should be two-way,

with the two players potentially benefitting from

the exchange, the mentor, by thought, is the person

who will overall be more able and taught than the

mentee. Plus, in view of his/her circumstance, the

mentor will overall have more conspicuous

permission to resources (like the data and power in

the affiliation), which the coach picks or doesn't

decide to give to the mentee. Because of their

with regards to the mentee. The job-related limit

fans out the helper as an aide who gives

encouraging dealing with the mentee's lord show

and improvement, [39]. The psychosocial limit fans

out the tutor as a certified model and genuinely

impressive association for the mentee. The two

formal school system, [41]. Thus, information is

moved and shared structures the center of the solid

groundwork handed down to the cutting edge for

the upper hand required in supporting the

productivity, development, and progress of their

family-claimed business, [42]. Nonetheless, the sort

connections, [44]. Tutoring is a worldwide

recognized device utilized in building likely

pioneers, reinforcing hierarchical and

representative capacities, widening worker

knowledge, [44], fostering authoritative

information, and supporting the company's upper

hand, [45].

3.1.2 Training

For affiliations to be appropriate and for people to

requirement and place a strong emphasis on

planning and improvement. The study, [47], such

an initiative might involve hiring top-notch

availability and improvement professionals and

compensating employees who are involved in

planning and progress. Interest in planning and

moving includes being aware of space and

equipment, as well as maintaining that awareness.

Additionally, it suggests that valuable employees

who work in the connection's critical business

association's focal business. In any case, interest in

arranging and progress is generally viewed as

exceptional association practice to remain mindful

of fitting limits now and later on, [49].

occasion of revamped lead. It is the utilization of

information and capacities with regard to an

unequivocal clarification. Arranging suggests

direction in unambiguous and mechanical

activities, similar to the development of some

machine//gear. Arranging is for a particular

occupation-related reason, [50].

3.1.3 Coaching

others through private, facilitated, hands-on getting

ready for capacities and expertise." Investigation

shows preparing can essentially additionally foster

execution when driven through coordinated trade

that has been definitively arranged with critical

goals, targets, and result evaluation, [52].

Various activities, for instance, coaching and

getting ready have been contrasted with teaching.

Regardless of the way that preparing and mentoring

are supposed to achieve a practically identical

offers hints, and gives direct assistance, the guide

doesn't give suggests clearly, yet helps the client

with finding the answers for the consuming

requests, [53].

Planning of course is the technique engaged

with getting data, capacities, or limits by study,

understanding, or training. The coach by definition

is the expert, and the informative class is likely

going to be assigned unambiguous capacities for

ensured results, [54].

training abilities have a fundamental spot in each

pioneer's tool stash.

3.2 Sustainability

Hierarchical maintainability is vital to reliable,

long-haul mission results and viability for private

endurance of any association requires fruitful

execution of techniques that protect or secure in

components of supportability, [56].

and congruity is fundamental to guaranteeing

hierarchical maintainability and is a critical

[57].

[58], express that how much life can be connected

while accomplishing its central objective is implied

as common sense, which is constantly affected by

various variables, for instance, genuine movement

orchestrating, [59], ability to expect and answer

change, among others, the action of the business as

an alternate legitimate component, which includes

separating individual resources and assets from

ability to continue finishing something, long haul,"

this study assessed viability when designation

(number of years) the exclusive organization has

been carrying on with work, [61], [62]. Given the

normal setting of Nigeria with a lacking system, the

massive cost of continuing with work, different

expense assortment, unpredictable government

procedures, and the inclinations, five years is taken

to be a period to consider an exclusive organization

efficient.

3.3 Theoretical Review

The speculation of the life cycle is the foremost

speculation that maintains this investigation work.

This theory was propounded by, [63]. According to

them, four stages can incite a strong movement of

pondered in this investigation work. Considering

this, the researcher had the choice to see clearly

are appropriately obtained by the speculation.

Similarly, the speculation has revealed that

arrangement and sharing of capacities by the tenant

is critical in the movement of exclusive

organization and that the principal part of the

commitment of the board and authority is solely a

relegating a replacement before the consistent

pioneer leaves, groom picked inside competitors by

permitting them to shadow the constant pioneers at

last block fight by making association changes

quickly, [65].

means of gathering data to measure the effect of

mentoring, training, and coaching, on the

sustainability of family-owned businesses in the six

geo-political zones of Nigeria. The survey presents

an oriented methodology used to investigate the

population by selecting samples to analyze and

discover occurrences, [66]. However, [67], reported

some limitations of survey research. One general

limitation attributed to survey research by, [67] is

the oversimplification of social reality.

which assessed the degree respondents agreed or

disagreed with the statement (5-strongly agree; 4-

agree; 3-undecided; 2-disagree; 1-strongly

disagree).

The data collected was checked for quality

before coding and data analysis which led to the

rejection of eight questionnaires for containing data

considered to be invalid. Correlational and multiple

regression analyses were conducted with the aid of

a statistical package to aid findings. The population

n= 390.4552 or 390

Therefore, the sample size of the study is 390

family businesses across the six geo-political zones

in Nigeria.

Table 4. Sample of Family businesses in Nigeria

whether they were small businesses as defined by,

[69], whether they had been in business for at least

(owner, manager, family member or senior staff)

and willingness to provide the required data.

Therefore, the sampling approach employed is

purposive sampling as the characteristics of the

samples were defined for the purpose relevant to

the study. The family businesses selected were

small enterprises and 87.4% had been in business

for at least 5 years at the time of data collection.

They also had enough data for the study. As

mentioned earlier, the family businesses were

researcher sought to test and verify or reject

predetermined hypotheses using numerical data and

generalization and cause-effect associations

through deductive reasoning, [71].

4.1 Model Specification

Regressions are very good tools to make

predictions on some future outcome based on

focus of this study is to measure correlations.

Mentoring, training, and coaching are the

independent variables while sustainability is the

dependent variable. Profitability level is used as a

control variable. The study used the multiple linear

regression model. Linear regression is one of the

The model for the study using the multiple

linear regression method is𝑆𝑈𝑆𝑖= 𝜑0+

COA = Coaching

PRO= Profitability level of the business

i denotes cross-sectional dimension and μ, error

term.

to the independent variables

µ =error term

4.2 Decision Rule

and from the outputs, the values of the constant (b0)

coefficient of regression β were obtained. In

addition, the outputs showed the T statistics and P

values for the coefficients which resulted in either

rejecting or failing to reject the hypotheses at a 5%

level of significance. The P-value is the probability

of getting a result that is at least as extreme as the

critical values (0.05). A null hypothesis is rejected

if the P-value is less than or equal to the critical

value (0.05). Also, the coefficient of determination

The degree of association between two things is

suggested by affiliation. The heading and strength

of a close link between two or more variables is

indicated by the affiliation coefficient (r). The

relationship coefficients of the variables in a

correlational report are displayed by an affiliation

network. This form of correlation will surface in

hypothesis testing, exploratory research, or

quantitative evaluation centers where it is desired

to explore the relationship between several

components. To decipher the relationship network,

a comprehension of how affiliation is evaluated is

Pearson thing second association coefficient called

The PPMCC, PCC, or Pearson's r. The ideal

connection between the factors is implied by the

positive value (+1.00), the ideal connection

between the factors is implied by the negative value

(- 1.00), and there is no connection between the

components (0.00).

quantify the direction and intensity of straight links

among components. The positive or negative sign

enterprises increases as progression methods do;

therefore, assuming there is a positive relationship

between a progression methodology and

maintainability, it means that the two aspects are

progressing in the same direction. This implies that

a positive connection and a positive relationship are

traveling in the same direction.

If the correlation is weak, it means that as

development systems advance, the viability of

privately owned businesses declines. As the two

components are traveling in opposite direction, this

impact of advancement procedures on the

manageability of privately-run businesses in

Nigeria considered in this review are shown in the

connection structure Table 6. The values for the

connections vary from -1 to +1, with 0.75-0.99

denoting a very strong association between the

convergent factors, 0.5-0.74 denoting a strong

relationship among the crossing factors, and 0.35-

0.49 denoting a weak relationship among the

elements.

number, the more grounded the relationship is. By

and by, analysts are content with the connection of

connection of - 0.75 is more vulnerable than +0.56.

In any case, the truth is, that a relationship of - 0.80

is pretty much as high or similarly as solid as the

connection of +0.80. While looking at +0.56 and -

0.75. the relationship of - 0.75 is more grounded

than the connection of +0.56.

a similar course.

5.2 Pre-Model Diagnostic Test

was seen to be not exactly the 0.05 (5%) level of

change of the factors was finished to address for