KNOWLEDGE TRANSFER AND CREATION AS TOOLS FOR A SUCCESSFUL SUCCESSION IN FAMILY BUSINESSES

Abstract

This research investigates the role knowledge creation and transfer processes play in the succession process of family firms in Thailand. Family firms constitute around 80% of Thailand’s companies, including around 75% of listed firms, making them very important for Thailand’s economy. Family firms are vulnerable to failure at key points, particularly during generational transition. Despite this vulnerability, only around 30% of Thai family firms have a succession plan. Thus, this research is intended to help firms improve their chances of an effective succession through preparation of the successor. The study uses a theoretical framework that incorporates Nonaka and Takeuchi’s (1995) concept of the SECI knowledge creation model and ba, or organizational context and leadership, along with Handler’s (1989, 1991) succession model of the family firm. The empirical research consisted of a qualitative study of Thai family firms that were undergoing succession or had recently undergone a successful succession process. 30 firms were selected, including small, medium and large firms (representing different organizational contexts). Dyadic pairs of predecessors and successors were interviewed about the succession process and the knowledge approaches that contributed to success during the process. The results revealed 16 different knowledge approaches that were associated with a successful family business succession. There were some differences between firms of different sizes, which were related to resource constraints, need for external knowledge and level of formalization of procedures. These knowledge approaches were used at different times during the succession process (pre-succession, transition and succession), although some of the approaches did persist throughout the process. Following the primary research, a process model was constructed that incorporated the most successful knowledge approaches during the succession phases. The implication of this research is that knowledge creation is an important part of the successful family firm transition. Furthermore, the process model can be used to develop a successful transition plan.