A Black Swan in Malaysian Chinese Family Business Succession: A Case Study

Authors

  • Jesrina Ann Xavier Faculty of Business and Law, Taylor’s University, Malaysia
  • Khai-Siong Gan School of Economics, University of Bristol, United Kingdom

DOI:

https://doi.org/10.33736/ijbs.4625.2022

Keywords:

Succession, Black Swan, Family Business, Case Study, Malaysia

Abstract

This article explores the impact of the highly improbable in a transgenerational succession of a Malaysian Chinese family business. Through an exploratory case study of succession in a Malaysian Chinese family business, a Black Swan in succession was identified, arising from unexpected changes in the business. Findings show that the predecessor did not expect his children; the successors, to take over the family business, as the successors were being groomed to pursue professional careers. Through an unexpected twist of events, the successors were able to take over and manage the family business, causing an impact to the future of this family business. This article demonstrates that the Black Swan theory may be applicable in the process of succession, causing a significant impact in a small Malaysian Chinese family business. This article is based on one case study. Hence, it should be noted that a case study should be judged based on transferability, not generalizability. This case study shows that a successful unexpected succession without any long-term preparation before a transition is possible. Education plays an important role in strengthening one’s entrepreneurial skills. This then facilitates a cross-generational innovation in a family business, successfully generating a notable impact to the growth of this family business.

References

Allouche, J., & Amann, B. (2000). L'entreprise familiale: un état de l'art. Finance Contrôle Stratégie, 3(1), 33-79.

Amran, N. A., & Ahmad, A. C. (2010). Family succession and firm performance among Malaysian companies. International Journal of Business and Social Science, 1(2), 193-203. https://doi.org/10.17576/ajag-2011-2-6538

Bagby, D. R. (2004). Enhancing succession research in the family firm: A commentary on "Toward an integrative model of effective FOB succession". Entrepreneurship Theory and Practice, 28(4), 329-333. https://doi.org/10.1111/j.1540-6520.2004.00048.x

Birley, S. (2002). Attitudes of owner-managers' children towards family and business issues. Entrepreneurship Theory and Practice, 26(3), 5-19. https://doi.org/10.1177/104225870202600301

Bjuggren, P. O., & Sund, L. G. (2001). Strategic decision making in intergenerational successions of small-and medium-size family-owned businesses. Family Business Review, 14(1), 11-23. https://doi.org/10.1111/j.1741-6248.2001.00011.x

Bjuggren, P. O., & Sund, L. G. (2002). A transition cost rationale for transition of the firm within the family. Small Business Economics, 19(2), 123-133. https://doi.org/10.1023/A:1016289106477

Bloch, A., & Hirsch, S. (2017). The educational experiences of the second generation from refugee backgrounds. Journal of Ethnic and Migration Studies, 43(13), 2131-2148. https://doi.org/10.1080/1369183X.2017.1286972

Bozer, G., Levin, L., & Santora, J. C. (2017). Succession in family business: multi-source perspectives. Journal of Small Business and Enterprise Development, 24(4), 753-774. https://doi.org/10.1108/JSBED-10-2016-0163

Breton-Miller, I. L., Miller, D., & Steier, L. P. (2004). Toward an integrative model of effective FOB succession. Entrepreneurship theory and practice, 28(4), 305-328. https://doi.org/10.1111/j.1540-6520.2004.00047.x

Campopiano, G., De Massis, A., Rinaldi, F. R., & Sciascia, S. (2017). Women's involvement in familyfirms: Progress and challenges for future research. Journal of Family Business Strategy, 8(4), 200-212. https://doi.org/10.1016/j.jfbs.2017.09.001

Chalus-Sauvannet, M. C., Deschamps, B., & Cisneros, L. (2016). Unexpected succession: When children return to take over the family business. Journal of Small Business Management, 54(2), 714-731. https://doi.org/10.1111/jsbm.12167

Chen, M. J. (2001). Inside Chinese business: A guide for managers worldwide. Harvard Business Press.

Chreim, S., Williams, B. E., & Hinings, C. R. (2007). Interlevel influences on the reconstruction of professional role identity. Academy of Management Journal, 50(6), 1515-1539. https://doi.org/10.5465/amj.2007.28226248

Chirico, F. (2008). Knowledge accumulation in family firms: Evidence from four case studies. International Small Business Journal, 26(4), 433-462. https://doi.org/10.1177/0266242608091173

Chua, J. H., Chrisman, J. J., & Sharma, P. (2003). Succession and non-succession concerns of family firms and agency relationship with non-family managers. Family Business Review, 16(2), 89-107. https://doi.org/10.1111/j.1741-6248.2003.00089.x

Clark, K., & Drinkwater, S. (2010). Recent trends in minority ethnic entrepreneurship in Britain. International Small Business Journal, 28(2), 136-46. https://doi.org/10.1177/0266242609355831

Cooper, A., Gimeno-Gascon, F., & Woo, C. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9, 371-395. https://doi.org/10.1016/0883-9026(94)90013-2

Corbett, A. C. (2007). Learning asymmetries and the discovery of entrepreneurial opportunities. Journal of Business Venturing, 22, 97-118. https://doi.org/10.1016/j.jbusvent.2005.10.001

Creswell, J. W. (2007). Qualitative Inquiry & Research Design (2nd ed.). Thousand Oaks: SAGE Publications, Inc.

Decrop, A. (1999). Triangulation in qualitative tourism research. Tourism management, 20(1), 157-161. https://doi.org/10.1016/S0261-5177(98)00102-2

De Massis, A., Chua, J. H., & Chrisman, J. J. (2008). Factors preventing intra-family succession. Family Business Review, 21(2), 183-199. https://doi.org/10.1111/j.1741-6248.2008.00118.x

De Massis, A., & Kotlar, J. (2014). The case study method in family business research: Guidelines for qualitative scholarship. Journal of Family Business Strategy, 5(1), 15-29. https://doi.org/10.1016/j.jfbs.2014.01.007

Dimov, D. P., & Shepherd, D. A. (2005). Human capital theory and venture capital firms: exploring "home runs" and "strikeouts." Journal of Business Venturing, 20, 1-21. https://doi.org/10.1016/j.jbusvent.2003.12.007

Drew, D. (1995). 'Race', Education and Work: The Statistics of Inequality. Aldershot: Avebury.

Doz, Y. (2011). Qualitative Research for International Business. Journal of International Business Studies, 42(5), 582-590. https://doi.org/10.1057/jibs.2011.18

Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and challenges. Academy of management journal, 50(1), 25-32. https://doi.org/10.5465/amj.2007.24160888

Gerring, J. (2007). The case study: what it is and what it does. In C. Boix & S. C. Stokes (Eds.), The Oxford handbook of comparative politics. Oxford University Press.

Gibbert, M., Ruigrok, W., & Wicki, B. (2008). What passes as a rigorous case study? Strategic management journal, 29(13), 1465-1474. https://doi.org/10.1002/smj.722

Gómez-Mejía, L. R., Makri, M., & Kintana, M. L. (2010). Diversification decisions in family-controlled firms. Journal of management studies, 47(2), 223-252. https://doi.org/10.1111/j.1467-6486.2009.00889.x

Green, N. (2011). Keys to success in managing a black swan event. AON Corporation. http://www.aon.com/attachments/risk-services/Manage_Black_Swan_Even_Whitepaper_31811.pdf

Handler, W. C. (1989). Methodological issues and considerations in studying family businesses. Family Business Review, 2(3), 257-276. https://doi.org/10.1111/j.1741-6248.1989.00257.x

Handler, W. C. (1990). Succession in family firms: A mutual role adjustment between entrepreneur and next-generation family members. Entrepreneurship Theory and Practice, 15(1), 37-52. https://doi.org/10.1177/104225879001500105

Harveston, P. D., Davis, P. S., & Lyden, J. A. (1997). Succession planning in family business: The impact of owner gender. Family Business Review, 10(4), 373-396. https://doi.org/10.1111/j.1741-6248.1997.00373.x

Hussain, J., & Martin, L. (2005, November 1-3). New Asian entrepreneurship: exploring finance and innovation. In 27th ISBE National Small Firms Policy and Research Conference on SMEs in the Knowledge Economy. England, Blackpool.

Jasani, N. K. (2002). Malaysia's family businesses: The family & the business international survey report. Malaysia: Shamsir Jasani Grant Thorton & Malaysian Institute of Management.

Jones, T., & Ram, M. (2003). South Asian businesses in retreat? The case of the UK. Journal of ethnic and migration studies, 29(3), 485-500. https://doi.org/10.1080/13691830305611

Jones, T., Mascarenhas-Keyes, S., & Ram, M. (2012). The ethnic entrepreneurial transition: recent trends in British Indian self-employment. Journal of Ethnic and Migration Studies, 381, 93-109. https://doi.org/10.1080/1369183X.2012.640020

Kansal, P. (2012). Succession and Retirement Planning: Integrated Strategy for Family Business Owners in India. Vilakshan, The Journal of Management, XIMB, Bhubaneswar, 9(1), 23-40.

Katila, R., Thatchenkery, S., Christensen, M. Q., & Zenios, S. (2017). Is there a doctor in the house? Expert product users, organizational roles, and innovation. Academy of Management Journal, 60(6), 2415-2437. https://doi.org/10.5465/amj.2014.1112

Kimberly, J. R., & Evanisko, M. J. (1981). Organizational innovation: The influence of individual, organizational and contextual factors on hospital adoption of technological and administrative innovations. Academy of Management Journal, 24, 689-713. https://doi.org/10.5465/256170

Kumar, R. (2019). Research Methods for Methodology: A Step-by-Step Guide for Beginners (4th ed.). London: SAGE Publications Ltd.

Lansberg, I., & Gersick, K. (2015). Educating family business owners: The fundamental intervention. Academy of Management Learning & Education, 14(3), 400-413. https://doi.org/10.5465/amle.2014.0254

Lee, K. S., Lim, G. H., & Lim, W. S. (2003). Family business succession: Appropriation risk and choice of successor. Academy of Management Review, 28(4), 657-666. https://doi.org/10.2307/30040754

Man, T. W., Lau, T., & Snape, E. (2008). Entrepreneurial competencies and the performance of small and medium enterprises: An investigation through a framework of competitiveness. Journal of Small Business & Entrepreneurship, 21(3), 257-276. https://doi.org/10.1080/08276331.2008.10593424

Man, T. W. Y., Mustafa, M., & Fang, Y. (2016). Succession in Chinese family enterprises: the influence of cognitive, regulatory and normative factors. International Journal of Management Practice, 9(4), 412-432. https://doi.org/10.1504/IJMP.2016.079620

Marshall, C., & Rossman, G. (1995). Designing Qualitative Research (2nd ed). London: SAGE.

Miles, M. B., & Huberman, A. M. (2003). Analyse des données qualitatives. De Boeck Supérieur.

Patton, M. (1990). Qualitative evaluation and research methods (pp. 169-186). Beverly Hills, CA: Sage.

Patton, M. (2002). Two decades of developments in qualitative inquiry: A personal, experiential perspective. Qualitative social work, 1(3), 261-283. https://doi.org/10.1177/1473325002001003636

Phikiso, Z., & Tengeh, R. (2017). Challenges to intra-family succession in South African townships. Academy of Entrepreneurship Journal, 23(2).

Price Waterhouse Coopers. (PWC) (2016). Family Business Survey 2016: The Malaysian Chapter. https://www.pwc.com/my/en/assets/publications/2016-family-business-survey-malaysian-chapter.pdf

Royer, S., Simons, R., Boyd, B., & Rafferty, A. (2008). Promoting family: A contingency model of family business succession. Family Business Review, 21(1), 15-30. https://doi.org/10.1111/j.1741-6248.2007.00108.x

Runde, J. (2009). Dissecting the black swan. Critical Review, 21(4), 491-505. https://doi.org/10.1080/08913810903441427

Sardeshmukh, S. R., & Corbett, A. C. (2011). The duality of internal and external development of successors: opportunity recognition in family firms. Family Business Review, 24(2), 111-125. https://doi.org/10.1177/0894486510391783

Scholes, L., Westhead, P., & Burrows, A. (2008). Family firm succession: the management buy-out and buy-in routes. Journal of Small Business and Enterprise Development, 15(1), 8-30. https://doi.org/10.1108/14626000810850829

Sharma, P. (2004). An overview of the field of family business studies: Current status and directions for the future. Family Business Review, 17(1), 1-36. https://doi.org/10.1111/j.1741-6248.2004.00001.x

Sharma, P., & Irving, G. (2005). Four Bases of Family Business Successor Commitment: Antecedents and Consequences. Entrepreneurship Theory and Practice, 29(1), 13-33. https://doi.org/10.1111/j.1540-6520.2005.00067.x

Sharma, P., Chrisman, J. J., & Chua, J. H. (2003). Succession planning as planned behavior: Some empirical results. Family Business Review, 16(1), 1-15. https://doi.org/10.1111/j.1741-6248.2003.00001.x

Sharma, P., Chua, J. H., & Chrisman, J. J. (2000). Perceptions about the extent of succession planning in Canadian family firms. Canadian Journal of Administrative Sciences/Revue canadienne des sciences de l'administration, 17(3), 233-244. https://doi.org/10.1111/j.1936-4490.2000.tb00223.x

Siggelkow, N. (2007). Persuasion with case studies. Academy of management journal, 50(1), 20-24. https://doi.org/10.5465/amj.2007.24160882

Taleb, N. N. (2007). The black swan: The impact of the highly improbable (Vol. 2). Random House Publishing Group, USA.

Tan, W. L., & Fock, S. T. (2001). Coping with growth transitions: The case of Chinese family businesses in Singapore. Family Business Review, 14(2), 123-139. https://doi.org/10.1111/j.1741-6248.2001.00123.x

Tharenou, P., Donohue, R., & Cooper, B. (2007). Management Research Methods. Cambridge University Press, New York. https://doi.org/10.1017/CBO9780511810527

Ward, J. L. (1987). Keeping the Family Business Healthy: How to Plan for Continuing Growth, Profitability, and Family Leadership. San Francisco, CA: Jossey-Bass.

Wennberg, K., Wiklund, J., DeTienne, D. R., & Cardon, M. S. (2010). Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers. Journal of Business Venturing, 25(4), 361-375. https://doi.org/10.1016/j.jbusvent.2009.01.001

Wennberg, K., Wiklund, J., Hellerstedt, K., & Nordqvist, M. (2011). Implications of intra-family and external ownership transfer of family firms: short-term and long-term performance differences. Strategic Entrepreneurship Journal, 5(4), 352-372. https://doi.org/10.1002/sej.118

Wong, S. L. (1985). The Chinese family firm: A model. British Journal of Sociology, 36(1), 58-72. https://doi.org/10.2307/590402

Xavier, J. A., Alagappar, P. N., & Yew, L. K. (2020). Disparity in the progress of ethnic Indian enterprises: a study on transgenerational succession in Malaysia. Asian Ethnicity, 1-13. https://doi.org/10.1080/14631369.2020.1796586

Downloads

Published

2022-03-31

How to Cite

Jesrina Ann Xavier, & Khai-Siong Gan. (2022). A Black Swan in Malaysian Chinese Family Business Succession: A Case Study. International Journal of Business and Society, 23(1), 461–475. https://doi.org/10.33736/ijbs.4625.2022

Issue

Vol. 23 No. 1 (2022): International Journal of Business and Society

Section

Articles

License

Copyright Transfer Statement for Journal

1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.

2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.

3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.

4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.

5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.

6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.