Succession planning in Chinese family-owned businesses in Hong Kong: an exploratory study on critical success factors and successor selection criteria

This is one of the first studies to engage with succession issues amongst Chinese family-owned businesses (FOBs) in Hong Kong. The study is based on a survey conducted amongst FOBs in the Federation of Hong Kong Industries or The Chinese Manufacturers’ Association of Hong Kong, and also on five in-depth case studies conducted to explore the issues that were revealed in the survey in detail. The study builds cumulatively on previous work on succession in family owned businesses, and identifies eight Critical Success Factors and five Successor Selection Criteria that Chinese founders and successors in family businesses in Hong Kong agree on. The eight Critical Success Factors are: capability and contribution of the successor in the family business; personal characteristics of founder; successor motivated to lead the family business and agrees with the company direction; business environment and the family business scenario to develop the successor in different scenario; fair and planned shareholder changed parallel transfer of power; relationship between founder and successor; corporate culture and organizational structure; and other participants’ view on the management transition of the offspring-successor. Furthermore, the study identifies five Successor Selection Criteria for founders and successors of family businesses in Hong Kong and compares findings with a study using the same framework conducted in Canada and India. The five criteria are: management skills and experience, interpersonal relationships and networks among stakeholders; trust and relationship among family members and owner-manager; self-confidence and commitment of the successor in the family business; family standing and share ownership; and business and working experience of the successor. These are evaluated in terms of their concordance with the non-Chinese FOB literatures, and with the cases studies of Chinese FOBs described in this study. The Thesis concludes that succession issues are even more important for family-owned businesses in Hong Kong than elsewhere, and that insofar as family-owned firms solve their succession problems they will continue to make a vital contribution to business worldwide.