Management of Change in Tourism

Academic Statement

Management of Change in Tourism

Family-Internal Succession

in Tourism SMEs

Gerhard Pilz, BA

1010487014

Management Center Innsbruck

MCI Tourism

Weiherburggasse 8, 6020 Innsbruck

AUSTRIA

MCI | ePortfolio | Family Business Management | Gerhard Pilz

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Academic Statement: Management of Change in Tourism

The Problem of Family Internal Succession in Family-Run Tourism SMEs

The paper “Management of Change in Tourism – The Problem of Family Internal

Succession in Family-Run Tourism SMEs” by Zehrer & Haslwanter (2010) discusses

the issue of handing-over a family-run small- and medium sized enterprise (SME) to

the next generation, which is also discussed by several other authors (Aronoff et al,

2010, Fager & McKinney 2007, Chua et al. 2003). The authors of the paper discern the

problem of succession within family businesses from that in other small- and medium-

sized enterprises (SMEs) as “interpersonal connections differentiate family from non-

family businesses” and concentrate on the issue of family-internal succession in

tourism businesses. The paper, by applying qualitative research in the form of expert

interviews, answers three main research questions, which will be discussed in this

statement.

Discussion

The first question placed in the paper concerns the most important characteristics of

successors in the course of taking-over the family business. The experts mainly came

up with tourism-related traits and business-administration skills, which for them were

important in order to successfully transfer the business to the next generation.

Interestingly, only 2 out of 15 experts stated “leadership skills” as being an important

trait of the successor. This is interesting as Hinterhuber (2011, p. 26) states that there

is a necessity for balance between leadership and management in order to be a good

entrepreneur. This is a fortiori true for SMEs, where in most cases leadership and

management function cannot be separated into two jobs, but both are the

responsibility of the owner-manager. Also, in a non-family business there are basically

two systems a leader has to deal with, which are the business organization and dealing


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with shareholders/owners, while within a family business there is one more

component that is family, which is almost always interwoven with the other two

systems (Aronoff & Baskin 2005, p.1.). This is also demonstrated by the 3-circle

model by Tagiuri & Davis (1982).

The second question asked the experts for the ideal time for family-internal

succession. More than half of the experts vote in favour of a planned succession, while

in general opinions differ about the point of time when the business should be

handed-over. Zehrer & Haslwanter note that the experts’ point of view is opposed to

the view that literature suggests. However, it is important to bear in mind that

literature (Kürten 2006, p. 6, Pfannenschwarz 2006, pp. 18-19) and the paper itself

propose the difficulty of assessing a model for family-businesses and their mode of

operation. Thus, it is reasonable to say that it is as difficult to determine a model that

applies to each and every succession of a family-owned business. The quantitative

limitation of the study, as the authors note, also narrows the room for interpretation

here. Here, it is important to note that although “the leader of a family business starts

out with an automatic advantage in his or her efforts to build trust among the

workforce” (Paisner 1999, p. 55) it is also important to consider the fact that non-

family employees might want to be able to relate to the new leader. Therefore it is an

advantage if they have an idea about how the person earned his or her way outside the

family-business (Hess 2006, p. 48). Thus, it can be argued that although succession

should take place as early as possible, the successor should also collect experience

outside the family-business first. However, most important of all is a thorough plan

for the succession, which according to Andrew Keyt (Executive Director of the

Loyola University Chicago Family Business Center) involves 3 key factors: regular

communication with the family, good advisors at hand, and regular strategic planning

(Keyt 2009).


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The third question asked for reasons why intra-family succession fails. Based on the

interpretation of the experts’ answers the authors assume that “family conflicts might

be problematic and hinder family internal succession” (Zehrer & Haslwanter, 2010)

and note the non-falsifiability for their empirical study. In fact, the determination of

the reasons for succession failure is a difficult task. Although conflicts within the

family might play a role in unsuccessful hand-over, empirical evidence is missing that it

is the only cause for the inefficacy of the succession. Also, literature in this field

concentrates on the success factors rather than the reasons for failure (Tagiuri &

Davis 1992, Astrachan & Kolenko 1994). Thus, it is of great interest for further

studies on the topic to have a closer look on the issue of conflicts within the family in

general, and in the course of succession in particular. An interesting aspect is the

question if the conflicts arise between the senior generation and the successor(s) or

only amongst potential successors.

Conclusion

In conclusion, family-internal succession within tourism SMEs brings along 3 main

challenges that have to be considered. First, the successor needs to be a leader and

have various characteristics that are important for taking over and creating a successful

future for the company. Second, it is important to plan the succession carefully and

regularly communicate with the family and also non-family advisors. Third, conflicts

within the family are a potential risk for a successful succession. Keeping these three

issues in mind within family-internal succession will help to hand-over the company to

the next generation successfully.


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Sources & Literature:

Aronoff, C. E., Ward, J. L. & McClure S. L. 2010, Family Business Succession: The Final

Test of Greatness, 2nd ed. (revised), Palgrave Macmillan, New York, NY.

Astrachan, J. H. & Kolenko, T. A. 1994, A Neglected Factor Explaining Family

Business Success: Human Resource Practices, in: Astrachan, J. H., Pieper, T. M.

& Jaskiewicz, P (eds.), Family Business, Edward Elgar Publishing Limited,

Cheltenham.

Aronoff, C. E. & Baskin, O. W. 2005, Effective Leadership in the Family Business, Family

Business Leadership Series, No. 21, Family Enterprise Publishers, Marietta, GA.

Chua, J. H., Chrisman, J. J. & Sharma, P. 2003, Succession and Nonsuccession

Concerns of Family Firms and Agency Relationship with Nonfamily Managers,

in: Astrachan, J. H., Pieper, T. M. & Jaskiewicz, P (eds.), Family Business,

Edward Elgar Publishing Limited, Cheltenham.

Fager & McKinney 2007, Succession Planning for the Family Owned Business: a blueprint for

the future, Sub-Scribe Literary Services, Madison, WI.

Hess, E. D. 2006, The Successful Family Business : a proactive plan for managing the family and

the business, Praeger Publishers, Westport, CT.

Hinteruber, H. 2010, Die 5 Gebote für exzellente Führung, Frankfurter Allgemeine Buch,

Frankfurt am Main.


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Keyt, A. 2009, Family Business Succession Planning, Interview, Wells Fargo Business,

26 May 2009, online, available at:

http://www.youtube.com/watch?v=XJ2mAQnEHis [accessed 10 April 2011].

Kürten, N. 2006, Application of a Unique Model to Build Up Succession of Family

Business in Practice, Scholay Paper, GRIN Verlag, Munich.

Paisner, M. B. 1999, Sustaining the Family Business: an insider’s guide to managing across

generations, Basic Books, Cambridge, MA.

Pfannenschwarz, A. 2006, Nachfolge und Nicht-Nachfolge in Familienunternehmen, Band 2:

Fallstudien zum familieninternen Generationswechsel, Verlag für Systemische Forschung

im Carl-Auer-Systeme Verlag, Heidelberg

Tagiuri, R. & Davis, J. A. 1982, Bivalent Attributes of the Family Firm, Working Paper,

Havard Business School, Cambridge, MA. Reprinted 1996, Family Business

Review IX (2), pp. 199-208.

Tagiuri, R. & Davis, J. A. 1992, On The Goals of Successful Family Companies, in:

Astrachan, J. H., Pieper, T. M. & Jaskiewicz, P (eds.), Family Business, Edward

Elgar Publishing Limited, Cheltenham.

Zehrer, A. & Haslwanter, J. 2010, Management of Change in Tourism – The Problem of

Family Internal Succession in Family-Run Tourism SMEs, Electronic Journal of Family

Business Studies (EJFBS), Issue 2, Volume 4, pp. 147-162.

Management of Change in Tourism

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