Parents’ Learning Mechanisms for Family Firm Succession: An Empirical Analysis in Spain through the Lens of the Dynamic Capabilities Approach

Round 1

Reviewer 1 Report

Recommendation: Minor Revision

 

Comments for author File: Comments.pdf

Author Response

RESPONSE TO REVIEWER 1

We would like to thank Reviewer 1 for his/her constructive comments and for his/her thoughtful contributions, which have helped with the development of the paper. We believe that we have addressed all of your comments. Nevertheless, if further changes are needed, we will be willing to make them. Below, we list our changes in response to your comments.

 

Minor revisions.

1. “Clarification of conceptualisation of “dynamic capabilities framework or approach”

We have sought to clarify the conceptualization of the dynamic capabilities framework by adding these two paragraphs at the beginning of the theoretical section:

The dynamic capabilities approach was conceived to explain which sources of firms’ competitive advantage occur over time [37]. This approach emerged as an alternative to existing theories and frameworks in an effort to understand the new sources of firms’ competitive advantage [83]. Since its conception, scholars have used it and applied it to identify diverse dynamic capabilities that are relevant to performing in environments which display certain characteristics, avoiding the ‘zero profit condition’ [14-16].

The distinctive feature of this approach is the concept of dynamic capabilities, and scholars have been challenged to ascertain its underlying microfoundations [83]. Based on this concept, the approach seeks to provide insights into how to compete in uncertain environments in which firms must exploit their knowledge while creating new knowledge in an effort to adapt, integrate and reconfigure their internal and external organizational skills, resources, and competences [83]. (See Page 2)

 

 

2. “Improve the implications of the study and the conclusions”

• We have changed the title of section 5 and have split it into two sections by adding section 6 so as to better address what is included in each section. We have rewritten the section, which now begins as follows:

5. Conclusion and discussion

5.1. Conclusion

Our results indicate that parents deliberately design family learning mechanisms to create a succession dynamic capability, and that this capability positively affects successor intention to remain in the family firm. Our research thus extends family firm succession literature by applying the dynamic capabilities approach. Succession is a topic dealt with by several scholars, despite which there is still a need to theoretically and empirically locate the proximate causes at the micro-level of analysis [84].

Our research suggests that the dynamic capabilities approach helps to understand parents’ role in family firm succession. Following on from previous research [88], we add more empirical evidence in the analysis of succession and advance in other areas of research in family firm literature from a dynamic capabilities approach [14 – 16, 24, 27, 85 – 87].

As stated, one of the open questions in family firm research involves understanding what role parental behaviour plays in next generation willingness to join the family firm [84]. Theoretically, authors have recognized the importance of specifically transferring incumbent family firm member knowledge in order to generate successors’ learning over time in a non-linear and simple fashion, taking into account other internal and external factors which affect successors’ capabilities. In this research, we show that parents are crucial in succession dynamic capability creation by using specific learning mechanisms within the family firm. Parents help successors to sense the opportunities which the family firm might provide them with if they scan, create, learn, and interpret and are able to seize the potential investments required for them to become involved in the family firm [37]. Moreover, this dynamic capability enables successors to develop their intention to continue the family firm. The notion of parents’ involvement in the succession process as a predictor of successor intention is thus gaining strength, as suggested by other researchers [10]. (See pages 13-14)

5.2. Discussion

The development and evolution of the succession dynamic capability must invoke mechanisms that go beyond the semi-automatic stimulus response process [17]. In family firms, there is a learning process wherein parents know that tacit experiential knowledge is not enough to develop a succession dynamic capability. Therefore, they specifically organize learning mechanisms in an effort to convey and codify their knowledge to their successors, doing so by talking with them and making them aware of how the family firm works by emotionally sharing their experiences and ideas about the firm. They also seek to codify their knowledge by explicitly showing how they make decisions and how the family firm works. Consequently, the succession process could be explained in the tradition of the evolutionary paradigm that Zollo and Winter [17] employ to explain the evolution of organizational learning - “variation-selection-retention”. Incumbents become aware of the need for succession as well as of possible changes in the family firm, and so commence a process of selecting the potential successor, whose intention to stay in the family firm they seek to enhance through a deliberate process of creating learning mechanisms that is designed to engender the succession dynamic capability. (See page 14)

6. Implications, limitations and further research

6.1. Implications for theory

As the results suggest, parents have a key role to play in the succession process. Scholars must therefore specifically analyse the process of acquisition, transfer, and integration of knowledge between parents and successors, and explain how parents are able to combine those in a co-evolutive manner with emotions (socioemotional wealth). In this way, we support the results of Casprini et al. [90], who were the first to study the specific challenges facing a family firm when acquiring and transferring knowledge.

Using dynamic capabilities, we present a new empirical evidence approach about one particular aspect of family firms; namely, succession. The dynamic capabilities approach might play an important role in explaining the process of succession in family firms and in explaining their survival or disappearance. The dynamic capabilities approach has value if considered as a single approach or when combined with other traditional family firm theories. Scholars are still studying the process of knowledge creation, transfer and retention in family firms [90], and the dynamic capabilities approach can complement this research since it focuses on the microelements [91] of such learning processes.

Parents’ role in the learning process and, therefore, in the creation of dynamic capabilities, other than those concerning succession, should be included in research as a key element of family firm success and survival. How parents’ knowledge is managed needs to be studied as a driver of dynamic capabilities that influences learning in family firms. These firms must learn not only about the business itself but also about the specific characteristics of the family and how family members run the firm.

 

6.2. Implications for practice

Family firms still need to work on the processes through which succession might pose both a challenge and an opportunity for future generations. Parents (incumbents) must be aware of any (external and internal) factors that might affect the skills and attitudes which successors need to maintain succession intention and they must constantly consider how they can positively influence successors’ intentions to continue the family firm. They should therefore review how their learning mechanisms must evolve in order to allow the succession dynamic capability to develop over time.

The external factors that make successors develop new skills and attitudes include changes in the sociological environment that affect people’s motivations, or technological or economic disruptive fluctuations that push the firm to adapt to the new competitive playing field. Internal factors include the potential rapid success of the family firm, which might make successors believe that reaching such a dominant situation is routinized in the firm and occurs with semi-automatic responses.

Moreover, family firm owners need to take greater care about the affective element of the succession dynamic capability than those who are self-employed. The emotional characteristics of incumbents and successors are more relevant in the succession process for family firm owners. As a result, the emotional aspects of parents’ learning mechanisms need to be developed further, since such aspects might have a greater impact on the learning mechanism and, therefore, influence successor intention to continue in the firm.

Finally, successor self-efficacy might not be a major concern for parents as they develop the learning mechanism. If correctly activated from incumbent to successor through efficient learning mechanisms, knowledge will offset the negative impact of other factors that might curb successor intention to remain in the family firm. (See pages 14-15)

 

“In structural terms, this work presents some restructuring needs, …”

1. “…namely in abstract: - The objective of the study it should be reformulate, more clear. I think the all abstract should be reformulated, since the reader, upon realizing that there are no definite conclusions, loses interest in reading. In methodology, brief details about it must be included. The abstract should incentive the readers in general for read the work. Please reformulate all abstract, make it more 'marketable'”

We have reformulated the abstract of the paper taking into account the recommendations of the reviewer:

Succession is a concern for most family firms. The literature has addressed succession in family firms from different perspectives. However, there are still unaddressed questions concerning the microfoundations of succession, and there is a need to secure a better understanding of the succession process and what role parents play therein. Using the dynamic capabilities approach, we shed light on the influence of parents’ behaviours on successors’ intentions. In particular, the paper pursues a twofold aim; first, to analyse the effect of learning mechanisms that parents deliberately use with their children in the family firm on the succession dynamic capability; and second, to explore the impact of this dynamic capability of successor intention to continue in the family firm. We test the model on a sample of potential successors of family firms in Spain. Using partial least squares (PLS) for a sample of 9,146 individuals, we confirm the positive impact of the use of parents’ deliberate learning mechanisms on succession dynamic capability and, in turn, the positive effect of the created succession dynamic capability on the successor’s intention to continue the family firm. Furthermore, we find that perceived self-efficacy fails to have any effect on successor intention. (See Page 1).

We have also made the objective clearer in the introduction:

The aim of this research is to deepen current understanding of what role parents play in successors’ intention to continue the family business, taking the perspective of the successor’s perceptions. In particular, the study seeks to understand the influence of parents’ learning mechanisms on the succession dynamic capability and, ultimately, on successor intention to become the next generation working in the family firm. (See Page 2).

 

1. “I suggest changing the title of the work, the authors must include the name of the country to make it clear to the researcher the context of the work”

We have followed the suggestion of being more specific in the title by including the name of the country. The new title is the following:

Parents’ learning mechanisms for family firm succession. An empirical analysis in Spain through the lens of the dynamic capabilities approach (See Page 1).

 

1. “The authors define the following hypotheses: H1: Parents’ use of specific deliberate learning mechanism with successors is positively related to the succession dynamic capability. H2: Succession dynamic capability is positively related to succession intention. I suggest that the authors reflect on the second hypothesis, because I cannot find an answer with the work done for these questions”

We have rewritten the formulation of H2 as suggested so as to make the claims of the hypothesis more appealing. The text in the paper now reads as follows:

The ultimate objective of the family firm is its survival, and for that to occur, successors must be willing to be the next generation attached to running the firm. Therefore, successor intention to continue the family firm is the first step towards family firm survival. From the dynamic capabilities approach, strong dynamic capabilities are critical to success and survival [44]. In the particular case of family firms and succession, these firms need a strong succession dynamic capability that will allow them to draw on successors who wish to continue the family firm [16, 27].

The succession dynamic capability allows successors to deploy their own resources, adjust them as circumstances require, and to generate or acquire new ones when needed [45], and which focus on the continuation of the family firm in an effort to preserve company survival. The succession dynamic capability, grounded on successors’ feelings, perceptions, motivations, and commitments, is important vis-à-vis creating succession intention. A successor who has acquired the skill to preserve socioemotional wealth [94], and who understands the importance of noneconomic outcomes, displays greater potential to develop transgenerational succession intention [11]. A successor who is able to secure organizational autonomy and entrepreneurial desires can relate to the feelings of readiness for succession [88]. Moreover, dynamic capabilities related to succession are associated with people who possess the abilities to develop better strategic practices [5] and achieve long-term profitability and growth [37]. Based on these arguments, we formulate the following hypothesis.

H2. Succession dynamic capability is positively related to succession intention. (See Page 4).

 

Open Review.

• “English language and style are fine/minor spell check required”

After the paper had been revised, it was sent to a native English professional copy-editor for copy-editing and proofreading.

 

Additional Comments.

3. Methodology: “The paper's argument was built on an appropriate base of theory, concepts, or other ideas but need to be better explain, and explain theirs implications”

We have tried to give a better explanation of the methodology, as follows:

• In the sample, we have started directly with the explanation of the sample and have deleted the first paragraph of the previous version (In Spain, approximately ninety percent of Spanish firms can be considered family firms, contributing nearby sixty percent of the gross value added of the country and two thirds of private employment. Before ownership is transferred, the next generation enters the company, and indeed 16.7% of firms owned by the first generation are managed by the second generation. When ownership is second generation, 6.6% are companies run by a different generation. In Spain, 53.6% of firms are owned by the first generation, 37.3% by the second generation, and only 9.2% by the third generation or later [8].) as it is not necessary for understanding the empirical analysis, and might cause confusion.
• In the variables, we give a presentation of the measurement of the variables, as follows:

In the following, we explain the measures for each of the dependent and independent variables.

• We have added a new section, “3.4. Method of analysis” in order to move the explanation of the method of analysis from the Analysis and Results section to the Methodology section.
• We have added special comments to the control variables. The new paragraph now begins as follows:

The study includes different variables as control variables. Only gender and students’ study area (humanities and arts) were found to be significant with regard to succession intention, with a coefficient of -0.042 (t = 5.233), and a coefficient of -0.032 (t = 4.688), respectively. These results suggest that gender (male-female) affects succession intention. The negative coefficient implies that females display less intention to continue in the family firm than males. This finding is in line with previous empirical and theoretical research [9, 12, 51, 52]. As regards the field of study, humanities and arts students exhibit less intention to continue the family firm than students from other disciplines. In previous research, results show that students from these specific fields display less entrepreneurial intention than the rest [57 – 60]. As for the perceived self-efficacy variable, results fail to show any effect on successor intention. This is also an interesting result since the successor’s locus of control, or their perceived marketable lack of skills, has been considered in the literature as playing a role in succession intention [81, 82]. (see page 11)

 

4. Results: “The results presented need to be further clarified and analyzed”

In an effort to improve the readability of the Results section (See pages 8 to 14), we have made several changes:

• We have changed the name of the section from “Analysis and Results” to “Results” (See Page 7).
• We have moved the explanation of the method of analysis to the Methodology section (See Page 7).
• We have provided a brief introduction to the results, as follows:

We explain the results of the analyses in three subsections. First, we explain the measurement model, next we present the structural model to test the hypotheses, and finally, we conduct some robustness analyses. (See Page 7).

• We have made Table 5 clearer (See Page 10).
• We have added further explanation to the control variables results (gender and field of study). (See Page 11)
• We have commented on the results of Table 6 (See Page 12).
• We have amended an error in Table 7 (See Pages 12-13).

 

5. Practicality and/or Research implications: “The paper identify some implications for practice and/or further research but the implications needed to be better explain and consistent with the findings and conclusions of the paper”

• As stated above, we have split the implications to emerge from the conclusions into different sections.
• Moreover, as explained above (See Minor revisions, section 2.), we have improved the conclusions and findings in the paper.

 

6. Quality of Communication: “The paper clearly express its case, measured against the technical language of the field and the expected knowledge of the journal's readership. Attention has been paid to the clarity of expression and readability, such as sentence structure, jargon use, acronyms, etc”

 

After the paper had been revised, it was sent to a native English professional copy-editor for copy-editing and proofreading in order to enhance its readability in the terms expressed by the reviewer.

Reviewer 2 Report

High level of research. Please continue this research it is important this thematic and the suggested approach on "future ...".

Congrats!

Author Response

RESPONSE TO REVIEWER 2

We would like to thank Reviewer 2 for his/her comments and encouragement to continue our research. The changes we have made in response to Reviewer’s 2 comments are set out below.

 

Open Review.

• “English language and style are fine/minor spell check required”

 

After the paper had been revised, it was sent to a native English professional copy-editor for copy-editing and proofreading.

Reviewer 3 Report

Please see attached file.

Comments for author File: Comments.pdf

Author Response

RESPONSE TO REVIEWER 3

We would like to thank Reviewer 3 for his/her constructive comments and for his/her thoughtful contributions, which have helped with the development of the paper. We believe that we have addressed all of your comments. Nevertheless, if further changes are needed, we will be willing to make them. Below, we list our revisions in response to your comments.

 

Revisions.

• Theoretical model
  • “Paper posits that parents learning mechanisms contribute to dynamic capability that results in positive successor intention. I find the model fairly elementary and sparse. Authors can enrich the model by considering other variables that effect both parents learning mechanisms and dynamic capability”

We are grateful for this comment about the model. However, our aim was to build a simple model based on only one theoretical approach, and from that to build the hypotheses. We considered the possibility of using several theories, and therefore of introducing more variables. However, in this paper we were aiming to evaluate the power of only one theoretical approach; namely, the dynamic capabilities approach. Moreover, our goal was to apply the approach to one of the trickiest decisions facing family firms; namely, that of succession.

In family firm research, this approach is considered relevant by several authors, who demand more empirical evidence. As an example, we might consider two papers: Daspit, J. J., Long, R. G. and Pearson, A. W. (2018), “How familiness affects innovation outcomes via absorptive capacity: a dynamic capability perspective of the family firm”, Journal of Family Business Strategy, Vol. 10 No. 2, pp. 133-143; Park, H. Y., Misra, K., Reddy, S. and Jaber, K. (2019), “Family firms’ innovation drivers and performance: a dynamic capabilities approach”, Journal of Family Business Management, Vol. 9 No.1, pp. 4-23.

Nevertheless, we have introduced other variables into the empirical section as controls in order to enrich it and to provide a contrast with other alternative explanations: self-efficacy, gender, and field of study. However, in an effort to follow your advice, we have improved and enriched the conclusions and implications with relevant information concerning the results and by comparing theories.

 

• Empirical part
  • “1) Consider self-selection bias. The GUESS survey is for university students. The sample is selected of parents who chose to send their children to university as opposed to let’s say work in the family firm”

Following Reviewer 3’s comment, we have added self-selection bias to the limitations of the study. However, we have considered the self-selection bias of university students themselves because the GUESS survey is voluntary, and these university students opted voluntarily to answer it.

Moreover, we consider that any self-selection bias derived from the fact that we are considering university students and not individuals who decided not to go to university is likely to be small for two reasons. Firstly, university students are a majority in terms of the young population because in 2018 there were 1 287,791 university students in Spain. Second, parents who are family firm owners understand that their children need university training, regardless of whether these children will continue in the family firms or not [13].

As commented, we have included self-selection bias as a limitation of the study, as follows:

The results may be affected by self-selection bias. Since the GUESSS survey is voluntary, individuals answering this survey are likely to display a more entrepreneurial personality and, therefore, their succession intentions are likely to be higher than those who do not answer the survey. However, there are many different studies based on the GUESSS survey, and which are considered to be appropriate [e.g. 95-97]. (See Page 15).

 

• “2) Majority of results consider self-employed parents and parents who own a majority stake in a company as same. The results should show the coefficients for sample of parents who own a firm. For example a consultant or a programmer parent who is self-employed will be different from parent who actually owns and runs a family firm.”

In the paper, we consider this possibility of having differences between these two groups, and for this reason we have conducted a robustness analysis with multi-group analysis (the two groups being: self-employed parents and parents who own a majority stake in a company). We see significant differences between students whose parents are self-employed and those whose parents own the majority of a business in the path: “parent learning mechanisms → Succession dynamic capability (affective commitment) → succession intention”. Affective commitment is therefore more important and significant in the succession process in family businesses than amongst the self-employed.

We have addressed this in section 6.2. Implications for practice:

Moreover, family firm owners need to take greater care about the affective element of the succession dynamic capability than those who are self-employed. The emotional characteristics of incumbents and successors are more relevant in the succession process for family firm owners. As a result, the emotional aspects of parents’ learning mechanisms need to be developed further, since such aspects might have a greater impact on the learning mechanism and, therefore, influence successor intention to continue in the firm. (See Page 15).

 

• “3) The paper can really improve a lot if we can get information on actual succession decision. I understand if it is not possible to do so.”

We agree with the reviewer that the paper could be vastly improved were we to have information available about actual succession. However, the GUESS project is only related to university students and we cannot obtain such information. We are sorry for this inconvenience, and we believe that this could be a recommendation for future GUESS questionnaires.

 

• “4) Do we have some idea what year of their university course the students are in? Is there a difference between a first-year student wanting to join a family firm vs a final year student wanting to join the family firm after graduating?”

The GUESS survey has no information about the exact year each university student is currently taking. However, this survey does provide information about when university students started their degrees. Therefore, and following the reviewer’s recommendation, we have created two groups of students: 1) students in the initial years of the degree, who embarked on their studies between 2016 and 2018; 2) students in the final years of the degree, who commenced their studies prior to 2016. With these two groups, we conduct a multi-group analysis (Smart PLS 3.3) in order to test whether there are significant differences between students in the final and in the initial years. The following table shows the results obtained:

Hypotheses	Path coefficient final courses	Path coefficient initial courses	Difference between groups
Parent learning mechanisms→ Succession dynamic capability (Affective commitment)	0.592	0.606	0.014     0.005
Parent learning mechanisms→ Succession dynamic capability (Normative commitment)	0.579	0.584
Succession dynamic capability (Affective commitment) → Succession intention Succession dynamic capability (Normative commitment) → Succession intention	0.270   0.464	0.289   0.443	0.019   0.021
Control relationships
Gender → Succession intention	–0.054	-0.033		0.022
Self-efficacy → Succession intention Engineering/IT → Succession intention Humanities/Arts → Succession intention	-0.006 -0.009   -0.032	0.009 0.004               -0.032		0.015 0.013             0.000

**p<0.01. *p<0.05.

 

The results show that there are no significant differences in any of the considered relationships between these two groups of university students. Therefore, we have decided to not include this multi-group analysis in the new version of the manuscript because it does not provide any additional information to the paper. However, we add a note regarding this point as follows:

We also conducted a multi-group analysis to test whether there are any significant differences between students in their final or initial years. Results show that there are no significant differences in any of the relationships considered between these two groups of university students. (See Page 11).

Even so, if the reviewer considers that this analysis is indeed important, it could be included as a robustness analysis in the final version of the paper.

 

• “5) Paper employs PLS -SEM modeling. It is not clear if there are any issues regarding normality in the data. I would suggest adding a simple regression model showing how parental actions are linked with successor intentions.”

Following Reviewer’s 3’s suggestion, we have conducted the analysis with an OLS (ordinary least squares) regression (IBM SPSS 24). To do so, we first created the different variables with the arithmetic mean of the different items of each variable on a Likert-type scale (1–7). In the case of the second-order construct of parents’ learning mechanisms, we created the four first-order constructs and weighted these four constructs by the outer weights obtained by partial least squares after we had created the second-order construct.

Finally, we have conducted three different regressions because we have three different dependent variables (affective and normative commitment and succession intention) in our model, and because linear regression only allows us to test them one at a time. The following table shows the results obtained:

Hypotheses	Path coefficient	t-value		Outcome
Parent learning mechanisms→ Succession dynamic capability (Affective commitment)	0.701	67.072**		H1 Supported
Parent learning mechanisms→ Succession dynamic capability (Normative commitment)	0.673	65.818**
Succession dynamic capability (Affective commitment) → Succession intention Succession dynamic capability (Normative commitment) → Succession intention	0.248   0.382	22.603**   34.844**		H2 Supported
Control relationships
Gender → Succession intention	–0.137	5.215**
Self-efficacy → Succession intention Engineering/IT → Succession intention Humanities/Arts → Succession intention	0.003 -0.026 -0.191	0.294 0.853 4.013**
R2 of Succession Intention	0.451 0.364 0.355
R2 of Affective Commitment
R2 of Normative Commitment

**p<0.01. *p<0.05.

 

The results obtained in this linear regression do not significantly differ with respect to the results obtained with PLS-SEM modelling for any of the relationships considered. We have included a note in the new version the manuscript to explain this:

The results have been replicated through a linear regression (IBM SPSS 24) and do not significantly differ with respect to those obtained using PLS-SEM modelling for any of the relationships considered. (See Page 11).

Nevertheless, if the reviewer considers that this analysis is important, it can be included as a robustness analysis in the final version of the paper.

 

• Language
  • “Paper should improve it’s language. I found the writing long winded and confusing at many places. It seems the paper is combination of several documents that have different formatting, fonts etc. Make the paper homogenous.”

We have undertaken a careful review of the paper, taking into account language issues. Moreover, we sent the paper for copy-editing and proofreading to a professional native English copy-editor.

 

• Citations
  • “In introduction it is mentioned “Second, we present an empirical study in Spain, a country in which succession is a key problem vis-à-vis preserving family capital over time.” This statement needs to have a cite or explain why family firms in Spain have peculiar issues and problems. Does this effect the generality of results across different countries?”

We added the reference as follows:

Second, we present an empirical study in Spain, a country in which succession is a key problem vis-à-vis preserving family capital over time [7]. (See Page 2).

The reference [7]. Instituto de Empresa Familiar. La imagen de la empresa familiar en España. 2006.

Moreover, the following sentence is included in the Limitations and Further Research 5.3. subsection:

First, the analysis focuses on only one country, Spain. Therefore, any conclusions should be used carefully in other countries, as researchers suggest that cultural embeddedness affects the role played by family in the firm [2] (See Pages 15).

 

• “Literature review is missing following citations of papers that are based on GUESS survey and are pertinent to the paper”

We are grateful for the recommendation of the papers and have included them in the references:

Brändle L., Berger E.S.C., Golla S., Kuckertz A. (2017). I am what I am – How nascent entrepreneurs’ social identity affects their entrepreneurial self-efficacy. Journal of Business Venturing Insights, Volume 9, June 2018, 17–23. http://www.sciencedirect.com/science/article/pii/S2352673417300835 (See Pages 6 and 19).

Criaco G., Sieger P., Wennberg K., Chirico F., Minola T. (2017). Parents’ performance in entrepreneurship as a «double-edged sword» for the intergenerational transmission of entrepreneurship. Small Business Economics, DOI 10.1007/s11187-017-9854- (See Pages 6 and 19).

Lopez, T., & Alvarez, C. (2019). Influence of university-related factors on students’ entrepreneurial intentions. International Journal of Entrepreneurial Venturing, 11(6), 521-540. https://doi.org/10.1504/IJEV.2019.103751 (See Pages 6 and 19).

Moreno-Gómez, J., Gómez-Araujo, E. and Castillo-De Andreis, R. (2019). Parental role models and entrepreneurial intentions in Colombia: Does gender play a moderating role?, Journal of Entrepreneurship in Emerging Economies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEEE-04-2019-0048 (See Page 6).

 

Open Review.

• “Moderate English changes required”

After the paper had been revised, it was sent to a native English professional copy-editor for copy-editing and proofreading.

Reviewer 4 Report

This paper deals with a very interesting and hot topic, related with succession in family firms. In fact, authors try to devise the conditions that can originate or promote a more successful succession in family firms.

Despite the possible "good shot" of the approach, I have serious concerns that authors have decided to follow a way that, from my point of view, is not adequate.

Authors chose to use Dynamic Capabilities (DC) approach to support their research model and create a so-called "Succession Dynamic Capability".

I advise authors to re-read the theory underlying DC and try to devise what are, in fact, DC, and what is its usefulness for business success. From my point of view, DC are related with business success. DC may promote organizational performance, and resource performance, but they are not adequate to explain such a complex process like family businesses' (FB's) succession.

As so, I have serious doubts that, in conceptual terms, the proposed research model is truly adequate to pursue the proposed research goals.

Despite this, I notice the following:

1- Introduction: authors present several possible theories to develop this research, but they don't go in deep detail on what they are proposing, nor show the reason why they use those theories. In the following sections of the paper, those theories are not referred anymore. Introduction must be more focused on the papers' goals, and open the way for the next sections, which doesn't happen in this paper.

Moreover, language used is sometimes to simple, and not adequate for a scientific paper. It is not acceptable, from my point of view, to have citations with 4/5 lines, nor even the reference to specific cases of companies in the Introduction of the paper.

2- Theoretical background and hypothesis development: This section must be more developed, and support the rest of the paper's development. Theoretical background is to poor, and authors do not present DC's perspective adequately, nor it is possible to connect the theory to the other parts of the paper. Hypothesis are not clear. What are "Parents' use of specific learning mechanisms"? Are we talking about training? Learning? Training Delivering Methods? Subjects? 

Do authors truly believe that succession in family business is planned most of the times, in order to allow that use of specific learning mechanisms? 

Those questions are crucial, from my point of view, to support the research. They need to be considered and adequately answered.

3- Methodology: I can't see the link between GUESS and family business succession. I believe the connection between GUESS and the fact that in Spain (like in many other EU countries) most of the companies are family-owned, may induce the idea that most of the young students that have answered GUESS are family business successors. And, even if they are, how GUESS collects parents (or incumbent family members) about their use of learning mechanisms?

If authors can adequately answer these objections, I believe that the methodology used is sufficiently strong to support the rest of the research.

I consider that Section 3, and also Section 4, about Results and Analysis, despite the previous observations, and once authors could be able to answer adequately the referred objections, are probably the strongest sections of the paper.

As to Conclusions, I also have serious concerns about its soundness. DC are important to explain family firms dynamics, as also any firm's dynamics (see line 363-364). However, dynamics of family firms is translated into concrete results, of which success of succession is just part of a complex process towards the overall business's success. Authors seem to mix different concepts and realities, and paper must be critically reviewed in order to make it more clear, to show a good story telling, and to better support (theoretically and empirically) the possible research model.

Finally, I propose a major revision of English. I didn't note any errors, but I understand that English used is sometimes very coloquial, and need to be further enhanced, and more based on scientific language, as required on a scientific paper.

I sincerely hope my comments can make you to rethink about the strategy and support for your research, and I expect that you can present an improved version of this research latter on.

I wish authors all the best on their research journey.  

Author Response

RESPONSE TO REVIEWER 4

We would like to thank Reviewer 4 for his/her constructive comments and for his/her thoughtful contributions, which have helped with the development of the paper. We believe that we have addressed all of your comments. Nevertheless, if further changes are needed, we will be willing to make them. Below, we list our changes in response to your comments.

 

Revisions.

• “I advise authors to re-read the theory underlying DC and try to devise what are, in fact, DC, and what is its usefulness for business success. From my point of view, DC are related with business success. DC may promote organizational performance, and resource performance, but they are not adequate to explain such a complex process like family businesses' (FB's) succession. As so, I have serious doubts that, in conceptual terms, the proposed research model is truly adequate to pursue the proposed research goals.”

In previous published papers, we have used the dynamic capabilities approach (for reasons of anonymity, we cannot reveal the papers), and this time we go one step further in modelling and measuring one specific dynamic capability. In this particular case of succession, the theoretical paper by Cabrera-Suárez et al. (2018) advances the importance of the dynamic capabilities approach to deal with the problem of succession in family firms. They propose a model in which family firm learning mechanisms are at the centre of transgenerational entrepreneurship. They attribute the importance of the approach based on the need to transfer knowledge from one generation to the next with a deliberate process of learning. In fact, they recognize that succession needs to be explained considering familiness as a broad dynamic capability in which succession could be perceived as a specific dynamic capability. This specific approach to succession is made after previous theoretical and empirical success in applying the dynamic capability approach to family firms.

 

1. “Introduction: authors present several possible theories to develop this research, but they don't go in deep detail on what they are proposing, nor show the reason why they use those theories. In the following sections of the paper, those theories are not referred anymore. Introduction must be more focused on the papers' goals, and open the way for the next sections, which doesn't happen in this paper. Moreover, language used is sometimes to simple, and not adequate for a scientific paper. It is not acceptable, from my point of view, to have citations with 4/5 lines, nor even the reference to specific cases of companies in the Introduction of the paper.”

We have rewritten the introduction, following your recommendations (mainly, avoiding simple language, long citations and justifying the use of the theories), as follows:

Succession is a worrying issue for family firms [1]. In fact, the biggest challenge facing family firm survival is succession, with most firms having no plans in this regard. In Spain, as in most European countries, the future challenges facing family firms, and the main obstacles to generational change have traditionally involved succession planning and professionalization [7]. However, even though it might seem that the success of the succession will depend on its planning, including the criteria to be met by the successor and how these will be applied, other areas need to be studied for a successful family succession in family firms [8].

Family firm literature has addressed this challenge from different theoretical perspectives, with the focus progressively shifting towards the parents (incumbents). In organizational commitment literature, the succession decision is explained by disentangling the various types of successor commitment, and by revisiting the antecedents of each type of commitment using a range of theories and approaches [4]. Further, the social cognitive theory advances our understanding of the antecedents of successor engagement in family firms by theoretically modelling the impact of parental support and psychological control on successors [3].

Adopting institutional logics, Richards et al. [2] explore the succession dilemma (successor willingness versus their actual ability) by taking the perspective of the incumbent family member, and suggest that incumbents play an important role in terms of their ability to engage skilled successors in the management of the family firm.

The social exchange perspective considers incumbent-successor relationships and stresses the importance of the quality of those relationships for transferring knowledge during the nurturing phase of succession [10, 13]. The imprinting theory explains how parents transfer their patterns of behaviour in the family firm to their children and how a family’s culture can guide family members through a learning process that helps to develop a particular way of thinking [5].

Although some progress has been made in family firm literature, there is still a need to secure a better understanding of the succession process and what role parents play therein. In order to gain deeper insights into these issues, we use the dynamic capabilities approach, which shows the family firm as a bundle of learning mechanisms and dynamic capabilities created across generations [14 – 16]. From this approach, the parents in the family firm play a role in developing learning mechanisms that will allow successors to forge one of the core dynamic capabilities that can keep the firm within the family [88]. Parents can create the learning mechanisms for their successors by giving them support [3], making them committed to the family firm [4], avoiding any negative imprints [5], and then making them willing to engage in the family firm. Should they succeed, successors will acknowledge the benefits of continuing the family firm.

From the dynamic capabilities approach, we highlight the importance of learning derived from incumbents in the firm. The closeness of the relationships between parents and successors and their simultaneous participation in the family and in the firm’s systems creates a unique context where knowledge and learning occur in an idiosyncratic manner, allowing the creation of parents’ learning mechanisms. The parent-successor relationship contains the specific conditions to integrate and recombine knowledge and to develop emotional and social mechanisms to preserve this knowledge, which then becomes part of successors’ specialized knowledge and skills and can enable their engagement with the family firm in the long-term and guarantee its sustainability (Duarte and Kok, 2018).

The aim of this research is to deepen current understanding of what role parents play in successors’ intention to continue the family business, taking the perspective of the successor’s perceptions. In particular, the study seeks to understand the influence of parents’ learning mechanisms on the succession dynamic capability and, ultimately, on successor intention to become the next generation working in the family firm. Additionally, we control for successor skills, as the literature has suggested that these might influence successor intention.

The contributions of this research are twofold. First, we further current knowledge of succession in family firms by using the dynamic capabilities approach in the creation of successor commitment as an antecedent of successor intentions. Second, we present an empirical study in Spain, a country in which succession is a key problem vis-à-vis preserving family capital over time [7].

The remainder of the study is structured as follows. First, we present the theoretical background and hypotheses. We then explain the methodology and results to emerge from the analyses. Finally, we provide the conclusions and offer a discussion of the results. (See pages 1-2)

 

2. “Theoretical background and hypothesis development: This section must be more developed, and support the rest of the paper's development. Theoretical background is to poor, and authors do not present DC's perspective adequately, nor it is possible to connect the theory to the other parts of the paper. Hypothesis are not clear. What are "Parents' use of specific learning mechanisms"? Are we talking about training? Learning? Training Delivering Methods? Subjects? Do authors truly believe that succession in family business is planned most of the times, in order to allow that use of specific learning mechanisms? Those questions are crucial, from my point of view, to support the research. They need to be considered and adequately answered.”

 

• We have introduced the theoretical section by clarifying and relating the assumptions of the dynamic capabilities approach to the hypotheses formulation, as follows:

The dynamic capabilities approach was conceived to explain which sources of firms’ competitive advantage occur over time [37]. This approach emerged as an alternative to existing theories and frameworks in an effort to understand the new sources of firms’ competitive advantage [83]. Since its conception, scholars have used it and applied it to identify diverse dynamic capabilities that are relevant to performing in environments which display certain characteristics, avoiding the ‘zero profit condition’ [14-16].

The distinctive feature of this approach is the concept of dynamic capabilities, and scholars have been challenged to ascertain its underlying microfoundations [83]. Based on this concept, the approach seeks to provide insights into how to compete in uncertain environments in which firms must exploit their knowledge while creating new knowledge in an effort to adapt, integrate and reconfigure their internal and external organizational skills, resources, and competences [83].

Dynamic capabilities emerge from learning and constitute systematic methods for modifying operating routines [17]. Dynamic capabilities are seen as an organization’s capacity to intentionally create, extend or modify its foundation of resources [18]. Dynamic capabilities allow a firm to extend, modify or create ordinary capabilities through access to and recombination of knowledge, thereby enabling success over time [17, 19 – 21].

In family literature, scholars recognize that the way in which dynamic capabilities are generated in family firms may differ due to the particular characteristics of the learning process inherent in these firms [22]. Because family members are emotionally, economically, and socially attached to the firm, family firms are expected to be able to develop unique and difficult to replicate learning mechanisms. There are family learning mechanisms resulting from family practice and experimentation in the firm which can allow strategic management to be effective. In family firms, dynamic capabilities orchestration is secured through family learning mechanisms [21], with such mechanisms proving vital as a pre-requisite for family firm survival [23]. (See pages 3-4).

 

• We have changed some of the writing of H1 formulation for clarification. This now reads as follows:

Learning in the family firm thus allows the bundle of resources and capabilities provided by the family to be linked and dynamic capabilities to be developed. Once family members acquire new knowledge and develop skills and bring these into the firm, they can be transferred to the other members of the firm [16, 24] and transferred across generations [25, 26]. Therefore, this specific learning management in family firms recognizes the dynamic component attached to the family’s resources and the family firm’s ability to secure wealth creation across generations [27].

In particular, parents are involved in the immediate (next) generation’s learning about the skills, norms, values or technical information related to the family firm. Parents act as an active internal stakeholder of successor learning by deliberately guiding them in the family firm learning process [2]. As do other individuals in a firm, successors build their skills by repeatedly executing similar tasks [28] and by figuring out what works and what does not when undertaking tasks in the family firm [17].

Grounded on the dynamic capabilities approach, we define parents’ deliberate learning mechanisms as systematic active actions of parents sharing knowledge experience, articulating and codifying family firm knowledge, and preserving the family’s socioemotional wealth so that successors learn to solve problems, improve decision making, stimulate creative ideals, effectively implement organizational objectives, and then assist in renewing organizational capabilities in the family firm (based on Nelson and Winter [29]; Clark and Fujimoto [30]; Teece et al. [21]; Argote [28]; Eisenhardt and Martin [20]; Zollo and Winter [17]; Barros et al. [27]).

These learning mechanisms –as an example of interaction and mutual trust- allow the family firm’s values and vision to be transferred to successors [31] and ensure continuity [32, 33]. When parents and subsequent generations are involved in management, they exhibit high levels of cohesion and a strong sense of shared purpose [34]. Moreover, symbols or stories about the family and the family firm that parents share with successors and parents’ valuable dedication to the firm are elements of the learning process [5, 35]. In fact, by using these mechanisms, parents are building a succession dynamic capability that is strongly anchored in the family firm’s culture, shared values, experimentation, and so on [36]. Following Zollo and Winter’s [17] definition of a dynamic capability, we define succession dynamic capability as a learnt and stable pattern of succession feelings, perceptions, motivations, and commitments through which the family firm systematically generates and modifies its operating routines in pursuit of family firm survival.

Balanced family structures have a positive influence on the family business over time, meaning that when family systems are connected and flexible in family firms the succession plans prove more effective [38]. Because a learning organization must enable the rapid dissemination of new knowledge laterally and vertically [36], families which balance stability and change, while at the same time working together in a democratic style and sharing roles, might be more able to better create a balanced commitment to the family firm [11]. Parents use their leadership skills to help successors develop their capacities to detect, interpret, and act on any future threats or new opportunities that might emerge in the family firm [36].

Family firm members who simultaneously fulfil the function of owner and manager maintain leadership and learning capabilities that make them worthy of being considered entrepreneurial managers and capable of creating lasting learning mechanisms for future generations that can ensure the sustainability of the succession dynamic capability [39, 40]. Based on those arguments, we formulate the following hypothesis.

H1. Parents’ use of specific deliberate learning mechanisms with successors is positively related to the succession dynamic capability. (See pages 3-4)

 

• We have revised H2 formulation as follows:

The ultimate objective of the family firm is its survival, and for that to occur, successors must be willing to be the next generation attached to running the firm. Therefore, successor intention to continue the family firm is the first step towards family firm survival. From the dynamic capabilities approach, strong dynamic capabilities are critical to success and survival [44]. In the particular case of family firms and succession, these firms need a strong succession dynamic capability that will allow them to draw on successors who wish to continue the family firm [16, 27].

The succession dynamic capability allows successors to deploy their own resources, adjust them as circumstances require, and to generate or acquire new ones when needed [45], and which focus on the continuation of the family firm in an effort to preserve company survival. The succession dynamic capability, grounded on successors’ feelings, perceptions, motivations, and commitments, is important vis-à-vis creating succession intention. A successor who has acquired the skill to preserve socioemotional wealth [94], and who understands the importance of noneconomic outcomes, displays greater potential to develop transgenerational succession intention [11]. A successor who is able to secure organizational autonomy and entrepreneurial desires can relate to the feelings of readiness for succession [88]. Moreover, dynamic capabilities related to succession are associated with people who possess the abilities to develop better strategic practices [5] and achieve long-term profitability and growth [37]. Based on these arguments, we formulate the following hypothesis.

H2. Succession dynamic capability is positively related to succession intention. (See page 4)

 

• In the theoretical section, we have defined parents’ learning mechanisms as follows:

Grounded on the dynamic capabilities approach, we define parents’ deliberate learning mechanisms as systematic active actions of parents sharing knowledge experience, articulating and codifying family firm knowledge, and preserving the family’s socioemotional wealth so that successors learn to solve problems, improve decision making, stimulate creative ideals, effectively implement organizational objectives, and then assist in renewing organizational capabilities in the family firm (based on Nelson and Winter [29]; Clark and Fujimoto [30]; Teece et al. [21]; Argote [28]; Eisenhardt and Martin [20]; Zollo and Winter [17]; Barros et al. [27]). (See page 3)

 

• The measurement of this concept is materialized in the methodology section as follows:

Parents’ learning mechanisms. For these variables, GUESSS employs the Career-Related Parent Support Scale of Turner et al. [50], adapting it for family firms. This scale contains four different groups of items: 1) Instrumental assistance (three items); 2) Career-related modelling (three items); 3) Verbal encouragement (three items); 4) Emotional support (three items). Students are asked to answer different statements related to how much they agree with their parents’ behaviour towards them while they were growing up. (See page 5)

 

3. “Methodology: I can't see the link between GUESS and family business succession. I believe the connection between GUESS and the fact that in Spain (like in many other EU countries) most of the companies are family-owned, may induce the idea that most of the young students that have answered GUESS are family business successors. And, even if they are, how GUESS collects parents (or incumbent family members) about their use of learning mechanisms? If authors can adequately answer these objections, I believe that the methodology used is sufficiently strong to support the rest of the research.”

 

In Spain, 33,278 student responses from 76 (public and private) universities out of a total of 84 were collected. Since we are studying succession intention in this research, we are only interested in students whose parents are self-employed and/or a majority owner of a business. The final sample size was therefore 9,146 students, which is 27.4% of the total number of students who answered the questionnaire. The rest of the students might have parents who work in the public sector or under contract in a company. This is explained in the text (See Page 6).

The GUESS questionnaire has a specific section for students who are family business successors, which means that only students who are successors answered the family firm related questions. Those questions, in which parents’ learning mechanisms are included, are answered by students, and reflect their perceptions concerning how they feel about learning from their parents. We have sought to clarify the method used to obtain information from students in the text in subsection 3.2., as follows:

All of the measures used in this paper are collected from the GUESSS questionnaire answered by university students. The scales are 7-point Likert scales for all the variables. Below, we explain the measures for each of the dependent and independent variables (Table 1).

Succession intention. GUESSS uses six items adapted from Liñán and Chen [49] concerning whether students are ready to, intend to, or are determined to be the successor of their parents’ businesses. Students are asked to answer different questions, such as the extent to which they agree with different statements related to succession.

Parents’ learning mechanisms. For these variables, GUESSS employs the Career-Related Parent Support Scale of Turner et al. [50], adapting it for family firms. This scale contains four different groups of items: 1) Instrumental assistance (three items); 2) Career-related modelling (three items); 3) Verbal encouragement (three items); 4) Emotional support (three items). Students are asked to answer different statements related to how much they agree with their parents’ behaviour towards them while they were growing up.

Succession dynamic capability. As previously mentioned, succession dynamic capability depends on the different succession feelings, perceptions, motivations, and commitments of successors. In this way, succession dynamic capability is operationalized with two different types of commitment: affective and normative. The affective commitment scale consists of five items related to the sense of belonging and to individuals’ feelings of being emotionally attached to their parents’ family firms. Normative commitment consists of four items concerning individuals’ obligation to follow their family firms [4]. Students are asked to respond to different statements in terms of how much they agree with each of them. (See page 5)

 

• “I consider that Section 3, and also Section 4, about Results and Analysis, despite the previous observations, and once authors could be able to answer adequately the referred objections, are probably the strongest sections of the paper.”

We have tried to improve these sections (3 and 4) in the new version, taking into account your comments and the comments of the rest of the reviewers (See Pages 5-13).

 

• “As to Conclusions, I also have serious concerns about its soundness. DC are important to explain family firms dynamics, as also any firm's dynamics (see line 363-364). However, dynamics of family firms is translated into concrete results, of which success of succession is just part of a complex process towards the overall business's success. Authors seem to mix different concepts and realities, and paper must be critically reviewed in order to make it more clear, to show a good story telling, and to better support (theoretically and empirically) the possible research model.”

In order to make this clearer, we have split the implications, limitations and further research section (now, section 6). Moreover, the conclusion section has been added to the discussion section (now, section 5) and has been revised taking into account the concerns of the reviewer, as follows:

• We have changed the title of section 5 and split it into two, adding section 6. Implications, Limitations and Further Research, in order to better address what is included in each section. We have sought to clarify the conclusion, which now reads as follows:

5. Conclusion and discussion

5.1. Conclusion

Our results indicate that parents deliberately design family learning mechanisms to create a succession dynamic capability, and that this capability positively affects successor intention to remain in the family firm. Our research thus extends family firm succession literature by applying the dynamic capabilities approach. Succession is a topic dealt with by several scholars, despite which there is still a need to theoretically and empirically locate the proximate causes at the micro-level of analysis [84].

Our research suggests that the dynamic capabilities approach helps to understand parents’ role in family firm succession. Following on from previous research [88], we add more empirical evidence in the analysis of succession and advance in other areas of research in family firm literature from a dynamic capabilities approach [14 – 16, 24, 27, 85 – 87].

As stated, one of the open questions in family firm research involves understanding what role parental behaviour plays in next generation willingness to join the family firm [84]. Theoretically, authors have recognized the importance of specifically transferring incumbent family firm member knowledge in order to generate successors’ learning over time in a non-linear and simple fashion, taking into account other internal and external factors which affect successors’ capabilities. In this research, we show that parents are crucial in succession dynamic capability creation by using specific learning mechanisms within the family firm. Parents help successors to sense the opportunities which the family firm might provide them with if they scan, create, learn, and interpret and are able to seize the potential investments required for them to become involved in the family firm [37]. Moreover, this dynamic capability enables successors to develop their intention to continue the family firm. The notion of parents’ involvement in the succession process as a predictor of successor intention is thus gaining strength, as suggested by other researchers [10]. (See pages 13-14)

5.2. Discussion

The development and evolution of the succession dynamic capability must invoke mechanisms that go beyond the semi-automatic stimulus response process [17]. In family firms, there is a learning process wherein parents know that tacit experiential knowledge is not enough to develop a succession dynamic capability. Therefore, they specifically organize learning mechanisms in an effort to convey and codify their knowledge to their successors, doing so by talking with them and making them aware of how the family firm works by emotionally sharing their experiences and ideas about the firm. They also seek to codify their knowledge by explicitly showing how they make decisions and how the family firm works. Consequently, the succession process could be explained in the tradition of the evolutionary paradigm that Zollo and Winter [17] employ to explain the evolution of organizational learning - “variation-selection-retention”. Incumbents become aware of the need for succession as well as of possible changes in the family firm, and so commence a process of selecting the potential successor, whose intention to stay in the family firm they seek to enhance through a deliberate process of creating learning mechanisms that is designed to engender the succession dynamic capability. (See page 14)

 

• “Finally, I propose a major revision of English. I didn't note any errors, but I understand that English used is sometimes very coloquial, and need to be further enhanced, and more based on scientific language, as required on a scientific paper.”

 

After the paper had been revised, it was sent to a native English professional copy-editor for copy-editing and proofreading.

Round 2

Reviewer 3 Report

Authors did an excellent job in addressing my concerns. I wish them the best for next stage in the publication process.