Dissertation/Thesis Abstract

Founder succession in small businesses
by Parkhurst, Michael, Ed.D., Pepperdine University, 2013, 175; 3556877
Abstract (Summary)

The purpose of this study is twofold. The first is to replicate and expand on previous studies by Rubenson and Gupta (1992, 1996) who introduced a contingency model for the initial succession of an organization. The second purpose is to verify that their model is applicable to organizations that are substantially smaller than the original 54 Fortune 1000 companies that were studied. The researcher used a qualitative research methodology to answer the following research questions. 1. Is the Contingency Model of the Initial Succession proposed by Rubenson and Gupta (1996) transferable to organizations of smaller size and lower revenues? 2. Were the founders of small sized organizations planning for their eventual succession? 3. What other factors came into play beyond those outlined by Rubenson and Gupta (1996) during the succession process?

The qualitative research methodology employed was a grounded theory research design utilizing personal interviews with the first successors of an organization. The researcher used a combination of structured and unstructured questions during the interviews of 15 successor CEOs about the process of succession from the founder to them as the next organizational leader. Participants in this study were chosen by a combination of purposeful sampling and chain referencing methods. All the participants and organizations in this study met the following criteria: (a) the interviewed successor must be the first leader after the founder, (b) the organizations must have been between $5 and $200 million dollars in annual revenue at the time of succession, (c) the organizations must have had 200 employees or less at the time of succession, and (d) the succession must either be in process or have happened within the last 5 years.

The results of this study suggest that founders who maintain a controlling equity position in their organizations are able to set the date and method of their succession with impunity. Only 6 of the 12 sub-factors in the model for the initial succession were confirmed in the sample population of this study. It is the authors conclusion that the proposed model by Rubenson and Gupta (1996) as it is currently constructed had minimal explanatory power in the target population of this study. Additionally, 6 themes were discovered during the interview process: founders are thinking in terms of how to cash out of the business rather than their legacy; founders are not planning for succession until it is thrust upon them by illness, old age, or by their family; founders did whatever they wanted because they were the majority shareholder; successors are not inclined to confront the founder; founders have a high level of self identification with the organization; and founders hung onto the organization because it was their hobby.

Indexing (document details)
Advisor: Rhodes, Kent
Commitee: Allen, Mark, Decker, Jeffery
School: Pepperdine University
Department: Education
School Location: United States -- California
Source: DAI-A 74/07(E), Dissertation Abstracts International
Source Type: DISSERTATION
Subjects: Entrepreneurship, Management
Keywords: Founder succession, Small businesses
Publication Number: 3556877
ISBN: 978-1-267-99227-7
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