Project – Succession Planning and Organisational Continuity in Family-Owned Businesses: A Study of Selected Family Enterprises in Ibadan, Oyo State

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Family-owned businesses are an important component of private enterprise because they combine entrepreneurial ownership with family relationships, values and long-term economic interests. Across developing economies, family enterprises operate in areas such as trading, manufacturing, agriculture, services, construction and professional activities, providing income and employment for family members and other workers. Their continuity, however, cannot be taken for granted because the departure, retirement or death of a founder can create substantial leadership and ownership challenges when a suitable successor has not been prepared. West (2019), in a multiple-case study of Nigerian family businesses, found that business continuity beyond the founding generation represents a significant challenge and examined the strategies used by successful Nigerian family-business leaders to facilitate succession. Similarly, Ogbechie and Anetor (2015) identified succession as an important challenge facing Nigerian family-owned businesses and examined the factors that influence the smooth transfer of leadership and ownership. Thus, succession is not merely a future administrative event but a strategic issue that can influence whether a family enterprise remains viable across generations.

Succession planning refers to the deliberate process through which an organisation identifies potential successors, develops their capabilities and prepares them to assume leadership or other critical responsibilities when existing leaders leave their positions. In family businesses, succession planning may involve identifying family members or non-family managers, providing them with education and experience, gradually transferring responsibilities, clarifying ownership arrangements and establishing mechanisms for resolving family disagreements. Ayoola, Abubakar, Nwoye, and Daniel (2023) examined succession planning strategies in Nigerian family businesses using mentoring, training, job rotation, coaching, talent management and internship as important succession-planning mechanisms. Their findings demonstrate that succession planning can be approached as a systematic developmental process rather than simply the selection of an heir. Sajuyigbe, Oyedele, and Unachukwu (2016), specifically examining family-owned businesses in Ibadan, Oyo State, similarly identified successor involvement, adequate training, cordial family relationships and willingness to learn from one another as factors relevant to successful generational transition.

Organisational continuity is closely connected with effective succession because a leadership transition can disrupt decision-making, customer relationships, employee confidence, organisational knowledge and strategic direction if it is poorly managed. In a family enterprise, the challenge can be more complex because ownership, management and family relationships may overlap. Olubiyi, Lawal, and Adeoye (2022) found a significant relationship between succession planning and family-business continuity in Lagos State, reporting that succession planning explained a substantial proportion of variation in business continuity among the family businesses studied. Oluwatukesi, Balogun, Oluwatukesi, and Jaiyesimi (2023) likewise reported that succession planning positively influenced business continuity among family-owned businesses in Lagos State. These findings suggest that continuity may depend partly on the extent to which businesses prepare for leadership transition before a transition becomes unavoidable.

One important element of succession planning is successor training and development. Potential successors may need to acquire technical knowledge, managerial competence, financial understanding, strategic decision-making abilities and knowledge of the organisation’s customers and operations before assuming senior responsibilities. Training can also provide successors with opportunities to understand the history, values and practices that have contributed to the business’s development. Ayoola et al. (2023) specifically identified training, mentoring, coaching, job rotation, talent management and internship as succession-planning strategies relevant to the sustainability of Nigerian family businesses. In the Ibadan context, Sajuyigbe et al. (2016) also emphasised adequate training and the involvement of successors in running the business as factors that can contribute to survival after the exit of first-generation owners. Consequently, the preparation of successors represents an important dimension through which succession planning may contribute to organisational continuity.

Another important component is mentoring and gradual involvement of potential successors in organisational activities. Mentoring allows experienced owners or managers to transfer tacit knowledge, business relationships, managerial practices and lessons acquired through years of experience. Gradual involvement can also allow potential successors to understand the operational realities of the enterprise before taking full responsibility. Sulaimon, Gbadamosi, Ebegbetale, Fajimolu, and Onyemaobi (2024) examined succession strategy and performance among selected micro family firms in Lagos and specifically considered management training and mentorship for successors as mechanisms relevant to family-business performance. Similarly, research on leadership transition among Nigerian family-owned SMEs indicates that the preparation of successors and strategies for transferring responsibilities are important considerations in maintaining continuity between founders and succeeding generations. This suggests that succession planning should involve an ongoing developmental relationship rather than a sudden transfer of authority.

The formalisation of succession arrangements is also important because informal expectations concerning inheritance or leadership may not be sufficient to guide a complex transition. A formal succession plan may specify potential successors, required competencies, timelines, responsibilities, ownership arrangements and procedures for dealing with disagreements. Ogbechie and Anetor (2015) found that although many Nigerian family businesses lacked formal succession plans, the absence of a plan alone did not explain all succession problems, indicating that other family and organisational factors also influence succession outcomes. More recent Nigerian evidence similarly shows that cultural traditions, legal complexities, organisational structures and family dynamics can interact in shaping succession processes. A 2026 study of Nigerian family businesses found that succession frequently occurs without sufficiently structured processes and highlighted the interaction of institutional, organisational and family-level factors in leadership transition. Therefore, formal succession planning should be understood alongside successor competence, family relationships, communication and organisational structures.

The issue is particularly relevant to family enterprises in Ibadan, Oyo State, because empirical research has already identified Ibadan as a significant setting for examining succession challenges in Nigerian family businesses. Sajuyigbe et al. (2016) specifically studied established family-owned businesses operating in Ibadan metropolis and reported that successor involvement, training, cordial family relationships and mutual learning were relevant to the survival of family businesses after the exit of first-generation owners. In addition, Oluwatukesi et al. (2023), whose study was based in Lagos, used a pilot validation exercise in the Oluyole industrial area of Ibadan, demonstrating the relevance of Ibadan as a setting within the Nigerian family-business research environment. The importance of the present study therefore lies in extending the empirical discussion to selected family enterprises in Ibadan and examining how specific succession-planning practices relate to organisational continuity.

1.2 Statement of the Problem

Many family-owned businesses are established with the entrepreneurial vision, personal networks and managerial capabilities of a founder, but the continued existence of the business becomes uncertain when leadership has to move to another generation. West (2019) noted that many Nigerian family-owned businesses experience difficulty surviving into subsequent generations and examined strategies used by family-business leaders that had successfully implemented succession planning. Ogbechie and Anetor (2015) similarly identified succession as a significant challenge among family-owned businesses in Nigeria and found that many enterprises lacked succession plans, although they also concluded that other factors contribute to succession difficulties. The problem is therefore not simply that family businesses change leadership, but that inadequate preparation for leadership transition can create uncertainty about who should assume responsibility, whether the successor is competent and how organisational activities will continue after the founder’s departure.

A second problem concerns inadequate preparation and development of potential successors. Family membership does not necessarily provide an individual with the managerial, technical and strategic competencies required to operate a growing enterprise. Without adequate training, mentoring and progressive exposure to organisational responsibilities, successors may find it difficult to manage employees, customers, finances and strategic decisions after assuming leadership. Ayoola et al. (2023) identified mentoring, training, job rotation, coaching, talent management and internship among the succession strategies examined in Nigerian family businesses. Evidence from Ibadan also indicates that successor involvement and adequate training are considered important factors in successful generational transition (Sajuyigbe et al., 2016). This creates a problem for family enterprises where successors are selected primarily because of family relationships without sufficient attention to their preparedness for leadership.

A third problem relates to family relationships and potential conflicts during succession. Unlike succession in many non-family organisations, family-business succession can involve emotional relationships, expectations concerning inheritance, competing interests among siblings and disagreements between generations. These relationships can make decisions concerning leadership and ownership more complicated. The 2026 multilevel study of family-business transitions in Sub-Saharan Africa, using Nigeria as its focal context, found that cultural traditions, legal complexities and family dynamics intersect with organisational factors in shaping succession processes. Similarly, Sajuyigbe et al. (2016) identified cordial relationships among family members and willingness to learn from one another as important factors in the survival of family businesses after generational transition. Thus, without clear communication and structured succession arrangements, family disagreements may affect organisational stability during leadership transition.

A further problem is the limited context-specific evidence on how succession-planning practices influence organisational continuity among family enterprises in Ibadan. Existing Nigerian studies have demonstrated relationships between succession planning and continuity in Lagos State, while other studies have examined succession challenges among family businesses generally or specifically within Ibadan. Olubiyi et al. (2022) reported a significant relationship between succession planning and family-business continuity in Lagos State, while Oluwatukesi et al. (2023) found that succession planning positively influenced business continuity among family-owned businesses in Lagos. However, the existence of evidence from Lagos does not establish that the same relationship operates in the same manner among selected family enterprises in Ibadan. The present study therefore seeks to provide empirical evidence on whether succession planning, particularly successor training and development, mentoring, successor involvement and formal succession arrangements, is significantly related to organisational continuity among selected family-owned businesses in Ibadan, Oyo State.

1.3 Purpose of the Study

The general purpose of this study is to examine succession planning and organisational continuity in family-owned businesses, with particular reference to selected family enterprises in Ibadan, Oyo State.

The specific objectives are to:

1. examine the relationship between successor training and development and organisational continuity among selected family enterprises in Ibadan, Oyo State;
2. determine the relationship between mentoring and coaching of potential successors and organisational continuity among selected family enterprises in Ibadan, Oyo State;
3. examine the relationship between successor involvement in business operations and organisational continuity among selected family enterprises in Ibadan, Oyo State; and
4. determine the relationship between formal succession planning arrangements and organisational continuity among selected family enterprises in Ibadan, Oyo State.

1.4 Research Questions

The following research questions will guide the study:

1. What is the relationship between successor training and development and organisational continuity among selected family enterprises in Ibadan, Oyo State?
2. What is the relationship between mentoring and coaching of potential successors and organisational continuity among selected family enterprises in Ibadan, Oyo State?
3. What is the relationship between successor involvement in business operations and organisational continuity among selected family enterprises in Ibadan, Oyo State?
4. What is the relationship between formal succession planning arrangements and organisational continuity among selected family enterprises in Ibadan, Oyo State?

1.5 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: There is no significant relationship between succession planning and organisational continuity among selected family enterprises in Ibadan, Oyo State.

1.6 Significance of the Study

The study will be significant to owners and founders of family-owned businesses because it will provide empirical information about practices that may facilitate leadership transition and organisational continuity. The findings may help business owners recognise the importance of preparing potential successors before retirement, withdrawal or other forms of leadership exit. This is particularly relevant given evidence that succession planning is associated with business continuity among Nigerian family businesses (Olubiyi et al., 2022; Oluwatukesi et al., 2023).

The study will be useful to potential successors and family members involved in family enterprises. It may provide a clearer understanding of the importance of training, mentoring, gradual involvement and communication in preparing the next generation for leadership responsibilities. Evidence from Ibadan has specifically highlighted successor involvement, training and cordial family relationships as factors relevant to successful generational transition (Sajuyigbe et al., 2016).

The study will also be useful to managers and employees of family-owned businesses. Effective succession is not only a family concern because changes in leadership can affect organisational structure, employee confidence, strategic direction and continuity of operations. Evidence from Nigerian family businesses indicates that leadership transition and survival are interconnected organisational issues requiring deliberate strategies (West, 2019; Adias & Akenbor, 2020).

The study will contribute to academic literature in business administration, entrepreneurship, human resource management and family-business management by providing context-specific evidence from Ibadan, Oyo State. Previous Nigerian studies have examined succession planning in Lagos and at broader national levels, while the present study focuses specifically on selected family enterprises in Ibadan.

Finally, the study will be useful to future researchers interested in family businesses, succession, organisational continuity, entrepreneurship and small-business sustainability. It may provide a basis for comparative research involving family enterprises in other cities and states in Nigeria and for studies comparing family businesses that have formal succession arrangements with those that rely primarily on informal family decisions.

1.7 Scope of the Study

The study is titled “Succession Planning and Organisational Continuity in Family-Owned Businesses: A Study of Selected Family Enterprises in Ibadan, Oyo State.”

The geographical scope of the study is limited to selected family-owned enterprises operating within Ibadan, Oyo State, Nigeria.

The content scope covers two major variables: succession planning and organisational continuity. Succession planning will be examined through four dimensions: successor training and development, mentoring and coaching, successor involvement in business operations, and formal succession planning arrangements.

Organisational continuity will be examined in terms of the ability of family enterprises to maintain leadership stability, continue business operations, retain organisational knowledge, maintain customer and stakeholder relationships, sustain strategic direction and remain viable following leadership transition.

The population scope will comprise owners, family members involved in management, potential successors, managers and relevant employees of selected family-owned businesses in Ibadan, Oyo State.

1.8 Operational Definition of Terms

Succession Planning: A deliberate organisational process of identifying, preparing, developing and selecting individuals who can assume leadership or other critical responsibilities when current leaders leave their positions.

Family-Owned Business: A business in which one or more families exercise substantial ownership, control or management and where family relationships influence important organisational decisions.

Organisational Continuity: The ability of an organisation to maintain its operations, leadership, strategic direction, organisational knowledge and stakeholder relationships despite changes in ownership or leadership.

Successor: An individual identified or considered as a potential future leader or owner of a family-owned business.

Successor Training and Development: The formal and informal educational, professional and practical activities undertaken to prepare a potential successor for future leadership responsibilities.

Mentoring: A developmental relationship in which an experienced business owner or manager provides guidance, knowledge, advice and support to a potential successor.

Coaching: A structured process through which an experienced person assists a potential successor in developing specific managerial, leadership and decision-making capabilities.

Successor Involvement: The extent to which potential successors participate in the daily management, decision-making and strategic activities of the family enterprise before assuming formal leadership.

Formal Succession Plan: A documented or clearly structured arrangement specifying how leadership, ownership or managerial responsibilities will be transferred when an existing leader exits.

Leadership Transition: The process through which managerial or ownership authority moves from an existing leader to a successor.

Organisational Knowledge: The accumulated information, skills, experience, procedures, relationships and practices required for the effective operation of a business.

Family Enterprise: A business organisation in which family ownership, management and/or influence forms a significant part of the organisation’s structure and decision-making.

Project – Succession Planning and Organisational Continuity in Family-Owned Businesses: A Study of Selected Family Enterprises in Ibadan, Oyo State