HANA NATALIA
International Business Management, Universitas Ciputra
E-mail: hana.natalia@ciputra.ac.id
Ungerer & Mienie (2018) stated that family business is a business that is led and controlled by one of the family members. Family members work in the family business where the family has an important role in the business’ vision and control. Businesses that are owned by family members or by family bonds are expected to reach family vision, which is succession. Regarding the regeneration, succession is one of the main factor that determines the generation’s continuation that includes family improvement, plan, and process beneath the family business owners (Zhou et al., 2016). The National Bureau of Economic Research Family Business Alliance in 2016 found a disturbance in family harmony regarding the succession. The data shows roughly 43% family businesses that survive from first to second generation. Transitions from second to third generation that survive are only 12%. Most businesses have difficulty passing the leadership baton to the next generation, which means disturbance in family harmony between the owner (previous generation) and the successor (next generation) that affect the successor’s intention to continue the leadership baton (www.pwc.com, 2016).
Global Family Business (Pwc Survey) in 2018 stated that family businesses in Indonesia are in strong growth and reach the third highest growth among 40 countries around the world. Pwc said that the succession process of family businesses in Indonesia is interesting to be researched because Indonesia has a strong plan and succession, which are better than the other countries around the world overall. Global Business Guide Indonesia in 2016 (GBG Indonesia) said that readiness of family businesses in South East Asia for succession between generations. GBG claimed that Indonesia’s successors tend to be more ready than the other ASEAN countries (www.gbgindonesia.com, 2016).
Succession crisis in relation to two aspects of readiness: successors’ intention to continue the business and commitment to receive new goals in running the business (Janka and Wieczorek, 2016). Mokhber et al., (2017) explained that relationships between family members include harmony and commitment in doing their own important roles. Good relationships with family members ensure continuous successful transition. Disharmony in the family tends to give destructive impact during the succession in family business. Family harmony and commitment are needed in an effective succession process and increase successors’ intention to continue the family business.
Based on the shown data, family harmony and commitment are appealing to be researched on the 8th generation of UC Family Business Community. That data can be the foundation in this research intention, so commitment and family harmony in regeneration of family business can give effect that increase or decrease the successors’ intention in continuing the family businesses. This research’s purpose is to be the researcher’s experience, understanding about the effect of commitment and family harmony towards successors’ intention to continue family businesses in UC Family Business Community. Hopefully, this research can be continued and give a clear understanding about the effect of commitment and family harmony toward the successor’s intention to continue the family businesses.
Commitment Theory
In common, commitment is a psychological condition that pushes someone to perform action (Garcia et al., 2017). Relating to family business, this research focuses on successors’ commitment that can be defined as family pride in business and form of involvement from family members to defend the family business that will lead to positive succession (Gimenez et al., 2018). According to successors’ commitment, a successor’s attitude can give different results in the intention of continuing family business. Successors’ place important classification on the effectiveness of family businesses. Commitment indicators that are used in this research:
1) Affective commitment (feeling or emotion of successors with attachment and involvement in the family business (Rautamaki & Paakkanen, 2016))
2) Normative commitment (successors have the feeling of responsibilities or in debt to run the family business (Rautamaki & Paakkanen, 2016))
3) Continuance commitment (feeling of anxiety about cost that is related to successors in the future with the family business (Rautamaki & Paakkanen, 2016))
Family Harmony Theory
Family Harmony is happiness or feeling full that is felt by husband, wife, children, and big family regarding the family life, such as respecting each other, contribution, decision making, conflict resolution, support, and care towards each other’s life (Sari & Puspitawati, 2017). Family harmony is interpersonal trust between family members that can create structure that is stable, well-organized, and integrated that keeps the family together (Scholes et al., 2016). Family harmony as the important element in successors’ performance in family business (Posso & Urbano, 2016). Family harmony is a healthy family condition with good relationships between family members. Family harmony indicators that are used in the research:
1) Communication (successors to family business owners). Communication is an interaction process that can result to mutual relationship between successors and family business owners
2) Conflict resolution. Conflict resolution is a problem solving process by considering individuals’ needs (Kavikondala et al., 2016)
3) Quality time with family is a time to increase relationship’s quality between family members (Kavikondala et al., 2016)
Intention Theory
Overall, intention can be defined as an important determinant of someone’s attitude to perform an action, as a combination from attitude, perceived norms, and perceived behavioral control (Rees, 2017). Considering this research is about family business, successors’ intention is a condition which a successor anticipates in taking over family business after the previous owner stops involving in the family business. Successors evaluate the attitude of the previous generation in taking over the family business regarding attitude, norms, and behavioral control that identify the successor’s perception about the skills in taking over family business (Morais et al., 2017). Successors’ intentions need to be conveyed in the family from generation to generation or owner to successor in running the family business. Intention’s indicators that are used in this research:
1) Involvement. Involvement means the successors are involved in the family business (Rautamaki & Pakkanen, 2016)
2) Loyalty. Loyalty means successors’ loyalty to focus on continuing family business (Rautamaki & Paakkanen, 2016)
3) Activeness. Activeness means the successors’ act in supporting activities and work in the family business (Rautamaki & Paakkanen, 2016)
Results
The Effect of Commitment and Family Harmony Towards Successor Intention to Continue the Family Business
Conclusion
This research’s purpose is to test the effect of commitment and family harmony towards successors’ intention to continue the family businesses. The research results are
- Commitment has a positive and significant effect towards successor’s intention to continue the family businesses
- Family harmony does not affect the successors’ intention
Suggestions
According to the conclusion, researchers suggest:
- Researchers and successors
Researchers and successors who want to continue their family business can pay attention more on the commitment
- UC Family Business Community
- Community can pay attention and focus on its members’ commitment in family business because increasing commitment will affect the successors’ intention to continue family businesses
- Community can give mentoring and training regularly to increase its members commitment so their intention to continue family business can increase
- Future research
- Explore the research to the other factors beside commitment and family harmony that can show the successors’ intention to continue family business
- Data collection method can be in form of face-to-face to know the real conditions of respondents
Limitations
- Some of the respondents were re-filling the questionnaires, which will change the former results
- Possibilities of bias in answering online questionnaires
*Original Journal was posted on PERFORMA: Jurnal Manajemen dan Start-Up Bisnis Volume 4, Nomor 2, Juni 2019