The Effect Of Culture In Family Business Succession In Hospitality (Using Ikota Area Of Ajah As Case Study)

Project and Seminar Material for Tourism and Hospitality

Abstract

This study was carried out on the effect of culture in family business succession in hospitality. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of senior staff of some selected hotels in Ikota area of Ajah. In determining the sample size, the researcher purposefully selected 53 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables, and mean score tables. While the hypotheses were tested using Chi-square statistical tool. The result of the findings reveals that primogeniture inheritance rules of management succession firstborn affects family owned business in Ikota area of Ajah.The study also revealed that gender-restrictive inheritance rules on management succession has a significant effect on family owned business in Ikota area of Ajah. Furthermore, multiple heirship inheritance rules on management succession has a significant effect on family owned business in Nigeria. Therefore, it is recommended that Many family firms fail in inter-family succession due to a lack of open and transparent communication results in overwhelming conflicts and rivalry among competing siblings. Therefore, a successful succession plan should include activities aimed at fostering clear and open communication among family members, subsequently resulting in improving mutual understanding among each other. Government should formulate good policy that will forestall the devastating effects of inheritance culture on family- owned business. To mention but few

Table of Content

Chapter One:

Introduction

1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of the Study
1.8 Limitation of the Study
1.9 Definition of Terms
1.10 Organizations of the Study

Chapter Two:

Review of Literature

2.1 Conceptual Framework
2.2 Theoretical Framework
2.3 Empirical Review

Chapter Three:

Research Methodology

3.1 Research Design
3.2 Population of the Study
3.3 Sample Size Determination
3.4 Sample Size Selection Technique and Procedure
3.5 Research Instrument and Administration
3.6 Method of Data Collection
3.7 Method of Data Analysis
3.8 Validity of the Study
3.9 Reliability of the Study
3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

4.1 Data Presentation
4.2 Analysis of Data
4.3 Answering Research Questions
4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

5.1 Summary
5.2 Conclusion
5.3 Recommendation
References
APPENDIX
QUESTIONNAIRE

Chapter One

Introduction

1.1 Background of the Study

Family-Owned Businesses constitute the world’s oldest and most dominant form of business organization. They account for about 70- 95% of all business entities in most countries around the world and also create between 50-80% employment (European Family Business, 2012). According to Small and Medium Enterprise Development Agency of Nigeria, (2012) family businesses in Nigeria contribute about 46-54% to Gross Domestic Product in 2014. The “European Group of Family Enterprises” and the “Family Business Network”(2008),defines family business as a company whose ownership and management are concentrated in one or more families, with at least one member of the family at the helm and control of the business and others are being groomed or considered for eventual leadership. Furthermore, Suh et al., (2008) believed that family business can be defined using the following criteria: voting control, percentage of ownership, power over strategic decision, involvement of multiple generations, and active management by family members. Thus, family business can be defined as a business in which the family has influence or control over both the ownership and management operations (Cabrera-Suarez, 2005). The poor survival rate of these firms is a continuing source of concern given the dominance of family businesses in so many national economies all over the world as only 13 percent survive through the third generation (Sharma, 1999).

According to Davis & Harveston, (1998) just 30% of family businesses see the light of the day beyond the first generation while about 10% to 15% go beyond third generation. In Nigeria more than 70% of Small and Medium Size Enterprises (SMEs) die before their founders as most of them are not able to survive a generational transition (Lansberg & Astrachan, 1994; Nworah, 2011). This problem is as a result of inheritance culture that influences management succession because, without qualified successors, there cannot be generational enterprises (Onuoha, 2013). According to Ughoro, (2011) Nigerian society thrives on sentiments with people occupying positions they should not because they are related to people at the helm of affairs with owners of businesses usually passing the reins to member of families, especially the eldest child even if not qualified, interested or knowledgeable enough to know their left from right. The right of the eldest surviving son to succeed his father in the headship of the family and his commercial ventures is automatic and arise as a result seniority (Onuoha, 2010). As a way of life, inheritance culture plays an important role in shaping the organisation of businesses and their efficiency (Aina, 2002).

Inheritance culture practices in Nigeria include – primogeniture, gender-restrictive, and multiple heirship (Ukaegbu, 2003; Sam, 1998; Maphosa, 1999). These inheritance cultural factors have been circulated to be of significant consequence on successful succession because management succession in family owned business is expected to follow the rules of inheritance (a situation where the founder bequeaths his assets, including his commercial enterprises to his heir(s). Thus, for an enterprise to achieve smooth succession and enterprise sustainability, it must jettison its traditional systems (traditional philosophy of life, and totality of beliefs, knowledge and customs), which are at variance with industrial culture (Ewurum, 1999).

1.2 Statement of the Problem

Hospitality is a socio-economic phenomenon (Mariani & Baggio, 2020) dominated by family businesses that are of critical importance in enhancing the competitive positioning of a destination (Arcese et al., 2020; López-Chávez et al., 2020). In a family business, the transition of ownership and management from one generation to the next poses significant challenges and is riddled with risks and set-backs (Leiß & Zehrer, 2018). Many family firms in the tourism and hospitality industry struggle to survive beyond the first generation due to a lack of clear succession plans, resulting in significant interpersonal struggles among family members, deteriorating business and family relationships(Arcese et al., 2020; López-Chávez et al., 2020). As such, a successful inter-family succession remains a dynamic and complex process (Muñoz-Bullon et al., 2017) despite being a critical factor to the growth and development of a family firm. Research concerning family business has long recognized these challenges, and consequently, a growing body of literature has emerged on the factors influencing inter-family succession (Porfirio et al., 2020; Schlömer-Laufen & Rauch, 2020).

Although the extant literature on family business provides significant insights into the factors influencing the succession process (Cisneros et al., 2018; Schlömer-Laufen & Rauch, 2020), most of these studies have been predominantly studied through a unidimensional perspective focusing on only the incumbent, successor, or non-family employees (Bozer et al., 2017). However, family businesses involve multiple stakeholder groups (Cisneros et al., 2018; Porfírio et al., 2020); thus, a more practical understanding of inter-family succession calls for a comprehensive framework assimilating various stakeholder perspectives (Bozer et al., 2017). More specifically, although family businesses are more widespread in the tourism and hospitality industry, the interaction between tourism and hospitality and family business literature is sparse (Arcese et al., 2020; López-Chávez et al., 2020).

Understanding family business in general (Kallmuenzer & Peters, 2018) and family business succession, in particular 4 (López-Chávez et al., 2020), is not widespread enough in the tourism and hospitality sector. Consequently, there is a compelling need for an explanatory framework that holistically captures the motives, actions, and meanings of multiple stakeholders involved in an inter-family succession in the tourism and hospitality sector.

1.2 Objective of the Study

The broad objective of this study is to examine the effect of culture in family business succession in hospitality using some selected hotels in Ikota area of Ajahas case study.

Specifically, this study seeks to:

Examine whether primogeniture inheritance rules of management succession firstborn affects family owned business in Ikota area of Ajah
Determine whether gender-restrictive inheritance rules on management succession has a significant effect on family owned business in Ikota area of Ajah
Investigate whether multiple heirship inheritance rules on management succession has a significant effect on familyowned business in Nigeria

1.3 Research Questions

Does primogeniture inheritance rules of management succession firstborn affects family owned business in Ikota area of Ajah?
Does gender-restrictive inheritance rules on management succession has a significant effect on family owned business in Ikota area of Ajah?
Does multiple heirship inheritance rules on management succession has a significant effect on family owned business in Nigeria?

1.4 Research Hypothesis

HO: There is no significant effect of culture in family business succession in hospitality.

H1: There is a significant effect of culture in family business succession in hospitality.

1.6 Significance of the Study

Findings of this study will provide considerable insights into the role of multiple stakeholder groups involved in an inter-family succession of a hospitality family firm concerning four key stakeholders, including the incumbent, successor, family, and non-family employees. Contributes to the extant tourism and hospitality and family business literature in three distinctive ways. First, we merge tourism and hospitality and family business literature by highlighting the relevance of family business in the economic structure of the tourism and hospitality sector. Second, in line with the stewardship theory, we provide a thick holistic description of the motives, actions, and meanings of multiple stakeholder groups involved in an inter-family succession concerning pre-, during, and post-succession phases, which has mostly been ignored in the family business and tourism and hospitality literature. Third, we provide significant insights into how a family business in the hospitality industry can strategically manage rivalry and competition among potential successors during an inter-family succession.

1.7 Scope of the Study

The scope of this study borders on the effect of culture in family business succession in hospitality. The study will consider cultural practices such as primogeniture inheritance rules,gender-restrictive inheritance rules and multiple heirship inheritance rules and it effect on family business succession in hospitality. The study is however delimited to selected hotels in Ikota area of Ajah.

1.8 Limitation of the Study

This research project, like all human endeavors, had some challenges that threatened to derail the study’s completion. One of the reasons is that the time allotted for this work was so limited that the researcher did not have enough time to complete the task thoroughly. During data collection, the researcher also had to put forth extra effort to understand the respondents’ interview schedules, several of whom fell into the incomprehensible age group. Also, there were financial and transportation constraints to deal with. Insufficient funds tend to impede the efficiency of the researcher in sourcing the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, interview).

1.9 Definition of Terms

Culture:

Culture is an umbrella term which encompasses the social behavior, institutions, and norms found in human societies, as well as the knowledge, beliefs, arts, laws, customs, capabilities, and habits of the individuals in these groups.

Family Business:

A family business is a commercial organization in which decision-making is influenced by multiple generations of a family, related by blood or marriage or adoption, who has both the ability to influence the vision of the business and the willingness to use this ability to pursue distinctive goals.

Hospitality Industry:

The hospitality industry is a broad category of fields within the service industry that includes lodging, food and drink service, event planning, theme parks, travel and tourism. It includes hotels, tourism agencies, restaurants and bars.

1.10 Organization of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, abnd selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

Chapter Five

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the effect of culture in family business succession in hospitality using some selected hotels in Ikota area of Ajah as a case study. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was on the effect of culture in family business succession in hospitality using some selected hotels in Ikota area of Ajah as a case study. The study is was specifically carried out to examine whether primogeniture inheritance rules of management succession firstborn affects family owned business in Ikota area of Ajah,determine whether gender-restrictive inheritance rules on management succession has a significant effect on familyowned business inIkota area of Ajah, andInvestigate whether multiple heirship inheritance rules on management succession has a significant effect on familyowned business in Nigeria.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent were senior staff of some selected hotels in Ikota area of Ajah.

5.3 Conclusions

Based on the findings of this study, the researcher concluded that;

Primogeniture inheritance rules of management succession firstborn affects family owned business in Ikota area of Ajah.
Gender-restrictive inheritance rules on management succession has a significant effect on familyowned business in Ikota area of Ajah.
Multiple heirship inheritance rules on management succession has a significant effect on familyowned business in Nigeria.

5.4 Recommendation

Based on the responses obtained, the researcher proffers the following recommendations:

Many family firms fail in inter-family succession due to a lack of open and transparent communication results in overwhelming conflicts and rivalry among competing siblings. Therefore, a successful succession plan should include activities aimed at fostering clear and open communication among family members, subsequently resulting in improving mutual understanding among each other.
Qualified experts should be employed in family-owned business in order to have good management succession. Owner/manager should train and prepare both the sons and daughters for possible takeover of the family business and it should not be sole right of the first son or other sons.
The Monogamous form of family structure should be encouraged to minimize conflict over inheritances and succession which are common among polygamous family.
Government should formulate good policy that will forestall the devastating effects of inheritance culture on family- owned business. This will invariably affect the economic development of Nigeria positively.