The mediating role of organisational commitment on the relationship between succession planning practices and business performance

Abstract

Orientation: Owing to the vital contribution of family-owned small to medium enterprises to the economic growth of many economies worldwide, succession planning has gained prominence in the academic field. This is because family firms rarely practise succession planning despite its importance in business management. Research purpose: This study examined the mediation effect of organisational commitment on the relationship between selected succession planning practices and the performance of family-owned small to medium enterprises in Zimbabwe. Motivation for the study: Because approximately 70% of family businesses fail to go beyond the first generation, it has become increasingly necessary to investigate antecedents that can improve the survival of family businesses across several generations. Research design, approach and method: This study adheres to the positivist paradigm and employs a quantitative approach. Data were systematically collected from 250 participants and analysed using Structural Equation Modelling. Main findings: The study revealed that successor development and intergenerational relationships significantly impacted business performance. Furthermore, organisational commitment partially mediated the relationship between succession planning practices and business performance. Practical/managerial implications: Successor training and relationship-building mechanisms play a pivotal role in improving the performance of family-owned businesses. Contribution/value-add: As succession planning is rare in small family-owned businesses, this investigation identifies attributes with high predictive power concerning the performance of small family-owned businesses. Not only that, but this study also validates organisational commitment as an underlying mechanism that supports the succession planning – business performance link.