Founder related knowledge transfer

In our research we explored different methods of tacit knowledge transfer (experiential and routine knowledge) from founders to successors of SFF.

Many authors (e.g., Cabrera-Suárez et al., 2001; Gersick et al., 1997) suggest that early exposure to a family business through summer and lower category jobs are valuable experiences for successors since they acquire in this way tacit knowledge, which is usually linked to a founder and therefore of particular importance during the transfer from the founding to the second generation (e.g., Cabrera-Suárez et al., 2001). The successor can also absorb tacit knowledge about the business at home (Gersick et al., 1997, 71) and maintaining creative families’ environments are prerequisite for creativity and innovation in businesses (e.g., Litz and Kleysen, 2001; Zenko and Mulej, 2011).

The findings of our research show that majority (seven, 70 %) of successors found early exposure and involvement into SFF as an important way of acquiring founder's tacit knowledge. Most of them (nine, 90 %) were exposed early, already as small children, to the family business environment. Successors who have been early exposed to the family business, have mostly done simple work on the week-ends (e.g., folding paper in the office, sweeping parents’ office or a workshop with a broom); they were around, when their parents were discussing business with their workers or even business partners, they were observing, listening and were involved in discussions at the family dinners or at Saturday breakfasts, tackling the business issues; some were accompanying parent at the business travel, listening to parent’s explanations why and how he/she did something;

most of them have worked summer-jobs since they were in the primary school, age of 12 and up. The only successor who has not been exposed and involved in the SFF as a child is a son-in-law of the founder.

Another important way of knowledge transfer is by mentoring and supervising relationships with family business leaders since they believe that the close interactions between them and their successor is a superior form of experience supporting development of tacit knowledge by successors (e.g. Cabrera-Suárez et al., 2001; Chirico, 2008). Mentoring is an effective way of transferring critical technical and managerial skills, knowledge on managerial systems (especially of informal ones) as well as norms of behavior and firm’s values (Swap et al., 2001). There is no common agreement on whether the parents are the most suitable mentors (e.g. Gersick et al., 1997). Some authors argue that parents are not the best mentors since they find it very difficult to give honest feedback to their children (e.g., Gersick et al., 1997) and suggest to include non- family mentors (e.g., a trusted non-family senior manager) who can provide the potential successors with knowledge on how to run the business (e.g., Ward, 1987). Research carried out by Boyd et al. (1999) showed strong presence of informal mentoring by a family member. Even though this kind of mentoring have numerous strengths (e.g., flexibility; unforced, unstructured, and opening-up communication; establishing caring relationship), the weaknesses should be considered such as the absence of objectives or an agenda, the presence of emotion (e.g., potential for bias, personality conflicts, unrealistic expectations) and lack of feedback or review. Therefore, it is recommended to incorporate positive aspects of formal mentoring such as “... goal setting and review, recognition of milestone events, and a time line on the relationship” (Boyd et al., 1999, 307).

Our analysis revealed that all ten (100 %) successors found mentoring as an important way of assimilating critical knowledge and skills (technical and managerial), mostly informal knowledge about management, norms of behavior, and SFF values. Nine (90 %) of successors were informally mentored by their parent, minority were formally mentored by a non-family member. Mentoring their children in an informal way means there were no plans, no programs have been worked out in advance. Often founders defined a problem and then jointly developed possible solutions with their children; often they told them how something has to be or has to be done, so their children developed their own living concept and gained experience; some have simply tried to motivate their children to do certain work in a best way. As well technical knowledge, “hidden recipes”, tricks were

more likely subject of transferring knowledge by learning-by-doing, a kind of internal training, then mentoring. Mentoring has been more transferring knowledge about management and managerial practices. Early insight into family business has enabled most of the successors (90 %) to grow with the firm.

As one of the founders said:”…. my daughter is not a technical type, and I can’t transfer my technical know-how to her; but she, being a ski and board teacher, perfectly understands how the products should work for the benefit of the customer. Thus she enables feed-back I need to improve development of the final products….”, and more: “… having pedagogic and entrepreneurial education she understands easily the managerial issues of the family business and I am preparing her for the role of a manager, while technical know-how and support will have to be provided by a non-family member in the future.”

The research has revealed that mentoring by a parent/founder contributes to emotional interactions between him/her and the successor; often parents understand successors’ standpoints very personally, as an objection and successors have to remind their parents to treat them as responsible adults, not as children anymore.

Another way of transferring knowledge across generations is in the form of apprenticeship (Chirico, 2008), which can constitute excellent training especially in traditional industries that do not operate in environments of rapid change. However, such type of training is insufficient, when markets change quickly (Le Breton-Miller et al., 2004).

The findings of our research reveal that most (eight, 80 %) of successors went through the apprenticeship in their SFF and four (40 %) of them stressed that apprenticeship with observing, imitating and practicing represents an excellent method of transferring founder's tacit knowledge and their training.

“My father has often said, that he rather sees me learning from his mistakes, not from my own ones, knowing it would be better that I learn from my own mistakes. As if he wanted to save the pain and time. And although he has not shown specific technical design, at the age of five, I assembled alone my first car-battery as a result of observing him at work. Later on he has always asked me to think with my own head and to apply in practice what I studied at the faculty. He has never specially praised me for my achievements, and he has always found something, so he could comment that I could still do better. So, practice, practice, practice….” one of the successors revealed in the

interview. Successors have the opportunity to learn directly from founders in a “learning- by-doing process” how to run the family firm, and all the ‘tricks of trade’ related to the business (Chirico, 2008). The findings showed that learning-by-doing, according to all ten (100 %) successors' high agreement, enables them indirect access to founder's knowledge about technical solutions, managing the family business and business tricks. Seven (70 %) of successors could learn about their family business directly from their parents.

Successor should also be involved in meetings and communication with business partners since this way the tacit knowledge of customers and suppliers can be acquired (e.g., Becerra-Fernandez and Sabherwal, 2001; Nonaka et al., 1994) and incorporated into new concepts, technologies, products or systems (Nonaka et al., 2006). Nine (90 %) of successors said that they have accompanied their parent at the meetings with business partners, so they could listen and observe how the deals have been negotiated. This enabled them insights in and information about the business, they could not find in the books; early established personal contacts with business partners contributed to development of trust into them. This is an important factor for the future development of the SFF. One (10 %) of the successors has been taken to the meetings with partners already as a child, but could negotiate the first deal only at the age of 26, while the others (eight, 80 %) have been involved into meetings first as observers, later as active participants. Mostly successors had to show serious interest for their career in the family firm before they could participate actively in the meetings and this coincided with their study time and before they formally entered the family firm.

In terms of successor’s skills requirements, the decision-making ability is ranked as the most important besides successor’s commitment to the business and interpersonal skills (Motwani et al., 2006). Therefore, it is of crucial importance that preceding generation allows succeeding generation to actively participate in decision-making, where both generations should have opportunity to offer suggestions for improving processes and to learn from the other (e.g., Kellermanns and Eddleston, 2004). Mazzola et al.’s (2008) findings on the role of strategic planning in the strategic decision-making process revealed that the involvement of the next generation family members in the strategic planning benefits their developmental process. Such involvement enables the creation of shared vision, provides the next generation with important tacit business knowledge and skills as well as contributes to building credibility and legitimacy for the next generation.

Regarding strategic planning and decision-making processes situation is different in explored SFF. Eight (80 %) of successors reported that they have started to participate in the strategic planning and decision-making processes since they were employed in the family firm, which coincides with the finding, that they did not participate actively in meetings with business partners, before they showed serious interest for the SFF. One (10 %) has not been involved as he is still a student and one (10 %), being son in law of the founder, has started to participate in strategic planning and decision-making processes only when he became a director of the SFF. The only exception, where they mostly get involved earlier is the challenge of succession.

Case analysis revealed that majority (seven, 70 %) of successors highly agree, while eight (80 %) of them were also included, that involvement in the planning processes, especially strategic planning, enables them to assimilate critical tacit (business) knowledge and skills, insight into industry development, improves successor's relationships within SFF and with business partners out of the SFF thus contributing to their innovativeness.

“We have daily meetings. Problems are promptly addressed and solved. When one of the children does not find a solution by him/herself, I get involved, in up to 80 % of all problems. Family life is pervaded with constant transfer of knowledge,” said one of the founders.

According to Shahid (2009) always bigger share of discoveries are result of team- multi-disciplinary cooperation, associating knowledge, functionality and insights of professionals from different fields. Team members articulate their own perspectives and reveal hidden tacit knowledge (Nonaka, 1994). Thus, team knowledge is viewed as an important source of innovation since the combination of team member’s knowledge creates the new knowledge (Delgado-Verde et al., 2011). Team work is important for preparing a successor for a leadership role (e.g., Ganzaroli et al., 2006) and is essential for a family firm to be creative and innovative entity (e.g., Litz and Kleysen, 2001). Family members’ specialized knowledge and its recombination in a team work enables the adaptation of a SFF to shifts in environmental conditions (Chirico and Salvato, 2008).

Majority of successors (eight, 80 %) agree on the importance of the team work for knowledge transfer and creation of new knowledge as a source of innovations. Eight (80 %) successors reported on working in teams as part of their training. Team work of family

members is often related to development of new projects, improvements of processes, products and services.

The founders are well aware how crucial it is to transfer their experience and knowledge to the younger generation in order to assure competitiveness and sustainability of a SFF. Mostly they share their knowledge and experience also with non-family members, but never tacit knowledge.

In the light of the above discussion the following proposition has been developed: Proposition 1: Early exposure to a family firm (socialization of the successor), mentoring, apprenticeship, learning-by-doing, as well as successor’s active involvement in decision- making, strategic planning and team work are effective ways of knowledge transfer from founders to the next generation, thus positively influencing innovativeness of the next generation in SFF.