Tacit knowledge transfer in family business succession

Full text

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TACIT KNOWLEDGE TRANSFER IN

FAMILY BUSINESS SUCCESSION

A Dissertation submitted by

Michael Henry, MBA

For the award of

Doctor of Business Administration

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ABSTRACT

Small business is the most common firm structure in the Canadian economy and

accounts for the single largest share of economic activity. As the founders of these

firms move to normal retirement age, they begin the transfer of the business to a

family or non-family member. When the second generation assumes control of the

firm, issues related to generational transfer of knowledge become important.

Financial and income and tax considerations have received the bulk of attention in

research. This study focuses on knowledge transfer from the founder to successor.

Tacit knowledge has been identified as a key strategic resource and passing this

knowledge from the founder to the successor is a key element in transition that

ensures the business is viable and remains in the family

A qualitative methodology based on the analysis of multiple case studies was used

for this research. Eight cases of family business succession were investigated, with

data collected from public sources and interviews with founders, successors (family

members and non-family members) and key observers. A total of forty interviews

were conducted, with interviews focused on the history of the firm and others on the

generational transfer of knowledge of the firm. A literature review provided a

research foundation and a theoretical context that informed the case selection and

interview protocol.

This study confirmed the theoretical construct that succession can be framed in

socialisation terms (derived from societal socialisation theory), but adds that family

and business socialisation while distinct, are not necessarily sequential or triggered

by the identification of the family member as the successor. The study also supported

the application of Nonaka and Takeuchi’s (1995) knowledge spiral in the context of

family business succession. The role of trust in family business succession is

supported by the study’s findings, but the findings expand on the existing literature

by differentiating between relationship trust and business competence trust and

defining the two types of trust as essential. This study supports prior knowledge that

female successors are often viewed as having less leadership ability than male

successors, however in this study females experienced more business socialisation

than reported in prior studies.

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CERTIFICATION

OF

DISSERTATION

I certify that the ideas, experimental work, results, analyses, software and

conclusions reported in this dissertation are entirely my own effort, except where

otherwise acknowledged. I also certify that the work is original and has not been

previously submitted for any other award, except where otherwise acknowledged.

M. Henry_________________________________ _____________________

Signature of Candidate

Date

Endorsement

___________________________________ ______________________

Signature of Supervisor

Date

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ACKNOWLEDGMENTS

I would like to acknowledge the support of my supervisor Dr. Ronel Erwee and

associate supervisor Dr. Erick Kong in providing valuable feedback and guidance

throughout this process. Special thanks to Dr. Erwee for her significant contribution

to this journey. Her timely feedback, clarity, and mentorship played a pivotal role in

developing my research and analytical skill. She continues to serve as a role model

for me in my research and teaching.

Special thanks to the families and businesses that participated in this study. I am

most appreciative of the valuable time they committed, their genuine openness and

their willingness to share their stories and their insights about their own journey.

I appreciate the support I received from Grant MacEwan University, and in particular

the encouragement to pursue this work from Dean Elsie Elford and Provost &

Executive-Vice President Dr. Janet-Paterson-Weir.

Most of all, I want to thank my life partner Jane Hewes and our children Ella, Jamie

and Micah for their unwavering support and for being a constant reminder to me

about what is important in life.

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TABLE

OF

CONTENTS

Abstract ... i 

CERTIFICATION OF DISSERTATION ... ii 

AcknowledgmentS ... iii 

Table of Contents ... 1 

List of Figures ... 5 

List of Tables ... 6 

CHAPTER 1 INTRODUCTION ... 7 

1.1  Background to the Research ... 7 

1.2  Research problem‐research issues and contribution to theory ... 9 

1.2.1  Family Business ... 10 

1.2.2  Knowledge Transfer ... 11 

1.2.3  Gender ... 13 

1.3  Research Focus of This Study ... 14 

1.4  Research Problem ... 15 

1.4.1  Research Propositions and Research Questions ... 15 

1.5  Method ... 17 

1.5.1  Phase 1 Interview design ... 19 

1.5.2  Phase 2 Interviews ... 19 

1.5.3  Phase 3 Advisory group review and input ... 19 

1.6  Justification for the Research ... 20 

1.7  Delimitations of Scope ... 22 

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1.8.5  Tacit knowledge ... 24 

1.9  Structure of the Study ... 25 

1.10  Conclusion ... 25 

CHAPTER 2 LITERATURE REVIEW ... 26 

2.1  Introduction ... 26 

2.2  Family business ... 27 

2.2.1  Family Business in the Economy ... 27 

2.2.2  Historical Overview of Family Business Research ... 28 

2.2.3  The development of Family Business Research ... 30 

2.2.4  Phases of Family Business Research ... 32 

2.2.5  Contemporary Approaches to Studying Family Business ... 35 

2.2.6  Succession as a Process ... 41 

2.3  Knowledge Transfer... 42 

2.3.1  Origins of the Study of Knowledge Management ... 42 

2.3.2  The Emergence of the Study of Tacit Knowledge in the 20th Century ... 42 

2.3.3  Knowledge Management in Organisations ... 44 

2.3.4  Knowledge Transfer in Family Business Succession ... 50 

2.4  Family Business Socialisation ... 55 

2.5  Trust ... 58 

2.6  Gender Differences ... 61 

2.6.1  Gender Issues in Family Business Succession ... 61 

2.6.2  Women in Family Firms ... 65 

2.6.3  Factors Impacting Gender Differences in Succession ... 67 

2.7  Research Questions ... 71 

CHAPTER 3 METHODOLOGY ... 74 

3.1  Introduction ... 74 

3.2  Justification of the Realism Paradigm ... 74 

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3.3.1  Justification for Qualitative Method ... 77 

3.3.2  Rationale for the Case Study Method ... 78 

3.3.3  Sampling ... 81 

3.3.4  Interview Protocol ... 84 

3.3.5  Interview Process... 86 

3.4  Other Sources of Information ... 88 

3.5  Data Analysis ... 89 

3.6  Individual Firm Analysis ... 93 

3.7  Cross-Case Analysis ... 93 

3.8  Research Quality ... 94 

3.8.1  Construct Validity ... 94 

3.8.2  Internal Validity ... 95 

3.8.3  External Validity ... 95 

3.8.4  Reliability ... 96 

3.8.5  Quality Control ... 96 

3.9  Research Ethics Process ... 98 

3.10  Conclusion ... 99 

CHAPTER 4 RESULTS ... 101 

4.1  Introduction ... 101 

4.2  Cross-Case Analysis of the Data ... 101 

4.2.2  Businesses where the successor was a family member ... 103 

4.2.3  Businesses where the successor was a non‐family member ... 104 

4.2.4  Founder’s role... 107 

4.2.5  Succession process predetermined ... 108 

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4.3.2  Family time ... 143 

4.3.3  Value of earning money ... 143 

4.3.4  Gender differences ... 144 

4.3.5  The founder’s personality ... 145 

4.3.6  Dynamic of tacit knowledge transfer—driven by the successor ... 146 

4.3.7  The value of experience from another context ... 147 

CHAPTER 5 DISCUSSION OF RESULTS ... 150 

5.1  Introduction ... 150 

5.2  Discussion and linking to theory ... 150 

5.2.1  Family‐Non‐family member ... 151 

5.2.2  Stage of business succession... 155 

5.2.3  Tacit Knowledge Transfer ... 157 

5.2.4  Knowledge Transfer from Founder to Successor ... 158 

5.2.5  Garcia‐Alverez, Lopez-Sintas and Gonzalvo (2002) Stages ... 159 

5.2.6  Nonaka and Takeuchi’s Knowledge Spiral ... 162 

5.2.7  Trust Between Founder and Successor ... 165 

5.2.8  Trust and Tacit Knowledge Transfer ... 167 

5.2.9  Gender Differences in Tacit Knowledge Transfer ... 169 

5.3  Emergent issues ... 173 

5.3.1  Values ... 173 

5.3.2  Founder’s personality ... 174 

5.3.3  Tacit knowledge transfer driven by the successor ... 174 

5.3.4  Value of gaining experience in another context ... 175 

5.3.5  Point of Successor Identification ... 175 

5.4  Contribution to theory ... 176 

5.5  Contribution to practice ... 181 

5.6  Limitations of the study ... 183 

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REFERENCES ... 187 

APPENDICES ... 1 

Appendix A – Participant Recruitment Advertisement ... 1 

Appendix B – Letter to Advisory Contacts ... 2 

Appendix C – Participant Information Form ... 3 

Appendix D – Participant Consent Form ... 6 

Appendix E – Interview Protocol ... 8 

Appendix F Example of Data Coding ... 12 

Appendix G – Synopsis of the cases... 21 

LIST

OF

FIGURES

Figure 2.1Nonaka and Takeuchi’s model of knowledge conversion ... 53 

Figure 2.2 Intersection of Garcia-Alverez, Lopez-Sintas and Gonzalvo (2002) family

business socialisation model and Nonaka and Takeuchi’s (1995) knowledge creation

model ... 70 

Figure 4.1 Founder’s role, financial control, and relationships with successors ... 106 

Figure 4.2 Concepts of trust and trustworthiness ... 131 

Figure 5.1 Knowledge transfer process ... 159 

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LIST

OF

TABLES

 

Table 3.1 Basic tenants of realism ... 76 

Table 3.2 Sample ... 83 

Table 4.1 The point at which the socialisation began in family-firm succession. ... 113 

Table 4.2 Examples of tacit-tacit knowledge transfer after the family and non-family

successors were identified. ... 119 

Figure

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References

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