A Study On Family Business Succession From The Perspectives Of Managerial Authority

Succession is a key problem which concerns the sustainable development of familybusiness. With the coming of peak period as founders passing on the power to nextgeneration in family business around the world, succession becomes the focus in familybusiness research.As the core of succession in family business, managerial authority effectivelytransferring is essential. Firstly, we review the theory of authority in the economics andsociology domain, and summarize three factors affecting managerial authority from thedynamic view. Then, surrounding the topic how to transfer the managerial authorityeffectively, we observe and study the evolution of family business succession in China,Japan and U.S.A. respectively; basing on the analysis, three standpoints are put forward:[1] The main reason that more longevous family business emerge in Japan and U.S.A.lies in they can make institutional innovation and adaptability adjustment to externalenvironment and conflict constantly.[2] Coparcenary is the main factor for the succession predicament of traditionalfamily organization in china, but not the only one. On the other hand, the traditionalauthority dissipation and selecting successor by lineal consanguinity accelerate the failureof managerial authority transferring; Contrary to this, Primogeniture in Japan set up theheir's ownership authority and traditional authority, and adoption and Banto system inJapan guarantee the heir's ability authority. All these factors promote longevity of Japanesefamily business.[3] The Separation of the ownership and management is the effective solution to thesuccession predicament. Two institutional innovations are applied by American familybusiness. One is the Trust Law, but it could not solve the predicament completely; theother is manager revolution, which makes the professional manager to succeed the founderof family business as CEO. The arrangement could smooth the intergenerationalsuccession by minimizing the negative effect of coparcenary and strengthening the abilityauthority. And family business in Japan realized two rights separation earlier; they mainlyselect and train professional managers from the interior market, which is different fromU.S.A. However, the difference reduces gradually after World Warâ…¡.Finally, we analysis the current circumstances and put forward some advices tosuccession of Chinese family business.