۱- Introduction

۲- Literature review and theoretical framework

۳- Methodology

۴- Findings

۵- Discussion and conclusions

۶- Contributions, limitations, and avenues for future research

References

Abstract

Little attention has been given to the role of interpersonal relationships in building the leadership skills of next-generation successors, with most literature focusing on the development of their business and technical skills. Drawing on Leader-Member Exchange (LMX) theory, we qualitatively explore how high-quality relationships develop between next-generation leaders and family and non-family stakeholders and how they impact leadership development. Findings from interviews with 24 next-generation leaders of family businesses in India show that high-quality relationships develop through mutual respect, trust, early affiliation with the business, mentoring, and mutual obligation. By exploring how high-quality relationships develop between next-generation family business leaders and family and non-family stakeholders, we contribute to a finer-grained understanding of successful intergenerational succession in family businesses. We also contribute to LMX theory by considering networks of relationships (and not just dyadic relationships) and by identifying two antecedents that are specific to family businesses (early affiliation with the business and mentoring) to the previously identified ones (trust, mutual respect, and mutual obligation).

Introduction

The effect of intergenerational succession on family business survival and performance has historically spawned much debate in extant literature (e.g., Calabrò, Minichilli, Daniele, & Brogi, 2018; Daspit, Holt, Chrisman, & Long, 2016). For every study outlining the benefits of succession for family firms’ prosperity across generations (Royer, Simons, Boyd, & Rafferty, 2008), there are others showing that family firms underperform with family leadership beyond the founding generation (Bennedsen, Nielsen, Perez-Gonzalez, & Wolfenzon, 2007; Chittoor & Das, 2007) or even disappear (Le Breton-Miller & Miller, 2015). A plausible cause is that next-generation successors are not always adequately prepared to assume the leadership role, making leadership development of the successor one of the critical determinants of family firm sustainability across generations (Daspit et al., 2016; Kansal, 2012; Sharma, Chrisman, & Gersick, 2012). Previous literature has traditionally focused on the development of the business and technical skills of successors (Deans, Oakley, James, & Wrigley, 2006; Dhaenens, Marler, Vardaman, & Chrisman, 2017; Ferris et al., 2009), with gradual expansion to investigating the role of high-quality relationships in developing leadership of next-generation family members (Sharma et al., 2012). Particularly, developing high-quality relationships between the successor and various stakeholders in the family business has been intricately linked with preparing next-generation successors to succeed in their leadership role (Bika, Rosa, & Karakas, 2019; Le Breton-Miller, Miller, & Steier, 2004; Mokhber et al., 2017). For example, Raaja Kanwar, Vice Chairman and Managing Director of Apollo International Limited – a family business operating in India – attributes a large part of his success as a leader to the high-quality relationships he built with his father and with other family and non-family stakeholders who provided much needed guidance and support when he assumed the leadership role (PwC, 2019).