Making Succession a Success - Preliminary Results from Thai SMEs

Abstract

This paper addresses intergenerational succession issue of Thai Small and Medium-sized Enterprises (SMEs). While a formal succession plan has emerged as instrumental for the success of SMEs to remain in business for a long period of time through safe transition of ownership and authority/governance from one generation to another, SME entrepreneurs in Thailand face an unavoidable succession plan dilemma whether to make it either explicit or implicit. The preliminary 50 survey questionnaires and 10 constructive interviews were conducted to collect data from selected SMEs across industries in Thailand. We primarily found that majority (i.e. 90.5 per cent) of the Thai SMEs have informal succession plan which is basically transferring business to own children. Education and business experience are considered important factors for succession planning but placed after the personal and family level relationship with the owners/founders of businesses. However, formal succession plan is normally delayed firstly, for the right time to come and secondly, for the uncertainty in selecting the right person on the part of the owners as to who is going to continue their businesses. Furthermore, the business owners do not vigorously pursue a succession plan in place. The study shows that there is a relatively low degree of willingness of the children to take part in the family business even though many of them have taken part in the business already. These preliminary findings deserve due consideration in developing strategy for having a formal succession plan on board to mitigate uncertainty on intergenerational business succession and protecting the interest of all parties related to SMEs as ongoing ventures.