The role of trust in family business succession planning

Abstract

Trust plays a pivotal role in the sustainability and longevity of family businesses, particularly in succession planning. Unlike corporate enterprises governed by formal structures, family businesses rely on interpersonal relationships, making trust a crucial factor in leadership transitions. However, succession planning remains a significant challenge for many family-owned businesses, often leading to disputes, instability, and, in some cases, business failure. This study explores the role of trust in family business succession planning by examining strategies used to appoint future leaders, the impact of trust on leadership transitions, and the factors influencing trust development. A qualitative research approach was employed, using semi-structured interviews with founders, successors, and key stakeholders from various family businesses in South Africa. Thematic analysis was conducted using Atlas.ti to identify patterns and key insights. Findings indicate that trust facilitates business continuity, smooth transitions, and leadership development. However, trust is influenced by internal family dynamics, governance structures, and external market conditions. The study underscores the need for structured succession planning, transparent communication, and leadership mentoring to sustain trust and ensure long-term success. The findings provide valuable insights for family businesses, policymakers, and scholars in understanding the complexities of trust in succession planning.