Family entrepreneurial resilience – an intergenerational learning approach

Abstract

Purpose

The purpose of this paper is to explore leadership succession in families in business. Although there is a vast amount of research on leadership succession, no attempt has been made to understand this phenomenon by using an intergenerational learning approach. By applying the Double ABC–X model, the authors discuss how resilience is developed through intergenerational learning during family leadership succession in business.

Design/methodology/approach

Based on a single case, the authors define pre- and post-event parameters of the business family under study and use the Double ABC–X Model as an analytical framework. Individual and pair interviews, as well as a family firm workshop, were undertaken following an action research approach using multiple interventions. The qualitative data were collected by reflective journals, field notes and observation protocols. Finally, the authors analyze the data according to a circular deconstruction strategy.

Findings

The authors find specific pre-event stressor parameters related to mutual mistrust, independent decision making and non-strategic transmission of power, knowledge and responsibility from predecessor to successor. The intervention based on the intergenerational approach during the post-crisis phase focuses on problem solving and coping within the new situation of co-habitation among the two generations. The intergenerational learning approach based on pile-up of demands, adaptive resources and perception is the source of family adaptation. Additionally, the power of the narrative to reflect past events and project the future seems to the point where the family starts developing resilience.

Originality/value

The way family businesses deal with critical and stressful events during leadership succession may lead to intergenerational learning, which is a source of resilient families. The authors apply the Double ABC–X model to understand family leadership succession in business and further develop it to explain how families develop resilience.

Citation

Zehrer, A. and Leiß, G. (2019), "Family entrepreneurial resilience – an intergenerational learning approach", Journal of Family Business Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFBM-09-2018-0037

Introduction

Family firm succession remains an important research area in the field of family business (Chrisman et al., 2008). Despite the research attention that succession has received so far, very little research has been carried out on how families in business (Hamilton, 2011) create and develop intergenerational learning across their business activities over time. Family leadership succession in business is commonly described as a complex long-term process that involves the dynamics before and after the actual leadership transfer (Blumentritt et al., 2013). Hence, leadership succession is a continuous process characterized by various critical, and thus stressful, events. We aim to reveal the way families in businesses face these critical events during the leadership succession period and investigate how their succession strategies may foster intergenerational learning.

Family leadership succession, like the classic case where the parents hand over the business to their children (Blumentritt et al., 2013), is a multi-dimensional process (Duh, 2014) that takes time to develop and needs to be planned and managed (Sharma et al., 2003). Along the transition period, several actors are involved (Le Breton-Miller et al., 2004), including the incumbent (Rubenson and Gupta, 1996), the successor (Birley, 2002), the other family members (Handler, 1994) and the firm’s internal and external stakeholders (Steier, 2001). Daspit et al. (2015) argue that succession cannot be reduced to the simple transfer of leadership at one point; it needs a more holistic approach over a certain period, which is referred to as the life-cycle approach of succession.

Succession issues are experienced differently among family members from different generations (Gersick et al., 1997). That is the reason the number of generations integrated into a family business has an impact on the business (Kellermanns et al., 2008) and the involvement of generations influences the manifestation of entrepreneurial behavior and learning (Zahra, 2005). Intergenerational learning emerges as an important concept at the interface of entrepreneurship and organizational learning (Wang and Chugh, 2014), is dynamic and disposes of interrelated processes of learning, particularly from critical experiences or events (Cope, 2003). Through this process, children especially, acquire role-specific knowledge and coping with lack of skills (Durst and Wilhelm, 2012).

Hamilton (2011) states that learning is cyclical, as the environment and business develop in ever-changing, new directions, which makes it necessary that entrepreneurs are ready to cope with change. The concept of learning is tightly connected to resilience (Davidson, 2000). However, Corner et al. (2017) see limitations to existing research on entrepreneurial resilience, despite the knowledge gained. Resilience usually characterizes individuals who overcome setbacks related to their life (Hedner et al., 2011). For entrepreneurs, resilience is a key trait and relates to a combination of internal (e.g. development of a desirable personal identity, experiences of power and control, adherence to cultural traditions, experiences of social justice and experiences of a sense of cohesion with others) and external contextual factors (e.g. access to material resources and access to supportive relationships) (Hedner et al., 2011). Thus, entrepreneurial resilience not only depends on internal or personal characteristics but also structural or external factors (Hedner et al., 2011) and their dynamic interactions. Since resilience is characterized by reflection on past, critical events, coping with and adapting to them, this continuous process requires open communication, shared values and common goals (King, 2016).

Since no attempt has been made to understand family leadership succession by using an intergenerational learning approach, our paper discusses how intergenerational learning develops resilient families in business during leadership succession. Applying action research in a single case study, we set up a change process to help the family in business identify and cope with succession-related stressors to solve intergenerational relationship conflicts and support them in developing an action plan for the power switch between predecessors and successors. Our interventions were expected to have a positive impact on the family’s intergenerational learning competence and thus on developing into a resilient family. We aim at answering the following research question:

RQ1.

How can intergenerational learning during family leadership succession develop resilient families in business?

Our research provides three contributions to the literature. First, extending previous research on the family succession process (Blumentritt et al., 2013; Duh, 2014), we find that family leadership succession is a process characterized by numerous critical events where pre-crisis stressors, the event itself, and the post-crisis learning actions form a whole that has to be managed. Managing family leadership succession deserves attention since only a successful transition establishes families in the business across generations. Second, even though previous research has focused on succession selection criteria (Cabrera-Suarez et al., 2001) and successor development (Cabrera-Suárez, 2005), we discuss the way families in business face critical events by underlying stressors perceived by predecessors and successors during the leadership succession process and how a learning approach during the post-crisis helps families adapt to the new situation. Finally, our paper specifically contributes to explaining why some families are more resilient than others. We show that intergenerational learning mechanisms based on the narrative among family members develop resilient families in business.

The remainder of the paper first discusses the theoretical background on leadership succession of families in business and introduces into intergenerational learning and resilience, particularly the analytical framework (Double ABC–X Model) used in the paper to understand how intergenerational learning develops family entrepreneurial resilience. Afterwards, the research method (action research case study) is described before the family under study is presented and characterized. This is followed by the presentation of our main results including pre- and post-event stressors and the synthesizing of our findings in a visual resilience model of leadership succession in families in business, as well as the theoretical and practical contribution of our work.

Theoretical background

Leadership succession in families in business

In the mindset of families in business, leadership succession, and thus the continuation of the business across generations, plays a crucial role in generating transgenerational value (Nordqvist and Melin, 2010). Despite being a major risk, transition to the next generation is still the least planned event within family businesses (Poulin et al., 2007). A success factor in intergenerational succession is to prepare members of the next generation to assume the leadership role (Ward, 2011) by cultivating, developing and enhancing their knowledge, which includes the knowledge transferred from predecessor to successor (Cabrera-Suarez et al., 2001). Creating a knowledge-oriented culture requires an understanding of how to strategically manage knowledge (North and Kumta, 2014). Although knowledge transfer is essential in all daily business activities, it is particularly relevant in the succession of the firm (Trevinyo-Rodríguez and Tàpies, 2010) since knowledge has to be transferred to offer new opportunities and perspectives to ensure the sustainability and entrepreneurial spirit of the family firm across generations (Chirico, 2012).

When families in business develop across generations (Lambrecht and Lievens, 2008), critical events might well arise out of their diverse behaviors. This is particularly the case in the process of transferring leadership to the future generation since this is a highly complex undertaking on both family and business levels (Cabrera-Suárez, 2005). Critical events in families in business are usually found on the process, task and relationship levels (Morris et al., 2007). Differences about business goals or strategies are examples of task issues, whereas process level issues cover diverging ideas concerning the way a task is done or relate to conflicting assumptions about responsibilities. Lastly, relationship conflicts deal with problems between individuals and different points of view with personal background (Kellermanns and Eddleston, 2004).

Family members often experience ambiguous emotions due to the overlap between business and family settings, particularly during leadership succession (Brundin and Sharma, 2012). Fleming (2000, p. 39) calls this intersection “the zone of combat” where the overlap between those two conflicting settings becomes real. This emotional chaos might stress the family members and be a potential for conflicts with consequences for all: individual, family and business (Brundin and Sharma, 2012). As a matter of fact, family members tend to avoid addressing topics that might prevent harmony, and they picture conflicts in combination with negative emotions. Mostly, the predecessor identifies himself with the problem resulting in the feeling of personal failure, which is another reason conflicts are usually avoided or ignored in families in business (Kenyon-Rouvinez, 2001). Kellermanns and Eddleston (2004) see a reasonable argument that some families in business can handle critical events successfully – whereas others fail – because they can differentiate and locate the source of the problem. Researchers found that the higher the level of generational involvement the higher the risk for relationship issues, especially in multigenerational ownership companies where more and more siblings get involved and relationship issues appear more often (Sorenson et al., 2013; Eddelstone et al., 2008). Contrastingly, a higher level of unselfishness usually lowers the level of relationship issues (Sorenson et al., 2013).

Intergenerational learning

Given the number of generations working together in a family firm, the attitude of the leading generation substantially influences the behavior of the succeeding generation; therefore, the spirit can be strengthened among family members (Welsh et al., 2013). Furthermore, family traditions and values influence and stimulate the behavior of individuals (Altinay et al., 2012). The task of the leading generation is to manage the place sustainably to transfer the business to the next generation while the involvement of the succeeding generation gives a fresh impetus (Welsh et al., 2013). Therefore, generations mutually influence each other’s behavior. The attitude of the leading generation toward sustainable business links to the proactive attitude of the succeeding generation (Kellermanns et al., 2008). As a result, the entrepreneurial spirit stays in the family and the next generation can build upon it (Kraus et al., 2012). Due to collaboration between the leading and succeeding generations, the leading generation passes on knowledge and business skills (Nicolaou et al., 2008) to manage and operate the business on a day-to-day basis. This enables intergenerational learning across generations (Chrisman et al., 2003).

Some literature reveals theoretical insights into learning in family businesses. This existing literature places special emphasis on learning during and after challenging setbacks (Taylor and Thorpe, 2010). Learning challenges both personal assumptions and established business routines (Rae and Carswell, 2000). For such learning to take place, entrepreneurs require several important competencies, including the ability to reflect on past events and strategies, recognize mistakes and learn not just from actions but also, and perhaps more importantly, from relationships. This last point highlights the importance of relationships across generations within the context of leadership succession in families in business (Van Dam et al., 2010; Welsh et al., 2013). Furthermore, Cope (2003) explicitly emphasizes the relevance of learning through critical events. Leadership succession can be regarded as a process characterized by some critical events.

Rae (2006) argues that learning per se refers to a complex social practice dominated by relationships between humans and their actions. The current focus of research is still primarily on individual learning. Research should now move in a direction that considers learning through social relationships, particularly familial relationships within a family in business (Stein, 2009). Intergenerational learning during succession does not solely mean transmission from the older to the younger generation. In a family business context, intergenerational learning occurs whenever social interactions take place across generations and, therefore, when family members of any generation engage with each other (Hamilton, 2011).

Resilient families

In a family business context, the family’s togetherness shows that families have a unique advantage that may help them to cope with conflicts more successfully than others (Ayala and Manzano, 2014). This is referred to as familial resilience (Hooper, 2008). In addition, resilient families usually possess shared features like belief systems, and the family, therefore, has organized patterns, flexibility and connectivity, a common way of perceiving risks or stress, as well as specific formal or informal rules, common attitudes and rituals (Walsh, 2002). Parental resilience contributes to the family’s resilience as a whole in the face of external or internal crises; this, in turn, contributes to their children’s hardiness, intelligence, knowledge, sense of mastery and self-esteem (Gavidia-Payne et al., 2015). Jin and Hong (2010) state that families in business who cope well with crises tend to communicate openly within the family, show parental resilience, have shared values and goals, and a strong willingness to change. It also determines the ability of the family to recover by maintaining its integrity (McCubbin and McCubbin, 2001).

McCubbin and Patterson (1983a, b) have created the Resilience Model of Family Stress, Adjustment and Adaptation, which is based on the Family Stress Theory (Hill, 1958; Burr, 1973). Their model focuses on four main dimensions, both pre-crisis and post-crisis. The Double ABC–X Model shows important pre-crisis parameters of a family’s stress coping style (shown on the left-hand side in Figure 1), which are stressor, resources, meaning of stressor and the nature of crisis response. Stressors include required role changes, prior unresolved strains, intra-family boundary ambiguity (Boss, 1977, 1980) – all are demands for change and sources of strain that the family faces while struggling with the major stressor event. Resources include personal resources (e.g. characteristics of individual family members such as self-esteem, knowledge and skills); family system resources (e.g. internal attributes of the family unit such as cohesion, adaptability and communication); and social support (e.g. capabilities of people or institutions outside the family on which the family can draw or a network in which the family is valued (Pilisuk and Parks, 1981, 1983)). Perception refers to the family’s general attitude toward the overall circumstance and reflects a sense of acceptance and understanding of the situation, a framework within which the interpretation of the situation is made and within which perceptions are judged. The x-factor is the family’s adaptation or outcome of the family’s processes in response to the crisis and pile-up of demands. Family adaptation is a continuous variable, ranging from maladaptation at the negative end of the continuum to bonadaptation at the positive end of the continuum (McCubbin and Patterson, 1983a, b; Patterson, 2002).

The Double ABC–X Model not only focuses on the interplay of internal and external influencing factors but also highlights the relevance of prior experiences in dealing with challenges. The second part of the diagram shows the post-crisis phase, during which problem solving and coping are at the center of the post-crisis stage (Wilmoth and Smyser, 2009). Several dimensions are important to define the family’s adaptation to the new situation, and these include adaptive resources (such as family hardiness and social support), pile-up of demands and perception (such as coherence among the family).

We use the Double ABC–X Model as a sensitizing concept (Bowen, 2006) and a framework to guide and facilitate sense making and understanding of our findings in a systematic manner to answer our research question:

RQ1.

How can intergenerational learning during family leadership succession develop resilient families in business?

Methodology

Research paradigm

The main goal of our paper is to gain deeper insight into how families in business address leadership succession across generations throughout intergenerational learning. We follow a qualitative action research approach based on a single case study of a family in business. Action research encourages participation, subject involvement in seeking answers to problems and the development of practical new knowledge in genuinely participatory contexts (Bradbury and Reason, 2003; Reason and Bradbury, 2006). A number of researchers consider action research case studies a useful research strategy when the topic is broad and highly complex (James et al., 2012). “An action research case study employs an action orientated approach to a prescriptive case study process combining problem solving with research in a way that is appropriate to the circumstances of the research to provide both academic rigour and practical relevance” (Altrichter et al., 2002, p. 129).

We decided that an action research approach would serve the requirements of the complex phenomenon of intergenerational learning of a family in business best, since it aims at producing practical knowledge and creating solutions to complex problems like succession and allowed us to make use of various intervention practices combining research, action and participation at the same time (James et al., 2012). Since action research views knowledge and action as tightly interwoven, understanding and action were kept in constant interaction by us (the authors of this paper) as researchers and facilitators. To understand the subjective perception of stressors during leadership succession of the family at hand, we focused on qualitative methods. The overall research process followed a circular process (see Figure 2), including discovery and understanding, planning and taking measurable actions and reflection/evaluation (James et al., 2012).

Case selection

In choosing a case study, it is not the number but the diversity that comes first (Eisenhardt, 1989). We decided to present a single case study since we did not aim at understanding differences and similarities between cases but rather wanted to get a deeper understanding of one single subject, namely, a family in business and all the actors involved. Since the tourism sector is responsible for 17.5 percent of the gross domestic product in the Tirol (Tirol Werbung, 2018), we selected a tourism family business as a case study. Moreover, given that 90 percent of all businesses in the tourism industry in Austria are small- and medium-sized (SME), which are family run (Getz and Carlsen, 2005), we chose a typical SME family business in our region. The family in business presented in this paper invited the authors of this paper to accompany them during their leadership succession process. The firm was in a particularly critical process of shift from the second to the third generation. Additionally, our case study could be considered as representative of most of the family businesses in the Tirol with 30 percent of all tourism businesses facing succession until 2032 (KMU Forschung Austria, 2014), particularly transition from the second generation to the third generation, like the family business at hand.

Data collection

The discovery stage basically consisted of further research on the problem and contracting via phone. The second step, measurable actions, included three sub-stages. First, we interviewed each family member individually with narrative interviews lasting between 1.5 and 3h. The main objective of this intervention was to understand the individual perspective of each family member. In this paper, we focus on the predecessors and the successors already working in the hotel, their individual stressors, resources and perceptions during the leadership succession process. Second, based on the reflective analysis of the interviews, we set up couple workshops lasting up to four hours to offer the possibility of developing a shared vision amongst the spouses. Also in the couple workshops, we set interventions to gain insights into the prevailing challenges and issues of the couples and to clarify interpersonal dynamics. These interventions made the couples articulate their feelings, concerns and struggles among generations. Third, we hosted a 5-hour family workshop with four members of the business family (predecessors and successors already working in the hotel) to exchange individual perspectives on their challenges during the leadership succession and family climate, identifying relationship conflicts and defining a shared vision on the leadership succession plan. Additionally, the family workshop interventions took place mainly to mutually reflect on past intergenerational experiences, build trust across the generations and develop a constructive atmosphere where learning could occur. The action research interventions also involved gathering data.

After a few months of the interventions above, the outcome and the realization of the action plan were evaluated with various family members through telephone calls and personal meetings. Over the entire action research process that lasted from January to December 2017, data were collected using reflective journals, field notes and observation protocols (James et al., 2012).

Data analysis

For data analysis, the evaluation method of Smith et al. (1999) was used. This method follows a circular strategy and analyzes data based on intuition and theory in creative thought loops. While circular deconstruction implies that implicit meaning can become visible, a change of perspective takes place and gives rise to new insights, contributing to answering the research question (Denzin and Lincoln, 2006). The data analysis was performed by reading our transcribed field notes, observation protocols and reflective journals several times. The authors read each piece individually and compared their findings. The second step was the search for patterns using the Double ABC–X Model of Lavee et al. (1985) as a sensitizing concept in the systematic paraphrasing and systemic comparison process. To make the validity of our interpretation of patterns in the qualitative data more transparent, we illustrate our results in the following sections with quotations from the different actors of the family in business.

The family in business under study

The family in business under study is in its second generation transiting into its third generation. The founders of the family business, Ady and Jessica, first generation, founded the business in 1965. By that time, it was an inn with an adjacent farm and six employees. In 1982, they handed the business over to their daughter Patricia, who, together with her husband Perry, has run the business ever since. They developed the place into a high-end four-star hotel and are very competitive thanks to their entrepreneurial activities and behavior over the past 35 years. They were one of the first hotels in the early 1990s to focus on families, which as of then, was a risky undertaking, but their entrepreneurial risk taking has proven worthwhile and they became very successful. In 2017, the business reached an annual turnover of €14m and employed 134 people, of which 5 worked in management. The employee fluctuation is 20 percent, which is far below the average rate in the tourism sector. Perry and Patricia have invested a lot of money in construction work in the hotel, particularly in 2016 and 2017 when they invested €13m in a new wellness area and room refurbishments.

Patricia and Perry have two sons, Charles and Peter, who are both willing to take over the family business. The older son Charles has been working in the business already for five years together with his wife Susan who runs the reception. Both of them have been educated in hospitality and tourism in a highly renowned hotel school in Switzerland. At that time already, the complexity increased with these two of the younger generation becoming part of the family firm and a transition cycle began. Charles, being a very social person, engaged in the firefighting and other voluntary associations in the village and started to find his place in the business. Charles and Susan have two daughters aged one and three years, who are Perry’s and Patricia’s pride and joy.

The younger son Peter studied financial management in the USA and Spain. Peter is a passionate sports enthusiast and a highly ego-centered character. Since he suffered from rheum as a young boy, his parents, in the eyes of Charles, always favoured him. During his studies abroad, Peter met Olivia from Chile, who studied marketing management and worked in marketing for big companies in recent years. Peter has worked at multinational companies in Geneva, Switzerland, in recent years, and both Peter and Olivia have not been involved in the family hotel so far. Their plan to marry and move to the Alpine village in September 2017 is a challenge since both are inexperienced in the hotel industry. Thus, the degree of involvement in the company before succession between Charles and his wife Susan, on the one hand, and Peter and Olivia, who entered the business five years after Charles and Susan, on the other. In addition, Olivia does not speak any German. Furthermore, she has some ambivalent experiences with family businesses since she was born into a family business in Chile herself but decided not to work there to avoid the everyday conflicts she could observe among her family members over time. While Peter is aware of the position and five-year involvement of Charles in the family firm, Charles is afraid of the continuing favoritism of Peter who he sees as the favorite son. Thus, the family and the family business are being plagued not only by intergenerational problems but also by sibling conflicts and rivalry. Table I shows an overview of the main actors of the family in business and their major characteristics.

Figure 3 shows the tree depicting the three generations of the family. In 2016, Perry and Patricia contended about passing the business reigns to the next generation of family members. Transition, therefore, became an imperative to be understood, planned and addressed in the interest of keeping the business in the family.

The transition of leadership was definitely a period of uncertainty when Perry and Patricia, as decision makers, felt most anxious and vulnerable, since they knew it is all about managing relationships and expectations among family members. Thus, the guiding question for the underlying case study is:

RQ1.

How can intergenerational learning during family leadership succession develop resilient families in business?

Results

The results of our action research are depicted according to the Double ABC–X Model, thus split up into the pre-crisis period, post-crisis period, and multiple dimensions involved during the leadership succession process and upcoming critical events.

Initial situation

The process of leadership succession starts at the family level. We know that, in times of critical events, family firms tend to avoid certain steps that would be necessary but involve too much emotion (Fleming, 2000). Perry’s main motives during the succession process were autonomy, individuality and independence expressed as “fear of losing my independence,” “niche apart from the mainstream” and “active shaping of the future.” Patricia’s main needs included continuity, reliability and commitment; her motives were “obligation towards the family, staff and society,” “maintaining and increasing the family heritage” and “success – financial and personal.” Patricia is a family-oriented person and discusses problems with her family in search of unanimous solutions; being a homemaker, she takes care of the family’s needs effectively. Charles’ motives for engaging in the family firm comprised “enjoy working in the hotel business,” “see people laughing and fulfil their wishes,” “work with employees and get to know them,” “develop myself” and “develop the hotel.” For his wife Susan reliability and belonging were vital needs expressed as “grateful for security and support,” “bound by tradition,” “success of the family” and “professional honour – dream job.” The needs and desires of both generations involved were only partially compatible, which explained the various critical events and the succession dynamics. For Perry, exiting from his management role was connected with enormous fears, leading to paradoxical behavior and communicative patterns such as: “I need competent successors but I do not think they are capable of anything” or “succession will only work with a sharp cut, but I do not want to commit myself when I will hand over the firm.” Charles, however, hated his father interfering in everyday managerial tasks and at the same time wanted to get support and recognition.

Thus, the initial situation of this family in business was observed as “stuck state” since it seemed to be a chronic event that had persisted over a long period and caused tremendous strain on resources even though the existence of individual resources (such as intelligence, education and acquired skills), family resources (such as declared responsibilities, strong mutual support networks or common values), which could prevent or against critical events, were nonexistent, either in writing or orally. Furthermore, a leadership succession plan did not exist.

A good balance between work and family commitments requires a high level of satisfaction and engagement with an individual’s role at work and in the family (Greenhaus et al., 2003). When the elder son of the family Charles made an unusually large demand on the available resources by claiming the leadership role in the business and by undertaking innovative entrepreneurial activities in business processes, it became physically and psychologically impossible to fully meet the expectations of his parents and relationship issues occurred. This was particularly the case in the family under study where, in the case of the patriarch Perry and his sons, their roles as professionals and as family members naturally overlapped (Liu et al., 2015).

Although family cohesion and interconnectedness of family members existed within the family system, it completely failed in the business system, resulting in a lack of sharing of knowledge, values and mutual support over our action research period. Another prominent collective family resource usually is adaptability or flexibility, but given the missing organizational culture, patterns of functioning were diffused, which is congruent with findings of Ensley and Pearson (2005), who found conflicts rooted in the relationship between parents and their children. In the family at hand, both sons experienced pressure to succeed in continuing the business and felt little acceptance by the parents, particularly their father Perry (Davidsson and Honig, 2003). One reason for these relationship conflicts in the family at hand is the fact that family members held on to roles they played in the family while they worked for the family business and were ignorant that business systems demand a handling approach different from social systems (Ensley and Pearson, 2005). This was particularly evident with regard to effective communication, which basically should have enabled them to coordinate resources and efforts to cope with the demands the critical events have placed on the family. Namely, we found that the communication patterns in place tended to exacerbate the situation through disagreement, yelling and harsh words against each other (Wilmoth and Smyser, 2009). Perry and his son Charles were particularly very impulsive during the family workshop, yelling at each other and disagreeing on strategic decisions of the family business (e.g. the enlargement and refurbishment of the wellness area).

Pre-crisis parameters

Pre-crisis parameters are stressors caused prior to the critical events of the leadership succession period on the side of the predecessors and successors (Lavee et al., 1985). Our action research showed that the predecessor Perry mainly perceived stress caused by his “enormous sense of duty to trustfully manage my wife’s heritage and property.” Additionally, he suffered from the transfer of power and responsibility to his son Charles and the burden of the last building project, the wellness area, financed by a large-scale bank loan and from an inadequate old-age provision. With regard to relationship conflicts, Perry experienced “a difficult time with my wife Patricia since I felt like standing between Patricia and our son Charles.” In the couple workshop it became clear that Perry and his wife Patricia did not have “a shared vision of how to organize our future private life and how to manage to let loose the family business.” The mother Patricia was stressed because “continuity, reliability and commitment are my main values and I cannot see these values in our two sons, which hurts.” Given that she wanted to retire from her operational duties during the year and wanted to maintain and increase the family heritage, Patricia even started “suffering from health issues and found my psychological well-being affected by the stressful situation.” Both in the couple interview and the workshop, she stated her desire for peace, recreation and harmony within the family, as well as privacy and a break from work.

The successor Charles felt tremendously stressed by the authoritarian leadership style of his father, “who, due to a lack in trust in me, disregards my responsibilities and competences, even in front of our employees, which is really humiliating.” There was no collaborative decision making between him and his father, and he was longing for appreciation and development, support and trust, contact and relatedness. Between 2016 and 2017, Charles wanted “to withdraw from succeeding three times already.” Personal conversations had become rare, especially between Perry and Charles, since they started to communicate with each other mainly via e-mail. We revealed that Perry did not prepare his son Charles at all to assume the leadership role in the future (Ward, 2011), which is known to be a success factor in leadership succession. “My father did not at all introduce me into my new role as CEO of the business.” Perry likewise said, “No, I did not cultivate, develop or enhance Charles’ knowledge of business-related issues”; Perry did not want to transfer his knowledge to his successor (Cabrera-Suarez et al., 2001). Thus, a knowledge-oriented culture did not exist, which usually hinders sustainability of the family firm within and across the next generation (North and Kumta, 2014).

Another stressor of Charles is the relationship conflict between Charles and his brother Peter. “Ever since we were kids, me and my brother Peter, we have not been very close to each other. This originated in our early education years where both of us were sent to residential schools away from home.” Moreover, they are very different characters – while Charles is a very socially embedded person who engages in the community life (voluntary fire brigade, village clubs and associations), Peter is a sports enthusiast, an egomaniac and largely a unilateral person. Given that Peter has had rheum from early childhood on, Charles had the impression that “Peter had always been treated differently or even better by our parents, although they deny it.” Charles always has and still envies Peter in some regard. Although Patricia knows about this, she perceives the situation differently: “I know that Charles envies Peter for his health issue, but I always tried to treat both of them the same.” In addition, Charles envisaged Peter as a threat when it became clear that he wanted to enter the family business: “I have been the only one of us two working in the family firm so far, while Peter had been employed in a completely different sector, enjoyed his life and only came to stay in the hotel for their yearly holiday.” Charles’ wife Susan also regarded the missing workplace and job descriptions in a company with more than 100 employees as her constant stressor. She found that “it is difficult if you do not know which responsibilities you have and what freedom you have to take your own decisions in your area of expertise and responsibility. Both Charles and I are well-educated in the field of hospitality, we both have worked in management positions in highly renowned hotel resorts around the world and thus both have proved that we can manage a hotel.” When Charles and Susan got married in the village, the father already announced handing over the business to them after marriage in front of many people from the village and relatives. Charles mentioned this situation several times by indicating that “Can you imagine how it feels if your father in front of the whole community, friends and relatives, claims that he will hand over the business in the next year? And now, five years after, the leadership succession has still not taken place? This is a big burden for me and my wife Susan.” Given the promise at their marriage, which had not been fulfilled, both Charles and Susan no longer believed the leadership succession would happen.

Generally, stress becomes problematic when the level of it causes a disturbance (Lavee et al., 1985), such as a family break-up or severe relationship conflicts, which started to be the case in the family under investigation. However, each family member perceives and assesses stressors differently due to individual interpretations and views (Wilmoth and Smyser, 2009). In terms of the perception of stressors, Perry was captured by his motives – autonomy, action, individuality and independence – while Charles hated his father interfering into everyday managerial tasks and at the same time longed for support and recognition. Generally, all four family members saw the succession process with the numerous stressors happening over time. These stressors include the public announcement of the leadership succession in front of the community after the wedding of Charles and Susan, no clear responsibilities and allocation of rights and duties among all family members involved resulting in insults and affronts of the successors even in front of the staff, and disagreement on strategic decisions for the family business among others.

Intergenerational learning

After the main stressors became evident in the individual and pair interviews, problem solving and coping were in the center of the family firm workshop where we intended to trigger the learning process across generations. The pile-up of demands referring to the cumulative effect, over time, of pre- and post-crisis stressors and strains resulted in an unlimited phase of co-habitation with the two generations working side by side and the upcoming of numerous critical events, without a clear perspective about the future. A clear lack of negotiation characterized intergenerational relationships among the predecessors and the successors, finally resulting in authoritarian decision making by the father. As a consequence of the unsolved ambivalences and conflicts, the potential successor Charles was oscillating between staying and leaving. We found reframing a useful intervention here to start reducing the emotional burden of the family members involved. By altering the perception of the situation, we could clarify the stressful issues during the many critical events and encourage perseverance through them. Thus, the reframing technique was used in the family workshop as an intervention to neutralize the situation and to create an atmosphere where predecessors and successors started talking to each other again on a level playing field, recognizing that each actor is basically well-disposed towards new ideas and opinions of his/her counterpart and is initially willing to see the good intention of the proposer.

Adaptive resources (resources that are available, developed and strengthened in response to the demands posed by the critical events) were used by family members to elaborate together (e.g. the jointly defined communication rules) a learning process as a first outcome of our reframing intervention. Patricia stated: “We now agreed to hold a weekly jour-fixe with a pre-defined agenda.” This can be regarded as a new platform for open communication within the family, enabling them to listen to all arguments and understand new aspects and viewpoints previously ignored; showed a first step of intergenerational learning. Also, Charles approves this development, “we send our concerns to be discussed to my father via email and every Monday morning we sit together and talk the points through.” With regard to each family member, the following changes occurred. Perry established new resources and found a hobby (playing golf), which helped him to focus not solely on the family business but on himself. Patricia defined “a set date to retire from [her] operational duties and [she] step-by-step handed over [her] duties of the reception to Susan.” Thus, Patricia started spending her resources and time with her grandchildren, and Susan got the feeling of having “a clear responsibility,” the lack of which was one of her major stressors in the pre-crisis period. Charles, still struggling with the situation and the difficult relationship conflict with his father, started to be “more pro-active in [his] entrepreneurial activities, making much more out of [his] educational background and experience in the hospitality industry and thus [he] also got more confidence in [his] work.” Perry also changed his behavior and started to realize that, “I know I have to hand over responsibility to Charles.” All of these observations could be seen as little steps and intergenerational learning experiences drawn from the critical events that happened during the leadership succession process across the two generations.

With regard to perception we could see the family’s general attitude toward the overall situation improving by accepting and understanding the critical events and stressors of each family member better, which improved cohesion and interconnectedness within the family. The succeeding generation was bound to undergo the challenges in the transition cycle of the family; thus, Charles and Peter understood that they had to undergo these critical events during the leadership succession process as a result of the divided opinions and viewpoints of family members to move on in leadership succession. This family in business learnt from the situation and made a joint turnaround effort for the future of their family firm.

Post-crisis and resilience

Family adaptation is a dimension ranging from maladaptation to bonadaptation. In the state of maladaptation, we experienced a continued imbalance between the pile-up of demands and the family’s capabilities for meeting those demands, leading to a deterioration of the situation. Especially, the family workshop showed the continued imbalance of individual family wishes and desires and the discordant collective vision of the family. With regard to intergenerational learning, particularly Perry and his experiences with “building the hotel to what it is today” played a significant role. He had the tacit knowledge of how to run the business, but retained it for himself and was not willing to transfer his knowledge to the next generation. He was also not willing to define clear responsibilities among the successors due to his fear of “not being needed any longer” and due to his prevailing mistrust that his sons would not fulfill the tasks to his satisfaction. This was explicitly stated by Perry during the couple interview where he claimed: “The hotel is what it is today due to my entrepreneurial spirit and efforts over the last 35 years. My sons are a different generation; they don’t know how to work properly and find leisure time much more important than dedicated work for the family firm. Running a hotel, however, means working 24/7 and 365 days a year.” While Peter was not so much frustrated about the situation, Charles felt “very bad, especially in front of the employees, who became witnesses” of various issues between him and his father.

During our action research period, we could nearly see the family “fall apart” and the situation even further deteriorating. The peak was when Charles felt triggered by a side-remark of his father during the family business workshop and left the room in a rage. His outburst highly irritated Patricia, who was puzzled, saying: “I didn’t want the situation to deescalate like this. What have I done?” Susan started crying and was very concerned that “Charles will leave the company forever if you don’t start changing your behaviour.” Finally, we asked Perry to look out for his son, apologize and ask him to come back. Since, at that point, all family members were exhausted, we finished the workshop after a short feedback and agreed to continue the process within a few weeks.

In the state of bonadaptation, which came up in the subsequent months, we found that the family members jointly worked and agreed on a communication strategy and vision for the family business, which showed that the discrepancy between the demands faced by the individual family members and the capability to meet those demands was shrinking. We thus found that the last critical event taking place during the family workshop when Charles ran out of the room resulted in a turnaround among the actors. Our intervention by asking Perry to look out for his son also contributed to improving the situation. Although Perry “found it risky and it is a tough scenario for me, I started realizing that I had to give up my monopoly of knowledge and power in the business and transfer it.” Herein, he slowly started to transfer the resources and capabilities to the next generation and started fading out of the business and together with his wife started to enjoy his spare time. He found this challenging but also understood that it is the only way to not losing his sons and to making the leadership succession sustainable and hopefully successful in the long run. He also realized that intergenerational learning “is challenged by constant changes being made by his sons, who have a different approach towards entrepreneurial activities compared to me.” But he was now at the state of understanding that he had to let go of his legacy subsequently and that his sons would do their very best for the future of the family firm. Thus, finally, the family succeeded in developing entrepreneurial resilience through intergenerational learning.

Knowing that the family was tightly bonded with a strong sense of belonging and a longing of harmony, finally, a balance in family functioning was achieved by strengthening the family’s integrity and the family members’ sense of well-being. Thus, family resilience, which McCubbin and Patterson (1983a, b) define as the family’s ability to maintain established, functioning patterns after experiencing stressor events, started to emerge and develop slowly. However, since then, the family did not want to engage in further interventions.

To conceptualize our key findings, Table II sums up key themes and interviewee extracts to show which themes stem from what multiple respondents said and which result from a single family member. For the matter of clarity, we highlight the statements of the main actors, Perry, Patricia and their son Charles, who already works in the business with regard to the pre-crisis stressors, and intergenerational learning including pile-up demands, adaptive resources and perception, which subsequently led to resilience.

Discussion and practical implications

Our paper aimed to investigate leadership succession in families in business by using a learning approach. The Double ABC–X Model developed by Lavee et al. (1985) was applied as a framework to understand the underlying stressors within the leadership succession of business families in our action research approach. Hence, we used it as a sensitizing concept to unveil the stressors of each family member and understand intergenerational learning as well as their impact on family resilience. Figure 4 summarizes our results on how family leadership succession produces resilient families in business.

The overlap between business and social settings occurs naturally in families in business and becomes particularly evident in stressful situations occurring during leadership successions. We found that, during the pre-crisis phase in family leadership succession, several stressors emerged caused by individual factors (such as trust, letting go or jealousy) and system factors (including interpersonal relationships, power switch, control, work–life balance and the unclear financial situation). These stressors started to hinder collaboration between the leading and the succeeding generations and impeded intergenerational learning, which is necessary for passing on knowledge and achieving sustainability of the family firm (Nicolaou et al., 2008). However, learning from critical events by enhancing their internal and external resources and gaining a more coherent understanding of the demands in terms of power transfer helped the family at hand to cope with critical events and to develop adaptation strategies (Chari and Chandrashekhar, 2014). In addition, the family made use of external support, agreed on a shared vision and common goals and established communication rules as well as clear responsibilities. Due to collaboration between the leading and the succeeding generations, the leading generation started passing on knowledge and business skills (Nicolaou et al., 2008) to manage and operate the business on a day-to-day basis. This enabled intergenerational learning across the two generations involved. This finding is congruent with Hamilton (2011), who states that intergenerational learning is cyclical and changes over time as the environment and the business develop in ever-changing, new directions.

Resilience, characterized by reflection on past stressors, coping with and adapting to arising critical events (Hedner et al., 2011), was achieved by a continuous process of open communication and negotiation within the family in business. In the underlying case study, we could see that the family members experienced cohesion and interconnectedness between each other on a private level but did not succeed in transferring these qualities to their cooperation in business, resulting in a lack of knowledge sharing, values and mutual support. However, through pile-up of demands, adaptive resources (such as knowledge transfer, life planning, shared vision and goals, communication rules, structures and responsibility) and perceptions (i.e. showing mutual understanding and accepting multi-perspective viewpoints), the family managed to reframe the experiences from the past, revise their expectations for the future and thus became resilient.

The underlying case study also confirmed that intergenerational learning and resilience are key traits of the family in business and relate to a combination of internal and external factors (Hedner et al., 2011). With regard to internal factors, we confirmed that experiences of power and control, but likewise adaptability and flexibility, were important to both predecessors and successors. The case also revealed that the missing organizational culture and diffused patterns of functioning made them struggle but that their sense of cohesion in the family system finally helped family members learn from each other and reach entrepreneurial resilience. Likewise, external contextual factors such as access to resources and supportive relationships (in our case to the successors’ and predecessor’s wives) helped both generations cope with stressors during the critical situations of the succession process. Also, resilience resources, such as family hardiness and social support, adaptation and composite elements (such as family climate), help understand why some families recover after experiencing critical events and others do not (Dollahite, 1991).

Based on our case study action research, the following five practical implications explain how families in business can advance their understanding of intergenerational learning and develop resilience during the family leadership succession. First, reduce stress level. Stressors, as depicted in the model, create most of the conflicting situations among family members, generating stressful situations in terms of different opinions and perception, leading to an escalation of relational conflicts, and ending in critical events. The number of relational conflicts resulting from stressful situations could be reduced if the necessary steps to minimize stress are set. These include good organization and preparation by means of checklists, optimization of the working processes and definition of responsibilities among others. Identifying and adapting such resources help reduce pressure on each family member and thus the overall family stress level.

Second, define competences and responsibilities. In contrast to non-family businesses where employees have clearly stated competences and responsibilities, in family businesses, the organizational structure is not always clear and does not exist in written form. Usually, the owner-manager operates the business while other family employees are also involved in the decision-making process. Thus, non-family employees, especially, sometimes find themselves in difficult situations when they receive two or more different orders from family members. A way to prevent such a conflict situation is to set clear competences and responsibilities for family members. Tasks and rights have to be clarified and be accepted by all family employees. Moreover, the organizational structure with a description of responsibilities and tasks should be available for all in written form so that in conflicting cases and during critical events family members and employees can fall back on some kind of statutes.

Third, creating a knowledge-oriented culture. The lack of awareness for knowledge transfer can be reduced through communication among family members, especially between predecessors and successors. In doing so, a knowledge-oriented culture starts to emerge and generate new opportunities and perspectives, which ensures the sustainability of the family firm across generations. Besides a weekly jour fixe, which helps create and maintain a knowledge culture, the organization of informal events and trips also helps strengthen the corporate culture and reinforce better knowledge transfer. Predecessors, especially, should be open to transferring their knowledge from their past entrepreneurial experiences as well as of day-to-day operations to the next generation to make the family business successfully and sustainably develop in the future.

Fourth, build distance. The family, especially those family members working within the family business, mostly experiences a high level of emotional involvement. Criticism against the business is taken personally, as they highly identify themselves with the business. A little privacy and little time to cool-off usually even aggravate the conflicting situations. To solve the problem or talk about it, the actors need to generate emotional and even sometimes spatial distance. A refuge available for every family member offers the chance to take the spatial and emotional distance needed to cool-off. This is particularly important in the hotel industry since often the family lives in an apartment in or directly adjacent to the hotel. Moreover, leisure activities outside the family firm, i.e. a hobby (e.g. Perry who started to play golf), also help not to focus one’s life solely on the family business. An emotional distance is necessary to generate a more objective view of problems, and being focused more on facts than on emotions also makes finding solutions much easier.

Finally, establish adaptation structures. Families have their own way of how to solve relationship conflicts, which might well result in critical events. As each family in business is unique in its development, history and structure, the conflict-solving strategy and adaptation mechanisms have to be adapted to the very special identity and needs of the given family in business. Being aware of the importance of identifying the stressors that unveil conflicts is a first step toward establishing a conflict-resolving system that furthers bonadaptation and resolves critical events.

Conclusion and contribution

Our research provides three contributions to the literature. First, we find that leadership succession is a process characterized by numerous stressors in families in business (Cabrera-Suárez, 2005; Lambrecht and Lievens, 2008), generating critical events. These critical events deserve attention since only a successful transition leads to long-term oriented and long-established families in business (Morris et al., 2007). We found that applying the Double ABC–X Model helps understand intergenerational learning and resilience in families in business. “Untangling” critical events needs regular work over a longer period. In this sense, individual values, norms and beliefs have to be made tangible, articulated and communicated because they are at the root of individual behavior. The discussion of stressors, available resources and perceptions of each family member are helpful to raise consciousness, understand one’s role and commitment within the family, resolve relationship conflicts and develop new conflict-solving resources, structures and processes. We could observe that along the process, mutual understanding started to emerge and the family developed a shared vision and a clear succession framework and thus finally reached familial resilience. However, since a succession cannot be regarded as a single event but as a process characterized by a number of critical events, the Double ABC–X Model was adopted by using a circular rather than a linear approach.

Second, we discuss the way families in business face these critical events and their underlying perceived stressors of predecessors and stressors during the leadership succession process (Lavee et al., 1985). Using a single case study, we give experts a comprehensive insight into the pre- and post-crisis dimensions and show other families in business how it is possible to cope with critical events through entrepreneurial learning of past experiences (Cope, 2003). We found that stressors were highly dependent upon the personal interactions among the parties involved. This, on the one hand, could be seen as an asset for the family firm and its future development; on the other hand, the family members often also hit the roof, which could particularly be observed in the family workshop. However, the pure knowledge of different stressors among each family member might raise awareness for and prevent conflicts during the leadership succession and thus function as a strategic advantage for families in business.

Third, we explore resilience in the context of leadership succession and show how intergenerational learning, in turn, develops resilient families in business. Although our findings cannot be generalized at large, we make a contribution to the family business literature by addressing a theoretical issue in family business research, that is, how families in business address succession processes (Hedner et al., 2011). The case shows how stressors resulting in intergenerational relationship conflicts can be identified and normalized, making it easier for families in business to recognize that challenges during leadership succession are both common and surmountable by activating existing and new additional resources and by developing comprehensive adaptation strategies and familial resilience.

In general, the action research case study methodology has worked well in support of this investigation into the challenges of leadership succession of families in business, the multiple critical events arising in this process and intergenerational learning. Following a circular intervention approach as suggested here seems to be highly reasonable since it leaves enough flexibility to constantly adapt the process depending on the outcome of the actions taken so far. However, researchers require a large set of methodological, personal and social competences, including self-reflection and tolerance of ambiguity, to deal with the unknown inherent in this research approach. Thus, there might be an ethical dilemma since researchers in an action research setting are characterized by an integral involvement and might have been too subjective over the period working with the business family under study.

Moreover, our research shows a lack of repeatability among other families in business since the situation might be different in the tourism context, for instance, and the qualitative methods used might not be applicable or appropriate in other sectors or industries. Future research should thus look into other sectors and industries to generate more robust results and implications. Limitations of our work also include that results are based upon a single case study and thus cannot be generalized to the population at large and within the action research approach, which generally shows limitations such as subjectivity of results or over-involvement of the researcher. Of course, a multiple case study approach would have improved the external validity as well as the generalizability of our findings, but our aim was not to compare and contrast different family firms but to reveal detailed insights into one family in business.

Figures

Figure 1

Double ABC–X Model

Figure 2

Circular research approach

Figure 3

Family tree

Figure 4

Model of family leadership succession – resilient families in business

Table I

Profile of main actors

Generation	Actor	Roles	Age	Education	Country of origin
Second generation (1982–2017)	Perry	CEO Father	61	Hotel school	Germany
	Patricia	Owner Mother	57	Hotel school	Austria
Third generation (2017–today)	Charles	Son Successor	33	Hotel school	Austria
	Susan	Wife Receptionist	32	Hotel school	Germany
	Peter	Son Successor	27	Financial management studies	Austria
	Olivia	Wife	30	Marketing management studies	Chile

Table II

Analytical overview of themes

Phase	Perry	Patricia	Charles
Pre-crisis stressors
Trust	“I need competent successors but I do not think they are capable of anything” “enormous sense of duty to trustfully manage my wife’s heritage and property”	“Continuity, reliability and commitment are my main values and I cannot see these values in our two sons, which hurts”	“Who, due lack in trust in me, disregards my responsibilities and competences, even in front of our employees, which is really humiliating” “[…] very bad, especially in front of the employees, who became witnesses”
Letting go	“The hotel is what it is today due to my entrepreneurial spirit and efforts over the past 35 years. My sons are a different generation, they don’t know how to work properly and find leisure time much more important than dedicated work for the family firm. Running a hotel, however, means working 24/7 and 365 days a year”	“[…] a shared vision of how to organize our future private life and how to manage to let loose the family business”	“Can you imagine how it feels if your father in front of the whole community, friends and relatives, claims that he will hand over the business in the next year? And now, five years after, the leadership succession has still not taken place? This is a big burden for me and my wife Susan”
Power switch	“[…] succession will only work with a sharp cut, but I do not want to commit myself when I will hand over the firm” “No, I did not cultivate, develop or enhance Charles’ knowledge of business-related issues”	“[…] maintain and increase the family heritage”	“My father did not at all introduce me into my new role as CEO of the business”
Jealousy		“I know that Charles envies Peter for his health issue, but always I tried to treat both of them the same”	“I have been the only one of us two working in the family firm so far, while Peter had been employed in a completely different sector, enjoyed his life and only came to stay in the hotel for their yearly holiday” “Peter had always been treated differently or even better by our parents, although they deny it”
Intergenerational learning
Pile-up demands	“[…] found it risky and it is a tough scenario for me, I started realizing that I had to give up my monopoly of knowledge and power in the business and transfer it” “I know I have to hand over responsibility to Charles”	“[…] a set date to retire from my operational duties and I step-by-step handed over my duties of the reception to Susan”	“[…] very bad, especially in front of the employees, who became witness”
Adaptive resources	“[…] is challenged by constant changes being made by his sons, who have a different approach towards entrepreneurial activities compared to me”	“We now agreed to hold a weekly jour-fixe with a pre-defined agenda”	“[…] we send our concerns to be discussed to my father via email and every Monday morning we sit together and talk the points through”
Perception	“[…] is challenged by constant changes being made by his sons, who have a different approach towards entrepreneurial activities compared to me”	“I didn’t want the situation to deescalate like this. What have I done?”	“[…] more pro-active in my entrepreneurial activities making, much more out of my educational background and experience in the hospitality industry and thus I also got more confidence in my work”