A study of management succession through the use of executive information system

Abstract

The Chinese family owned business is facing the reality that the business may eventually die or be taken over by new management, unless it can overcome the obstacles of management succession. There are two main factors as observed, which affecting the second-generation owners (2GOs) in initiating changes to reinvent the business. The first is the first generation owners (1 GOs) are still committed to their mission. They are disinclined to change, often viewing change as disruptive. The second factor is aggregated for those small and medium sized enterprises (SMEs) managed by 2GOs; most of them have not experienced the hardship of problems to establish the company. The 2GO may think he knows the business, but most of the time he sees it from a worker's perspective, do whatever assigned. He should develop his competence and capability like his father in crafting a new business model for the changing marketplace. This thesis proposes a framework to facilitate the acquisition of such skills by 1 GO and 2GO so that they can share a new mental model to run the family business. Both content and process are emphasized in this framework. The content refers to the key concepts needed in management succession. These concepts were identified as a result of interviews with twenty-four 2GOs. Each of them was assisted to complete a questionnaire and describe the difficulties they encountered in managing family businesses. These concepts were considered ideas which are the key to 2GOs management succession. The model also emphasizes the need to acquire essential skills vital in management succession. The 2GOs must go through many action learning loops to capture the skills crucial for successful management succession. Up to now, published literature shows that to introduce process change in creating business values for Chinese family owned businesses is a challenge on its own. Through an academic-industrial collaboration project, a 2GO could acquire an action learning approach for doing empirical research in the real world. In the research study, we illustrate by examples on how successors increase problem solving and decision making abilities through the approach of learning and doing, to put the idea of implementing an executive information system in business, for mastering the changes in people, processes and systems in the Chinese family-owned business organization. This will lead to the family business gaining competitive advantage. In as far as the significance and relevance of research is concerned, the research study provides an action learning approach to identify the strategies with the family business owner on management succession and to build a new culture for the day-to-day operations. The essence of this research study is to use a tripartite model for technology transfer to the 2GOs of SME to adopt in enhancing their problem solving and decision making abilities and re-invent their family businesses to compete in the dynamic marketplace. A prototype of EIS was to be built to validate the management succession framework. The EIS prototype demonstrated that succession leaders learnt the way to manage changes brought about by operations being situated in different time zones. The experiences gained and lessons learnt in implementing the EIS would be disseminated as good manufacturing practice' for the benefits of other 2GOs in the changing marketplace. The management succession case acts as a technology transfer showcase for reference, illustrating EIS being implemented by 2GO in a family owned business in Hong Kong.