A Knowledge Framework for Understanding Small Family Business Succession Process

Business succession in family firms has been one of the most investigated topic through theoretical, empirical and anecdotal studies (Sharma, 2004). However, we argue that this bulk of literature seems to neglect the role of the most intangible source of competitive advantage of firms: knowledge. At the same time, small family firms, although representing most part of the firms and facing higher risks of failure due to succession, did not receive much interest (Ventor et a., 2005). The present study attempts to contribute to the literature shedding some lights on the business succession in small family firms informed by an intellectual capital perspective. The paper develops a theoretical model drawing from intellectual capital literature (Mouritsen, 2004; Rastogi, 2003) and knowledge management concepts of knowledge repository (McGrath and Argote, 2000) and knowledge transfer (Szulansky, 1999). We assume that business succession is a process during which the intellectual capital modifies, with the risk of a slump loss due to the incumbent retirement, and so it needs to be managed. In particular, knowledge transfers through the interaction among the incumbent, the successor and the organisation. This theoretical result illuminates how small family firms can maintain and increase their competitive advantage during the succession process, reducing the risk of failure