Why Are Family Owned Businesses Unable to Sustain Beyond the Second Generation

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Abstract

The main aim of this research is to investigate the causes of lack of sustainability in fob i.e. family owned businesses. The research has been carried out in Pakistan and therefore, the businesses included are from Pakistan. The research will help in addressing the pain points of FOBs in Pakistan. Other than financial reasons, there are serious issues which sometimes leads these FOBs to a situation of closure. The research study is qualitative in nature as the scope for his research suggests that we need to determine the causes for the failure of FOBs in Pakistan. Data was collected through interviews from people who work in family businesses and had been working in FOBs for more than 15 years. The Findings from the research suggest that, the variables i.e. Responsibility, Authority & Power, Effective Communication, Honesty &Trust, Succession Planning are main reasons for the lack of sustainability of FOBs. There are other variables too that impact on the sustainability of FOBs but, the research has shown only the above variables are more talked about. In conclusion, succession planning has been the major bone of contention between the FOB’s and their future however, other issues are also important. The firms that mutually plan the succession and made an agreement at the time of inception, are able to survive longer. However, a need for a proper conflict management system among the family members was also frequently talked about.