The Bequest Motives for Chinese-Owned SME Family Business Succession Planning in Malaysia

Loh, Wei Hoong (2025) The Bequest Motives for Chinese-Owned SME Family Business Succession Planning in Malaysia. Doctoral thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

Family businesses have long been a driving force behind global economic growth, typically managed by family members. What makes a family business unique is that it is passed down through generations, inherited within the family tree. Family businesses often pursue both economic and non-economic goals, such as maintaining a family dynasty and preserving identity. As a result, succession planning has always been a critical issue. This quantitative study aims to explore the founder’s bequest motives when selecting successor for the family business. Four key personality traits are identified as predictors of the successor: commitment, motivation, relationship, and competency. This research will use bequest motives as a mediator to examine how these four predictors influence the selection of a successor by family business founders. A research framework has been proposed to assess the influence of the family business founder or incumbent on successor selection. This study examines Malaysian Chinese-owned SME family business succession planning from a bequest perspective. Chinese business owners control 64.0 per cent of Malaysia’s private assets and 44.0 per cent of its large companies, which dominate commerce. Therefore, this study focuses on Chinese family business owners. Between April and July 2023, Vistage Malaysia and the Associated Chinese Chambers of Commerce and Industry (ACCCIM) compiled 220 questionnaires. The results demonstrate that the dynasty model, which incorporates elements of the selfish life cycle, social norms, and tradition, is the most common model among family business founders with bequest motives. In this study, altruism is not considered important. In other words, the CEO of the family business takes the company very seriously and shows no empathy, emotion, or humanity. The CEO has indicated that the four essential personal qualities of a successor – commitment, motivation, relationship, and competency – are important and in high demand. However, the requirements differ slightly depending on whether the successor will take over management or ownership of the family business. According to the CEO, dedication, drive, and rapport are crucial for a successor to assume a management role. In contrast, relationship and competence are the most important qualities for a successor taking over the ownership of the family business. Competency in management roles can be taught and acquired, but it is essential for advancing the family business if the successor is to assume ownership. Additionally, a positive working relationship between the CEO and successor is necessary to facilitate a smooth transfer of ownership of family business shares between generations. The study’s conclusions highlight the key personal characteristics that affect family business succession planning and how bequest motives influenced the CEO’s decision in selecting a successor.