The article “A power perspective on knowledge transfer in internal succession of small family businesses” by Muskat and Zehrer (2017) discusses knowledge transfer in family business succession under the assumption that knowledge is a source of power. The authors claim that power influences the exchange of knowledge between predecessor and successor and consequently the success of internal succession. (Muskat & Zehrer, 2017)

 

Knowledge is a source of lasting competitive advantage for businesses (Nonaka, 1991). Due to their characteristics that influence knowledge transfer small family businesses are at greater risk for knowledge loss compared to large organisations (Muskat & Zehrer, 2017). Small family businesses are rich in valuable tacit knowledge which is held by few people with the owner-manager being the most central and dominant (Minder, 2001; Bodersen & Pfüller, 2013). Resulting power imbalances between successor and predecessor that negatively influence tacit knowledge transfer need to be overcome to ensure successful business succession. Combined with the lack in strategic orientation of small family businesses these power imbalances are a major threat to successful business succession (Muskat & Zehrer, 2017). 

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Business succession is the major source of knowledge loss as the owner-manager holds most of the tacit knowledge which is based on experiences. This knowledge is transferred informally through socialization which requires mutual trust (Nonaka & Tekeuchi, 1997; Muskat & Zehrer, 2017). The authors theorise five influencing factors of knowledge transfer: (1) expert power, (2) decision-making power, (3) trust, (4) rivalry and (5) capabilities. For instance, the higher the level of trust the greater the willingness to share knowledge (Howorth et al., 2004; Sambrook, 2005). In contrast, potential rivalry has a negative effect on knowledge transfer. Hence, both parties need to be aware of balancing trust and potential rivalry (Levin & Cross, 2004; Kumar et al., 2017). Furthermore the quality of the relationship as well as the degree of familiness are decisive as they allow to balance the power between predecessor and successor and thus facilitating knowledge transfer (Muskat & Zehrer, 2017). Through knowledge and appropriate handling of the five factors, the challenges of the succession process can be overcome. Transitions need to be planned and processed as well as started at an early stage for a successful internal succession. (Muskat & Zehrer, 2017)

 

The article’s above-mentioned findings are based on extent literature. However it has to be noted that the authors apply a power perspective to knowledge transfer in internal succession. As Trevinyo-Rodríguez and Tàpies (2010) show there are further factors influencing knowledge transfer in the succession process: effective time, desire (e.g. shared dream), uncertainty, trustworthy communication, attitudes, traditions and expectations (Trevinyo-Rodríguez & Tàpies, 2010). Some of these coincide with the one’s by Muskat and Zehrer (2017), however it seems as overall these cover the areas of influencing factors of knowledge transfer in internal succession more precisely. Although Muskat and Zehrer (2017) claim to argue from the successor’s perspective  a lot of emphasis is placed upon the owner-manager, his/her strong attachment to the business, the challenges involved and relationship issues with the successor. However, it is at least as important to consider the attitude of the successor. According to Trevinyo-Rodríguez and Tàpies (2010) this includes the successor’s commitment, willingness to learn, expectations and preferences (Trevinyo-Rodríguez & Tàpies, 2010). 

 

To conclude, knowledge transfer in internal business succession presents a major challenge for small family businesses. Even a high level of familiness cannot prevent the emergence of challenges. Hence, the influencing factors expert power, decision-making power, trust, rivalry and capabilities need to be kept in mind. However for an internal succession to be successful additional factors are relevant that Muskat and Zehrer’s (2017) article does not cover. 

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Bibliography

 

Brodersen, J., Pfüller, K. (2013). Information und Wissen als Wettbewerbsfaktoren: Analysen und Managementansätze. München: Oldenbourg, 2013. 

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Howorth, C., Westhead, P., Wright, M. (2004). Buyouts, Information Asymmetry and the Family Management Dyad. Journal of Business Venturing, 19(4), 509-534.

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Kumar, A., Cantor, D., Grimm, C. M., & Hofer, C. (2017). Environmental management rivalry and firm. Journal of Strategy and Management, 10(2).

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Levin, D., & Cross, R. (2004). The strength of weak ties you can trust: The mediating role of trust in effective knowledge transfer.  Management Science, 50(11), 1477-1490.

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Minder, S. (2001). Wissensmanagement in KMU - Beitrag zur Ideengenerierung im Innovationsprozess. St. Gallen: Verlag HSG, 2001. 

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Muskat, B., Zehrer, A. (2017). A power perspective on knowledge transfer in internal succession of small family businesses. Journal of Small Business & Entrepreneurship, 29(5), 333-350.

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Nonaka, I. (1991). The Knowledge-Creating Company. Harvard Business Review, 69(6), 96-104. 

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Nonaka, I., Takeuchi, H. (1997). Die Organisation des Wissens: Wie japanische Unternehmen eine brachliegende Ressource nutzbar machen. Frankfurt/Main: Campus-Verlag, 1997. 

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Sambrook, S. (2005). Exploring Succession Planning in Small, Growing Firms. Journal of Small Business and Enterprise Development, 12(4), 579-594.

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Trevinyo-Rodríguez, R. N.,  Tàpies, J. (2010). Effective knowledge transfer in family firms. Working Paper (865), IESE Business School – University of Navarra.