The Effect of succession planning challenges on the performance of family-owned supermarkets in Nairobi, Kenya

Abstract

Succession planning remains a major challenge affecting the continuity and performance of family-owned supermarkets globally. Studies show that only about 30% of family businesses survive into the second generation and less than 16% survive into the third generation due to ineffective succession processes. This research examined how succession planning challenges influence the organizational performance of family-owned supermarkets in Nairobi County. Specifically, the study evaluated the effects of legal, financial, and interpersonal challenges on organizational performance during succession planning. The investigation was anchored on Trait Theory and Path–Goal Theory and employed a positivist research philosophy with a descriptive cross-sectional design. Data were collected from all 47 registered family-owned supermarkets in Nairobi County through a census approach, with one manager representing each firm. Questionnaires served as the primary data collection instrument, and collected data were cleaned and analyzed using quantitative techniques, including descriptive statistics and multiple linear regression analysis. Findings revealed that legal challenges, financial constraints, and interpersonal conflicts significantly hinder effective succession processes. Correlation results indicated strong and statistically significant negative relationships between each of the succession planning challenges and organizational performance. Regression analysis further confirmed that legal, financial, and interpersonal challenges exert a significant negative effect on the performance of family-owned supermarkets. Based on these findings, the research concludes that unresolved succession planning challenges substantially undermine organizational performance in family-owned enterprises in Nairobi County. It is therefore recommended that succession laws be strengthened and the adoption of documented succession plans be mandated to minimize legal disputes and promote business continuity.