A Multidimensional Approach to Succession in
Family Firms: The Case of Denmark
Britta Boyd
Associate Professor
Department for Border Region Studies
University of Southern Denmark
Alsion 2, 6400 Sønderborg, Denmark
Tel. +45 (0) 6550 1756
Fax +45 (0) 6550 1779
bri@sam.sdu.dk
Tomasz A. Fediuk
Visiting Scholar
Center for Corporate Communication
Aarhus University
Denmark
Tel. +45 871 60320
tafediuk@yahoo.com
Isabel C. Botero
Visiting Scholar
Center for Corporate Communication
Aarhus University
Denmark
Tel. +45 871 65125
boteroisa@gmail.com
February 1, 2012
* Paper in progress submitted for consideration to the 12th Annual World Family Research
Conference. Bordeaux, France, June 26-29, 2012.
**All authors contributed equally to this project.
Abstract
In family firms succession is often defined as the transition of leadership and ownership between
a family member and the next generation. Traditionally research on succession in family firms
has focused on the family member as they enter the leadership role (i.e., how family firms
successfully transition to the next generation). From our point of view this is a one-dimensional
perspective of succession with a focus on the family or the non-family member that will take
over the leadership role. However, we found evidence in Danish family business research that
such an approach is restrictive in a way that concern for the family is not the only consideration
for organizational development in the succession process. Building on conflict management
literature, we examine the succession process from a multi-dimensional approach where concern
for the family is one dimension, and a second dimension of concern for others is added. Based on
this discussion, we present a multi-dimensional framework for succession planning and its
implications for understanding succession processes. To illustrate our framework, case studies
from Danish firms are presented and investigated with regard to their concern for others in
succession planning and decision making.
Keywords: Succession in Family Firms, Organizational Culture, Intercultural Research, Case
Study
Word Count: 192
Introduction
This paper investigates family firm succession from a different angle that traditional research on
succession. Understanding succession intent is here not only focusing on family transition but on
concern for other stakeholders such as employees. The presented research model shows how
succession intent in influenced by different variables. The secondary data analysis shows the
relevance of family firms to the Danish economy in comparison to other European countries.
Based on a clear definition of family businesses and a literature review different surveys indicate
that culture and taxation have an important impact on family business succession in Denmark.
As family business research can be considered to be at a starting point in Denmark this study
contributes with suggestions for further investigation of Danish family firms.
Theory on succession
??
Research model
Figure 2 – Understanding Succession Intent
Culture
Industry Context
Concern for
Family
Social Context
Laws and
Policies
Succession Intent/
Decision
Concern for
Others
Variables:
 Culture includes country, family, and organizational.
 Industry Context: This includes all the current description of how the industry is doing
and its future.
 Social Context includes issues like availability of family incumbent.
 Laws and policies are the norms of succession by the country in which the organization is
housed.
Analysis: The case of Denmark
Based on the presented research model characteristics of the Danish culture, laws and policies
are investigated. This will then show how different levels of concern for family and others
influence the succession decision in Danish family firms.
Although family businesses have a long history in Denmark, the explicit research on family
businesses seems to be quite recent and nascent (Danholt, 2008). In Denmark only a few large
family owned companies exist; more important with regard to the amount of companies are small
and medium sized family businesses.
As in other countries family business research in Denmark started with publications on
succession (Gersick, 1994). In the late 1970s first articles on generational change evolved
(Thomsen, 1978; Nielsen & Lindencrona, 1983) followed by books and other publications in
Danish language on the family business and its leadership (Wivel & Valther Hansen, 1997;
Sørensen, 1998a; Sørensen, 1998b; Gren Svendsen. & Pløger, 2000). Sørensen (1998b)
investigated prominent Danish family businesses, studying the weaknesses and strengths of
mixing family and business.
The first survey on family businesses in Denmark was conducted by DTL (Dansk Transport og
Logistik) among 1,188 Danish haulage businesses in 2002. 52 percent of the respondents were
concerned about the generational change but only 36 percent could envisage handing over the
company to a family member (DTL, 2002). First publications in English language were based on
a national survey of family-owned businesses consisting of 5,334 succession processes between
1994 and 2002. According to this survey from Bennedsen, Nielsen, Peréz-González and
Wolfenzon (2004) the percentage of family firms among all privately held firms in Denmark was
89.2. Another interesting result of the study was that family succession has a negative impact on
firm performance.
Almost 80% of Danish family firms do not have a succession plan. Owners consider legislation,
inheritance tax and pricing of the company as main obstacles for generational succession.
Interests of heirs, qualifications, age or who is going to continue the firm are of less concern for
Danish family firms Danholt (2008). These mentioned obstacles could be a reason to show less
concern for family members.
Like other Nordic countries Denmark is a highly developed welfare society build upon heavy
taxation and a large public sector. High estate tax liabilities can make it difficult for family
businesses to survive a succession process (OECD, 2008). This can be stated by a study among
18 European countries regarding the location quality for family firms. Even though Denmark is
ranked in second position overall the tax system index showed very low ranking compared to the
other European countries (Stiftung Familienunternehmen, 2008). Therefor the taxation in
Denmark can be seen as main reason for not being concerned for family when facing succession.
Another study from Greens (2008) shows similar results with a low relevance of family
succession. Among 892 Danish family firms, only 25 percent stated that it would be important
that the business stays in the family. More important for the investigated family businesses was
to achieve a good price for selling the company (87 percent) and to secure the future of their
employees (74 percent). Therefore Danish family businesses are more concerned about the
continuation of the company and that employees have a future than keeping it in the family
(Børsen, 2011).
Conclusions
With taxation as a main impact on family firm succession the Danish government should
investigate other possibilities in that respect. Moreover it would be helpful to look how other
European countries cope with taxation of family firms. As family firm succession affects
company performance negatively a main concern regarding family businesses should be
legislation around transitions in Denmark.
Despite the importance of family firms in Denmark research and teaching at universities is very
limited. Therefore further family business research is needed to investigate the different
approach to succession in Danish family firms. Special interest could be to explore in more detail
why Danish family firms are more concerned for others than keeping the business in the family.
As Danish family businesses are more concerned about continuation and employees than keeping
the business in the family the relevance of family firm succession in a social and industrial
context should be further investigated.
References
Bennedsen, M., Nielsen, K.M., Peréz-González, F. and Wolfenzon, D. (2004) The Family behind
the Family Firm: Evidence from CEO transitions, Discussion Paper 2004-14, Centre for
Economic and Business Research, London.
Danholt, P. (2008) Overview of Family Business Relevant Issues - Country Fiche Denmark,
KMU Forschung Austria, Study on behalf of the European Commission.
DTL - Dansk Transport og Logistik (2002)
vognmandserhvervet i Danmark, Analyserapport.
Generationsskifteundersøgelse
af
Gersick, K. E. (1994) Handbook of family business research 1969-1994, Family Business
Review Vol. 7, Nr. 2, S. 103-107.
Greens Analyseinstitut (2008) I Familiens Eje: En Undersøgelse af Familieejede Virksomheder i
Danmark. Dagbladet Børsen.
Gren Svendsen, S. & Pløger, L. (2000) Generationsskifte i små og mellemstore virksomheder den selvstændige livsform som paradoks, Center for Småvirksomhedsforskning, CESFO,
Syddansk Universitet, Kolding.
Nielsen, T. & Lindencrona, G. (1983) Internationalt generationsskifte,FSR Forlag: Copenhagen.
Mandel, I. (2008) Overview of Family Business Relevant Issues – Final Report, KMU
Forschung Austria, Study on behalf of the European Commission
OECD (2008) Entrepreneurship Review of Denmark, OECD Directorate for Science,
Technology and Industry, http://www.ebst.dk/file/23319/entrepreneurship_review_dk.pdf,
24.10.2011.
Sørensen, P. O (1998a) Den familieejede virksomhed, Børsen ledelseshåndbøger.
Sørensen, P. O (1998b) Familievirksomhedens bivalente kendetegn, Handelshøjskolen, Århus.
Stiftung Familienunternehmen (2008) Länderindex der Stiftung Familienunternehmen, 2.
Auflage, München 2008.
Thomsen, F. (1978) Generationsskifte, Schulz Forlag: Copenhagen.
Wivel, T. & Valther Hansen, J. (1997) Bestyrelsesarbejdet i den familieejede virksomhed, Ernst
& Young.