What
is the Purpose of Passing the Firm Down to The Next-Generation While There is a
Low Success Rate
source: Wang Luzhuang, Fang Jie, Tan Xiaoyan: An Empirical Study on the Inheritor Training of Modern Chinese Family Business (Science Research Management, 2008, Vol. 29)
After choosing the successors, the owner’s children, they start to plan or do whatever they can to help their children to become competent, decisive, sociable and so on. There are many way the owners use to cultivate their children to a apt successors. Giving pressure on grade is the most often way to urge them since they are young. The parents hope that they can have a better education background to convince people that they are the proper one to take over the company, not just because they are lucky enough to be the owners’ children. And arranging the successor to the management position or bottom position is the sometimes essential procession of succession. One of the purposes may be to be familiar with the way the firm operates at the same time to know other employees well. The last one mentioned is also a vital way the parents train their children, that is bringing them to different formal occasions, to know their parents’ business friends and to learn the manners.
source: Wang Luzhuang, Fang Jie, Tan Xiaoyan: An Empirical Study on the Inheritor Training of Modern Chinese Family Business (Science Research Management, 2008, Vol. 29)
After choosing the successors, the owner’s children, they start to plan or do whatever they can to help their children to become competent, decisive, sociable and so on. There are many way the owners use to cultivate their children to a apt successors. Giving pressure on grade is the most often way to urge them since they are young. The parents hope that they can have a better education background to convince people that they are the proper one to take over the company, not just because they are lucky enough to be the owners’ children. And arranging the successor to the management position or bottom position is the sometimes essential procession of succession. One of the purposes may be to be familiar with the way the firm operates at the same time to know other employees well. The last one mentioned is also a vital way the parents train their children, that is bringing them to different formal occasions, to know their parents’ business friends and to learn the manners.
Having these preparations, you may think they may be good enough to manage the firms. However, one statistics show that the success rate of passing is decreasing with the generations. There are 40% could last to the second generation and 13% to the third generation. And only 3% of firms still live well under the forth generation’s management. It is reasonable that a company edging down to closing up with years. Then there is no reason to insist on passing down the firm to the next generation. As I mentioned before, the offspring are not necessary appreciate the faith the entrepreneurs hold, and on the other hand, doing so could restrict the children’s freedom to choose or find what they really want to do by deciding for them at the very first.
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