Ageing Entrepreneurs and Business Transfer Challenges in Croatia
Abstract
Business transfer as a research topic awakened the interest of researchers in the past few decades. Business transfer is defined as a change of ownership of any firm to another person or legal entity assuring the continuous existence and commercial activity of the enterprise, and it encompasses different kinds of transfers both to family and non-family members. Ageing and consequently retirement are often mentioned as the reasons for entrepreneurs’ exits from the companies and intention to initiate the business transfer process. A successful business transfer process is one of the key prerequisites for long- term sustainability of small and medium-sized enterprises. There is a significant number of ageing business owners in Croatia who will exit their companies in the coming years. Considering the number of these entrepreneurs and the influence their exits can have on company stakeholders and national economy in general, it is of great importance to better understand the factors that can influence the choice of their exit strategies. The aim of the paper is to provide an understanding of the dilemmas that the ageing entrepreneurs face when considering different exit modes. The data for the study was collected through in-depth, semi-structured interviews conducted with six ageing business owners. The analysis of the interviews enabled the identification of the challenges that ageing entrepreneurs face in the business transfer process: emotional attachment to the firm, strong preference for family succession and concerns about financial security after retirement. Some of these challenges are a result of the undeveloped business transfer ecosystem, strong tradition and cultural values that imply family succession as the only acceptable exit strategy for retiring company owners in Croatia.
Downloads
References
Aldrich, H. E. (2016). Perpetually on the eve of destruction? Understanding exits in capitalist societies at multiple levels of analysis. In D. R. DeTienne, Wennberg (Eds.), Research Handbook of Entrepreneurial Exit (pp. 11-41). Cheltenham, UK, Northampton, MA, USA: Edward Elgar Publishing. https://doi.org/10.4337/9781782546979
Alpeza, M., Grubisic, N., & Mikrut, M. (2015). Business Transfer Barometer Croatia. Zagreb, Croatia: CEPOR - SMEs and Entrepreneurship Policy Centre.
Alpeza, M., Tall, J., & Mezulic Juric, P. (2018). The Challenges of SME Business Transfers: The Evidence from Croatia and Finland. Organ- izacija, 51(2), 135-145. https://doi.org/10.2478/orga-2018-0012
Bennedsen, M., Nielsen, K. M., Pérez-González, F., & Wolfenzon, D. (2007). Inside the family firm: The role of families in succession decisions and performance. The Quarterly Journal of Economics, 122(2), 647-691. https://doi.org/10.1162/qjec.122.2.647
Breton-Miller, I. L., Miller, D., & Steier, L. P. (2004). Toward an Integrative Model of Effective FOB Succession. Entrepreneurship Theory and Practice, 28(4), 305-328. https://doi.org/10.1111/j.1540-6520.2004.00047.x
Croatian Pension Insurance Institute (2019). Retrieved from http://www.mirovinsko.hr/default.aspx?id=723
Dana, L. P., & Ramadani, V. (2015). Family businesses in transition economies. Management, Succession and Internationaliza- tion. Switzerland: Springer International Publishing. https://doi.org/10.1007/978-3-319-14209-8
Delmar, F., Hellerstedt, K., & Wennberg, K. (2006). The evolution of firms created by the science and technology labour force in Sweden 1990–2000. In: J. Ulhöi & P. Christensen (Eds.), Managing Complexity and Change in SMEs (pp. 69-102). Cheltenham, UK, Northampton, MA, USA: Edward Elgar Publishing.
Deschamps, B. (2012). External takeover of small-and medium-sized enterprises: What do we know. Presented at Transeo Academic Awards 2012. Retrieved from http://www.transeoassociation.eu/uploads/Academic%20Awards/Deschamps%20Abs.pdf
DeTienne, D. R. (2010). Entrepreneurial exit as a critical component of the entrepreneurial process: Theoretical development. Journal of Business Venturing, 25(2), 203-215. https://doi.org/10.1016/j.jbusvent.2008.05.004
DeTienne, D. R., & Cardon, M. S. (2010). Impact of founder experience on exit intentions. Small Business Economics, 38(4), 351–374. https://doi.org/10.1007/s11187-010-9284-5
DeTienne, D. R., & Chandler, G. N. (2010). The impact of motivation and causation and effectuation approaches on exit strategies. Frontiers of entrepreneurship research, 30(1), 1.
Eisenhardt, K. M., & Bourgeois III, L. J. (1988). Politics of strategic decision making in high-velocity environments: Toward a midrange theory. Academy of management journal, 31(4), 737-770. https://doi.org/10.5465/256337
Eisenhardt, K. M. (1989). Building theories from case study research. Academy of management review, 14(4), 532-550. https://doi.org/10.5465/amr.1989.4308385
European Commission (2002). Final Report of the Expert Group on the Transfer of Small and Medium Sized Enterprises, Brussels. European Commission (2011). Business Dynamics: Start-ups, Business Transfers and Bankruptcy, Final Report, Brussels.
European Commission. (2013). Evaluation of the Implementation of the 2006 Commission Communication of Business Transfers. Brussels: CSES, DG Enterprise and Industry. (Ref.Ares (2014)180425 - 27/01/2014).
Eurostat (2019). Population structure and ageing – Statistics explained. Available at: https://ec.europa.eu/eurostat/statistics-explained/index.php/Population_structure_and_ageing#Past_and_future_population_ageing_trends_in_the_EU
Feldman, D. C., & Beehr, T. A. (2011). A three-phase model of retirement decision making. American Psychologist, 66(3), 193-203. https://doi.org/10.1037/a0022153
Flören, R.A., & Nandram, S.S. (2007). Bedrijfsoverdracht in het MKB: een nieuwe stap voor de ondernemer. Neyenrode Business Universiteit. Cited in Weesie, E. (2017). Psychological Barriers In Business Transfers. How to cope with the transfer of SME ownership (Doctoral dissertation). University of Twente.
Harris, S. G., & Sutton, R. I. (1986). Functions of parting ceremonies in dying organizations. Academy of Management journal, 29(1), 5-30. https://doi.org/10.5465/255857
Hytti, U., Stenholm, P., & Peura, K. (2011). Transfers of business planning and bounded emotionality: a follow-up case study. International Journal of Entrepreneurial Behavior & Research, 17(5), 561 – 580. https://doi.org/10.1108/13552551111158853
Ip, B., & Jacobs, G. (2006). Business succession planning: a review of the evidence. Journal of small business and enterprise development, 13(3), 326-350. https://doi.org/10.1108/14626000610680235
Koładkiewicz, I., & Wojtyra, M. (2016). Entrepreneurial Exit: Research Perspectives and Challenges. Problemy Zarządzania, 14(3 (62), t. 2 Rozwój badań nad przedsiębiorczością w kontekście globalnym), 89-106. https://doi.org/10.7172/1644-9584.62.6
Lansberg, I. (1988). The Succession Conspiracy. Family Business Review, 1(2), 119-143. https://doi.org/10.1111/j.1741-6248.1988.00119.x
Lansberg, I. (1999). Succeeding generations: Realizing the dream of families in business. Harvard Business Review Press.
Morris, M. H., Williams, R. O., Allen, J. A., & Avila, R. A. (1997). Correlates of success in family business transitions. Journal of business venturing, 12(5), 385-401. https://doi.org/10.1016/S0883-9026(97)00010-4
Sarasvathy, S. D. (2004). The questions we ask and the questions we care about: reformulating some problems in entrepreneurship research. Journal of Business Venturing, 19(5), 707-717. https://doi.org/10.1016/j.jbusvent.2003.09.006
Sharma, P., Chrisman, J. J., Pablo, A. L., & Chua, J. H. (2001). Determinants of Initial Satisfaction with the Succession Process in Family Firms: A Conceptual Model. Entrepreneurship Theory and Practice, 25(3), 17-36. https://doi.org/10.1177/104225870102500302
Sharma, P., Chrisman, J. J., & Chua, J. H. (2003). Predictors of satisfaction with the succession process in family firms. Journal of Business Venturing, 18(5), 667-687. https://doi.org/10.1016/S0883-9026(03)00015-6
Soleimanof, S., Morris, M. H., & Syed, I. (2016). The role of retirement intention in entrepreneurial firm exit. In D. R. DeTienne & K. Wennberg (Eds.), Research Handbook of Entrepreneurial Exit (pp. 157-183). Cheltenham, UK, Northampton, MA, USA: Edward Elgar Publishing. https://doi.org/10.4337/9781782546979
Steingold, F.S. (2012). The complete guide to sell your business. Berkeley: Nolo.
Taylor, M. P. (1999). Survival of the fittest? An analysis of self-employment duration in Britain. The Economic Journal, 109(454), 140-155. https://doi.org/10.1111/1468-0297.00422
Van Teeffelen, L. (2010). Exploring success and failure in small firm business transfers. (Doctoral dissertation). Available from http://repository.nyenrode.nl/record/8979
Van Teeffelen, L., Leroy, H. L., & Uhlaner, L. M. (2011). What are the Main Drivers for Exit Choice in SME's: Owner or Firm Characteristics? Retrieved from: SSRN: https://ssrn.com/abstract=1866244
Van Teeffelen, L. (2012). Avenues to improve success in SME business transfers: reflections on theories, research and policies. Utrecht: Hogeschool Utrecht.
Van Teeffelen, L., & Uhlaner, L. M. (2013). Firm resource characteristics and human capital as predictors of exit choice: An exploratory study of SMEs. Entrepreneurship Research Journal, 3(1), 84-108. https://doi.org/10.1515/erj-2012-0008
Viljamaa, A., Tall, J., Varamäki, E., Singer, S., & Durst, S. (Eds.). (2015). Business Transfer Ecosystems and Awareness Raising Activities: Situation Analysis of Five European Countries. Seinäjoki: Seinäjoki University of Applied Sciences. Retrieved from https://www.theseus.fi/bitstream/handle/10024/97257/B108.pdf?sequence
Varamäki, E., Tall, J., & Viljamaa, A. (2014). Business transfer and successions in Finland from the potential sellers’ and predecessor’s perspective. The entrepreneurship SIG at European Academy of Management: New Horizons with strong traditions. Advancing European Entrepreneurship Research: Entrepreneurship as a Working attitude, a mode of thinking and an everyday practice, 55-80.
Weesie, E. (2017). Psychological Barriers In Business Transfers. How to cope with the transfer of SME ownership (Doctoral dissertation). University of Twente.
Yin, R. K. (2014). Case study research: Design and methods, 5th edition. Sage publications.
