INNOVATION AFTER BUSINESS SUCCESSION

Abstract

The purpose of this paper is to clarify factors that promote innovation after business succession. To accomplish this purpose, this paper reviewed literatures, presented hypotheses, tested the hypotheses using a questionnaire, and added discussions. The questionnaire was mailed mainly to old companies based on the perspectives of successor's understanding of the shortcomings of the predecessor, the influence of predecessor on the management, and the interest of business manager in the survival of the business, and valid responses were obtained from 328 companies. A multiple regression analysis using innovation as the dependent variable was then performed by combining 7-point scale responses obtained from the survey to create some original scales. The study indicated that the potential for innovation increases when 1) the successor understands the shortcomings of the predecessor and 2) the business manager focuses on the survival of the business. In terms of 1), however, it also seems improving communication between the predecessor and the successor is effective in innovation. This is because the influence of predecessor is not affecting the result of the regression analysis and it was presumed that successor's ideas do not always lead to a good innovation. Regarding 2), this study, which demonstrated that focusing on the survival of the business increases the innovation potential, contributes to the discussion as to whether companies work on innovations that entail risks or avoid that risk because they focus on survival. The results turned out to reject the contradictory relationship between innovation and the survival of family business, which had been implied in previous studies.