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Succession planning and knowledge management with knowledge sharing perspective in business families

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Loss of knowledge is a critical factor for organizations. This paper approaches the topic of a combined research of knowledge management and succession planning.

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  1. International Journal of Management (IJM) Volume 7, Issue 7, November–December 2016, pp.70–81, Article ID: IJM_07_07_007 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=7 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication SUCCESSION PLANNING AND KNOWLEDGE MANAGEMENT WITH KNOWLEDGE SHARING PERSPECTIVE IN BUSINESS FAMILIES Antonette Asumptha J. and Mathan C. National Institute of Technology, Trichy, India ABSTRACT Objective: Loss of knowledge is a critical factor for organizations. This paper approaches the topic of a combined research of knowledge management and succession planning. Factors like death and family partition and sudden loss of the key member is faced with succession planning. This research has a glimpse of knowledge management and detailed study on succession planning in particular family owned business.. The scarcest resource today is top management talent that can handle anything negative that arises. Methods: Here in this research we have tailored Structural Equation Modeling and Theory of Planned Behavior. Findings: From a managerial perspective, our results suggest that cultivating positive normative beliefs of significant members motivation to comply as well as positive attitude for sharing knowledge. Novelty: A causal path from Attitude to Perceived Behavioral Control. Key words: Family owned business, Succession Planning , knowledge management, knowledge sharing.. Cite this Article: Antonette Asumptha J. and Mathan C., Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families. International Journal of Management, 7(7), 2016, pp. 70–81. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7 1. INTRODUCTION Knowledge leads to successful competitive advantage. Hence we accentuate on strategic knowledge management. Knowledge management is nothing other than collecting, using, disseminating and growing knowledge in a concern. It involves the use of people, technology and processes (Awad and Ghaziri 2004, 2-3). One process that can be put in place is to enhance the capture of knowledge is succession management. Succession planning has been defined as “the process of ensuring that qualified persons are available to assume key managerial positions once the positions are vacant” (Mondy and Noe 2005, 506). Succession planning is an explicit plan for management succession to fill in key roles within the company at all levels of the organization. Succession planning is a process whereby an organization http://www.iaeme.com/IJM/index.asp 70 editor@iaeme.com
  2. Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families ensures that employees are recruited and developed for future purpose. Through the succession planning process, organizations can recruit superior employees, develop the recruited person’s knowledge, skills, and abilities, and prepare them for advancement or promotion for more challenging roles. (Kathy, PHD) Some jobs are the lifeblood of the organization, hence it can’t be neglected or kept vacant for a long time, thus succession planning came into being. Succession planning should be actively pursued when the organization expands and loses the key role employees. The developmental needs of the employee have to be fulfilled and ensured that all employees are developed to fill in their key roles which are expected out of them. 1.1. Advantages of Succession Planning To face sudden attrition the organization should be well prepared in advance and this is done by success planning. Key roles are maintained. Identification of employee strengths, skills, abilities. A motivating factor for the employees. Advantage of recruiting internal employees who are aware about the organization reduces cost and time. The process of succession planning is as follows: 1. In order to ensure leadership continuity, creating a talent pool. 2. Building potential successors. 3. Scrutinizing candidates and obtaining the best candidature. 4. Yielding a greater return on investment by cotemplating resources. Effective succession planning is required to recognize the lifeblood jobs of the organization essential to be filled up and is critical. 2. GAP AND OBJECTIVES The story of family succession has been there right from the 1950’s.Brazil has done a lot of studies in the area of succession planning but Asia hasn’t touched this part. Hence we draw attention to succession planning combined with knowledge management in family business. This paper is aimed to bring out the concept of succession planning and knowledge management in family owned businesses. 3. COMMON PITFALLS INCLUDE Full responsibility delegated to human resources Succession Planning has to be updated regularly or else there would be adverse results. Friendships and relationships cloud the judgment Before getting into in depth understanding of succession planning let us consider what knowledge management. 4. KNOWLEDGE MANAGEMENT “Systematic management of knowledge takes on new importance with the current economic reality where knowledge is a differentiating competitive factor for individuals, corporations, and nations. This reality is the driving force behind broad adoption. Knowledge Management: A Working Definition Simply stated, in the opinion of this author, the objectives of knowledge management (KM) are: (1) To make the enterprise act as intelligently as possible to secure its viability and overall success and (2) To otherwise realize the best value of its knowledge assets.” KARL M. WIIG (1997). http://www.iaeme.com/IJM/index.asp 71 editor@iaeme.com
  3. Antonette Asumptha J. and Mathan C. 5. THE RELATIONSHIP BETWEEN SUCCESSION PLANNING AND KNOWLEDGE MANAGEMENT Eddleston and Kellermanns (2007) portray that family business may be stuck without a succession strategic process. Succession planning is important when the present generation wants to grow and develop the new generation. Hence transfer of knowledge from current generation to the new generation in family owned business is crucial. Morris et al. (1997) and Tirsadari and Dhewanto (2012). Two types of knowledge that is used in succession planning are implicit and explicit knowledge, explicit knowledge is easily codified as a excel database while implicit knowledge is concerned with leadership, entrepreneurship and risk taking. Factors that directly affect the succession process are: (1) tendency of the holder to leave, (2) disposition of the successor to take over, (3) a deal among the family members to maintain family involvement in the business, (4) acceptability of the individual roles, and (5) succession planning (SHARMA; CHRIMAN; CHUA, 2003).”W. Gibb Dyer (1989) has corroborated on the reason why should a family business be professionalized.” One reason among them is acquiring or developing management expertise to prepare for leadership succession. The founder or family leader may want to retire in the near future and may feel that family members in the business need additional training before assuming the mantle of leadership, or the founder may feel t9hat no one in the family is capable of running the business after he or she is gone. A search is then made to find managers that can be trusted with the future leadership of the firm.” Succession planning, generally, in whatever industry it may be, is critical, especially when the business is transferred to the next generation. Depending upon Coleman (2013) here one should appreciate the entrepreneurship skills of the team leader as he has already set up the platforms, the new generation just needs to build on. Here the team leader selects the new leader as he retires, here is way knowledge sharing plays a role. the succession planning helps the leader to select the right one trained for taking up the position. 6. RESEARCH MODEL 6.1. The Theory of Planned Behaviour Model Ajzen (1992) proposed the TPB model an extension of TRA model. Attitude is the favorable or unfavorable effect of performing a behaviour. Subjective Norms is the social pressure for performing the behavior. Perceived Behavioral Control is the ease or difficulty in performing behaviour Figure 1 The Theory of Planned Behaviour Model http://www.iaeme.com/IJM/index.asp 72 editor@iaeme.com
  4. Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families 6.2. Hypothesis The proposed hypothesis are : H1 Family members attitude has a positive effect on the intention to share knowledge H2 Family members subjective norms has a positive effect on the intention to share knowledge. H3 Family members perceived behavioral control has a positive effect on the intention to share knowledge. Figure 2 The THEORY OF PLANNED BEHAVIOUR Model Figure 3 Technology Acceptance Model (Davis et al,1989) PBC is the perceived ease or difficulty that the individual faces to perform the behaviour (Emma L. Pelling and Katherine M. White,2009),2001a,b; Bock et al 2005; Ryu et al(2003) & Lin 2007c; Chang 1998, Chau & Hu 2001 Perceived ease of use (PU) – This was defined by Fred Davis as "the degree to which a person believes that using a particular system would enhance his or her job performance" http://www.iaeme.com/IJM/index.asp 73 editor@iaeme.com
  5. Antonette Asumptha J. and Mathan C. Figure 4 Extended Model The Extent to Which a Person Feels Able to Enact the Behaviour: has two Aspects Attitude Influences Pbc: How much a Person has Control over The Behaviour and Attitude Influences Pbc: How Confident a Person Feels about being Able to Perform the Behaviour Table 1 Measurement Model Fit –Table1 Measurement Model Fit Factor Latent Constructs Item Loading AT1 0.70 AT2 0.65 Attitude toward knowledge AT3 0.72 sharing (AT) AT4 0.75 AT5 0.83 SN1 0.66 SN2 0.79 Subjective Norm(SN) SN3 0.78 SN4 0.71 SN5 0.76 PBC1 0.47 Perceived Behavioral PBC2 0.73 Control(PBC) PBC3 0.63 PBC4 0.58 INT1 0.79 Intention to share knowledge INT2 0.59 (INT) INT3 0.73 INT4 0.62 http://www.iaeme.com/IJM/index.asp 74 editor@iaeme.com
  6. Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families Table 2 Item Statistics Mean Std. Deviation N AT1 3.3396 1.01078 533 AT2 3.3246 .96640 533 AT3 3.5704 .89549 533 AT4 3.3977 .96720 533 AT5 3.4053 .97571 533 SN1 3.3114 .96001 533 SN2 3.2889 .96314 533 SN3 3.3677 .94384 533 SN4 3.3058 1.01784 533 SN5 3.3508 .99566 533 PBC1 3.6173 .86050 533 PBC2 3.4784 .89799 533 PBC3 3.5610 .83763 533 PBC4 3.3752 .93687 533 INT1 3.3677 .99993 533 INT2 3.2045 .99690 533 INT3 3.2702 .98970 533 INT4 3.4578 .95608 533 Table 3 Reliability Statistics Discriminant validity was found by evaluating the square construct correlation values. The construct correlation values of AVE values.(Fornell and Larcker 1981). http://www.iaeme.com/IJM/index.asp 75 editor@iaeme.com
  7. Antonette Asumptha J. and Mathan C. Figure 5 Confirmatory Factor Analysis (CFA) Model Figure 6 The Theory of Reasoned Action http://www.iaeme.com/IJM/index.asp 76 editor@iaeme.com
  8. Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families Figure 7 Extended TPB Model with Causal Path from Attitude to PBC Table 5 Overall fit indices of the Investigated Overall fit indices of the Investigated Model Fit Reasoned planned Extended Model Causal Recommend Index Action(TRA) behavior(TPB) Path from Attitude to PBC cut-off value Measures of Absolute Fit Near to Degree of χ2 498.688 1062.51 998.375 freedom The greater, d.f 75 132 131 the better χ2/d.f 6.649 8.049 7.641 3 TO 6 RFI 0.838 0.744 0.758 ≥0.8 RMSE A 0.103 0.115 0.112 ≤0.08 Incremental Fit Measures NFI 0.867 0.780 0.793 ≥ 0.90 CFI 0.884 0.801 0.814 ≥0.90 Parsimonious Fit Measures The higher, PCFI 0.729 0.691 0.697 the better The higher PNFI 0.714 0.673 0.679 the better http://www.iaeme.com/IJM/index.asp 77 editor@iaeme.com
  9. Antonette Asumptha J. and Mathan C. 7. PATH COEFFICIENTS Table 6 Implication of individual paths Path Co- TRA Model1(TPB) Model2 Causal Efficient Path from Attitude To PBC AT IN 0.2 0.13 0.24 SN IN 0.85 0.69 0.7 PBC IN 0.63 0.7 AT PBC 0.49 Table 7 Effect on Academicians Intentions to Share Knowledge Model2 Causal Path from TRA TPB Attitude to PBC DIRECT AT 0.2 0.13 0.24 EFFECT SN 0.85 0.69 0.7 PBC 0.63 0.7 INDIRECT AT PBC INT 0.49 EFFECT TOTAL AT 0.21 0.21 0.21 EFFECT SN 0.21 0.21 0.21 PBC -0.2 -0.2 AT PBC INT 0.39 The aim of this research was to cull out the applicability of social psychological theories, the Theory of Reasoned Action and Theory of Planned Behaviour moto the predict knowledge sharing among family 'members in succession planning and extend the predictability of original TPB model by including causal path from Attitude to Perceived Behavioral Control. Results show that attitude and subjective norm are not as independent, and is consistent with the previous research in other domains. 8. CONCLUSION This study investigated the knowledge sharing behavior of family members in succession planning by applying prevalent psychological social psychology models in business families. This study focused to bring out the applicability of the Theory of Reasoned Action and Theory of Planned Behaviour and we also tested the extended model by adding a causal path from Attitude to Perceived Behavioral Control. Several implications from the study can be shed light on in knowledge sharing behavior in family members with the key focus on succession planning. Results from the study shed light on several implications in physician's knowledge sharing behavior. First, findings of the study show that the TPB model can be used quite successfully. Second, the amended TPB model shows that the indirect effects with a causal path from Attitude to Perceived Behavioral Control are significant. Third, the research has the intrinsic worth of conducting a knowledge sharing investigation in a real-world business setting that involves family members. From a managerial http://www.iaeme.com/IJM/index.asp 78 editor@iaeme.com
  10. Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families perspective, our results suggest that cultivating positive normative beliefs of significant members motivation to comply as well as positive attitude for sharing knowledge. REFERENCE [1] Madden, T. J., Ellen, P. S., & Ajzen, I. (1992). A comparison of the theory of planned behavior and the theory of reasoned action. Personality and social psychology Bulletin, [2] Chang, M. K. (1998). Predicting unethical behavior: A comparison of the theory of reasoned action and the theory of planned behavior. Journal of business ethics, 17(16),1825-1834. [3] Coleman, J. L. (2013). A Phenomenological Study of the Knowledge Transfer and Succession Planning Experiences of Senior Leaders Retired from the California Community College System (Doctoral dissertation, Drexel University). [4] Durst, S., Zarelli, P. R., Vaz, C. R., Muran, C. B., & Selig, P. M. (2015). Knowledge Management and Succession Planning: case study in a food industry from the state of Paraná,Brazil International Journal of Knowledge Engineering and Management (IJKEM), 4(8), 01-22. [5] Fornell C, Larcker DF. Evaluating structural equation models with unobservable variables and measurement error. J Mark Res 1981;18(1):39–50. [6] Pritchard, J.,& Becker, K. L. (2009). Succession management as a knowledge management strategy.814-825 [7] Team, Q. W. (2005). In Enhancing the innovation environment: Proceedings of the 10th International CINet Conference, 6-8 September 2009, Australia, Queensland, Brisbane. [8] Trevinyo-Rodríguez, R. N., & Tàpies, J. (2010). Effective knowledge transfer in family business. Working Paper-865. IESE. Business School of Navarra. [9] Ryu, S., Ho, S. H., & Han, I. (2003). Knowledge sharing behavior of physicians in hospitals. Expert Systems with applications, 25 (1), 113-122 [10] Wiig, K. M. (1997). Knowledge management: where did it come from and where will it go?. Expert systems with applications, 13(1), 1-14 [11] https://www.besmith.com/thought-leadership/white-papers/10-questions-comprehensive- succession- planning [12] Sengottuvel and Dr. U. Syed Aktharsha. Knowledge Sharing Behavior and Knowledge Management Capability in Engineering Organization . International Journal of Management (IJM), 7 (2), 2016, pp. 215 – 225 [13] Dr. M.A Shakila Banu and K. Kalaivani. The Impact of Knowledge Management on Organisational Performance. International Journal of Management (IJM), 7(2), 2016, pp. 191 - 199, http://www.iaeme.com/IJM/index.asp 79 editor@iaeme.com
  11. Antonette Asumptha J. and Mathan C. APPENDIX Knowledge Sharing and Succession planning in a family owned business. Age: Gender: Highest Qualification: Department: Position: Years of Experience with UG: Organization Name: Years of Experience with PG: Organization Type: Govt./Private If Government : State/ Central If Private: Self-Financing / Non Self – Financing Appendix A. Questionnaire Items Construct Items Intentions to share knowledge(IN:4 items) I always will IN1: ...plan to share knowledge with my family members IN2: ...try to share knowledge with my family members IN3: ...make an effort to share knowledge with my family members IN4: ...intend to share knowledge with my family members, if they ask Attitude toward knowledge sharing (AT: 5 items) If I share my knowledge with other faculty members, I feel AT1: very harmful..........very beneficial AT2: very unpleasant.....very pleasant AT3: very bad.................very good AT4: very worthless.......very valuable AT5: very unenjoyable....very enjoyable Subjective norms (SN: 5 items) SN1: It is expected of me that I share knowledge with other faculty members. Most academicians who are important to me SN2: ...think that I should share knowledge with other faculty members http://www.iaeme.com/IJM/index.asp 80 editor@iaeme.com
  12. Succession Planning and Knowledge Management with Knowledge Sharing Perspective in Business Families SN3: ...share their knowledge with others academicians whose opinions I value SN4: ...would approve of my behavior to share knowledge with other faculty members. SN5: ...share their knowledge with others Perceived behavioral control (PBC: 4 items) PBC1: For me to share my knowledge is possible always PBC2: If I want, I always could share knowledge PBC3: It is mostly up to me whether or not I share knowledge PBC4: I believe that there are much control I have to share my knowledge with other faculty members. http://www.iaeme.com/IJM/index.asp 81 editor@iaeme.com
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