As per a recent survey conducted by EY titled, ‘Coming home or breaking free? A closer look at the succession intentions of next-generation family business members’, family businesses globally are facing a succession challenge as more and more young graduates turn to the outside world for opportunities.
The study finds that only 3.5% of all next generation members want to take over their parents’ firm directly after college graduation; 4.9% plan to do so five years later. Moreover female potential successors have weaker succession intentions than their male counterparts. Succession intentions vary across countries as well. Survey participants in Mexico, Belgium and Slovenia have the strongest intention of joining the family business five years after studies, with those in the US, Israel and Denmark the least likely to follow in their parents’ footsteps. The study further shows that since 2011, succession intentions have decreased by around 30%.
The reason for the decline, according to the researchers, is that the labor markets have improved in many of the respective countries, and with more plentiful job opportunities, next-generation members can find more attractive career options, reducing the appeal of the family business. The problem is acute particularly in middle income countries, where the employment market is more attractive straight out of school. Moreover in the longer term, many would prefer starting their own business.
This study is based on data collected by the GUESSS project (Global University Entrepreneurial Spirit Students’ Survey), which is supported by the EY Global Family Business Center of Excellence. Data was collected from 750 universities in 34 countries and 109,000 surveys were completed. This study was based on responses from 34,113 students (31.3%) with a family business background. Three-quarters (76%) of those surveyed were studying for their Bachelors, 60% were female and the average age of those participating was 23.