3.1 DESCRIPTIVE STATISTICS - Shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/20882/9/09_chapter 3.pdf · 3.1 DESCRIPTIVE STATISTICS Is has been already stated that judgment was

3.1 DESCRIPTIVE STATISTICS

Is has been already stated that judgment was used when sampling,

to try to ensure adequate coverage of respondents, to cover a wide range of

organizations, with all levels of selected key variables related to the business

and the respondent. The variables chosen were those that could influence,

chance of success of inheritance management in the business, which is the

dependent variable used in this study. This section of the chapter is used for

presenting the data, to show the extent of coverage of these variables, in the

sample of data collected for this research. In order to show the extent of key

variable spread in the sample used, frequency tables have been constructed

with appropriate class intervals, for each key variable under organization

related variables, such as size of organization, generation of business and

respondent owner related variables, such as religion and age class of owner

respondent. The organization related variables are presented first followed by

respondent owner related variables.

Table 3.1 shows the coverage of the samples with respect to size of

organization. Annual turnover was used as the variable, to represent size of

the organization. Organizations have been classified into the following three

classes. First those with annual turnover up to rupees one hundred lakhs,

second those with annual turnover between one hundred and one lakhs to

rupees five hundred lakhs, third those with annual turnover above five

hundred and one lakhs to rupees. From the table 3.1, it can be seen that a

large majority of the respondents (76.8 percent) are having businesses with

turnover up to rupees one hundred lakhs. There are 11.3 percentage

respondents who have businesses having turnover between one hundred and

one lakhs to rupees five hundred lakhs. The percentage of respondents with

annual turnover above five hundred and one lakhs to rupees is 11.9. These

40

percentages are nearly the same as the percentage of these businesses in

Kerala which is around 80, 12 and 8 respectively in classes one to three above.

Table 3.1

Classification of sample based on annual turnover of the organizations

Frequency PercentValid

PercentCumulative

Percent

Valid

Up to 100 116 76.8 76.8 76.8

101 to 500 17 11.3 11.3 88.1

501 to 1000 18 11.9 11.9 100

Total 151 100 100 100

Table 3.2 shows the coverage of the samples with respect to nature of

constitution of organization. Organizations have been classified into the following

five classes. Ones that are proprietorships come in the first class. In the second class

are partnership firms. The third class has Private limited companies, the fourth has

Public limited companies and the fifth class contains charitable trusts. Table 3.2

shows the frequency table of type of organization based on ownership status. From

the table it can be seen that 40 respondents (26.5 percent) are having proprietary

business. There are 43 respondents (28.5 percent) with partnership businesses. The

percentage of respondents with private limited company is 33.8 (51 numbers). There

were 16(10.6 %) public limited companies and one charitable trust among the

organizations covered. Except for charitable trusts all other classes are adequately

represented in the sample.

41

Table 3.2

Classification of sample based on nature of constitution of the organization

Frequency Percent Valid PercentCumulative

Percent%

Proprietorship 40 26.5 26.5 26.5

Partnership 43 28.5 28.5 55.0

Private Ltd 51 33.8 33.8 88.7

Public Ltd 16 10.6 10.6 99.3

Charitable Trust 1 .7 .7 100

Total 151 100 100 100

Table 3.3 shows the coverage of the samples with respect to the

generation of owners who now run the family Business. Organizations have been

classified into the following three classes, first class of business where respondent

started the Business, second class where the parents of the respondent started the

Business and third where respondent’s grandparents or generation previous to that

started the Business. Table 3.3 shows the frequency table based on generation of

Family Business. From the table it can be seen that there are 39 numbers of (25.8

percent) first generation, 74 numbers (49 percent) of second generation, and 38 (25.2

percent) of third generation or above respondents.

Table 3.3

Generation which started the Family Business


PercentCumulative Percent

I Started 39 25.8 25.8 25.8

Parents started 74 49.0 49.0 74.8

Grand Parents or above started

38 25.2 25.2 100

Total 151 100 100 100

42

Next the respondent owner related variables are described. Table 3.4

shows the coverage of the samples with respect to religion of the current owner

respondent, of the survey. Organizations have been classified into the following four

classes, based on religion into Hindu, Muslim, Christian and Jain. Table 3.4 shows

the frequency table based on religion of owner. From the table it can be seen that

there are 68 (45 percent) Hindu respondents, 42 (28 percent) Christian respondents,

38 (25 percent) Muslim respondents and 3 (2 percent) Jain respondents.

Table 3.4

Classification of samples based on Religion of Owner Respondent

Religion Frequency Percent Valid Percent Cumulative Percent

Hindu 68 45.0 45.0 45.0

Muslim 38 25.2 25.2 70.2

Christian 42 27.8 27.8 98.0

Jain 3 2.0 2.0 100

Total 151 100 100 100

Table 3.5 shows the coverage of the samples with respect to age group of

respondent owner. From Table 3.5 it can be seen that the respondents below 40 years

of age are 41 in number (27.2 percent), between 40 to 50 years 31 numbers (20.5

percent). Those between 50 to 60 years are 58 numbers (38.4 percent) and above 60

years 21 numbers (13.9 percent).

Table 3.5

Frequency table of Age class of Respondent Owner of Family Business

Age Frequency PercentValid

PercentCumulative

Percent

Below 40 years 41 27.2 27.2 27.2

Above 40 up to 50 years

31 20.5 20.5 47.7

Above 50 to 60 years 58 38.4 38.4 86.1

Above 60 years 21 13.9 13.9 10043

Total 151 100 100 100

Table 3.6 shows the coverage of the samples with respect to level of

education of owner. From Table 3.6 it can be seen that the respondents with

education up to 10th class is 32 in number (21.2 percent), between 10th to Graduation

83 numbers (55 percent), Masters Degree 34 numbers (22.5 percent) and above

Masters Degree 2 numbers (1.3 percent).

Table 3.6

Frequency table of Level of Education of Owner of Family Business

Education Frequency Percent Valid PercentCumulative

Percent

Up to 10th 32 21.2 21.2 21.2

SSLC to Degree 83 55.0 55.0 76.2

Masters 34 22.5 22.5 98.7

Above Masters 2 1.3 1.3 100

Total 151 100 100 100

The next respondent owner related variable examined is the district to

which the respondent belongs. Table 3.7 shows the coverage of the samples with

respect to district to which the respondent Family Business owner belongs. From the

Table it can be seen that the southern districts of Trivandrum and Kollam have 51

respondents, Central District of Ernakulam 50 respondents and Northern district of

Calicut 31 respondents. There are a small number of respondents from other Districts

also. A higher representation has been given to Ernakulam the commercial capital of

Kerala.

44

Table 3.7

Frequency table showing the District to which the Respondents belong

District Frequency Percent Valid PercentCumulative

Percent

EKM 50 33.1 33.1 33.1

Calicut 31 20.5 20.5 53.6

Tvm 30 19.9 19.9 73.5

Alleppy 7 4.6 4.6 78.1

Kollam 21 13.9 13.9 92.1

Trichur 2 1.3 1.3 93.4

Kottayam 2 1.3 1.3 94.7

Idukki 8 5.3 5.3 100

Total 151 100 100 100

Now we shall look at the spread of the dependent variable used in the

study “Chance of success in Family Inheritance” hence forth called ‘Chance of

Success’ for simplicity. Table 3.8 shows the spread of responses regarding Chance of

success. From Table 3.8 it can be seen that there are 16 respondents (10.6 percent)

have given response as Very Low for Chance of success and 27 respondents (17.9

percent) have given response as Low chance of success. In the Medium chance of

success there are 25 respondents (16.6 percent), 53 respondents (35.1 percent) have

said that the chance of success is high. There are a good number of respondents (30

numbers) coming to 19.9 percent with response High. From the above it can be seen

that the whole range of five responses have been covered. The Histogram of the data

in the table shows that the distribution is nearly Normal.

45

Chance of success in FB Inheritance6543210

Freq

uenc

y

60

50

40

30

20

10

0

Histogram

Mean =3.36Std. Dev. =1.277

N =151

Figure 3.1

Histogram showing chance of success in Family Business Inheritance

Table 3.8

Frequency table of Chance of success in Family Business Inheritance of respondents

Chance of success Frequency Percent Valid PercentCumulative

Percent

Very low 16 10.6 10.6 10.6

Low 27 17.9 17.9 28.5

Medium 25 16.6 16.6 45.0

High 53 35.1 35.1 80.1

Very high 30 19.9 19.9 100

Total 151 100 100 100

From discussions with experts it was felt that, there is lack of knowledge

regarding management of inheritance among family business owners. To find the

level of knowledge regarding management of inheritance in the family business, the

response to the statement 'I know to pass business to next generation’ was tabulated

as given below in Table 3.9.

Table 3.9.46

Response to statement : I know to pass business to next generation


PercentCumulative Percent

ValidStrongly Disagree

9 6.0 6.0 6.0

Disagee 39 25.8 25.8 31.8

Neutral 32 21.2 21.2 53.0

Agree 59 39.1 39.1 92.1

Strongly Agree 12 7.9 7.9 100.0

Total 151 100.0 100.0

From the table 3.9 it can be seen that the distribution of responses is

nearly normal with only slight skewness towards strongly agree. This validates the

suspicion that there is lack of knowledge regarding management of inheritance

among family business owners. This also therefore indicates that there is scope for

improvement of knowledge regarding inheritance management since fifty three

percent respondents are neutral of disagree with the statement, ‘I know to pass

business to next generation'.

Experts also expressed fear that, enough was not being done by current

owners for management of inheritance of their Family Business. To find the level of

effort taken by current owners for management of inheritance in the family business,

a Frequency table for response to the statement 'I do enough to pass business to next

generation' was tabulated and is given below in Table 3.10.

47

Table 3.10

Response to statement :I do enough to pass business to next generation

Frequency Percent Valid PercentCumulative

Percent

ValidStrongly Disagree

22 14.6 14.6 14.6

Disagee 35 23.2 23.2 37.7

Neutral 33 21.9 21.9 59.6

Agree 43 28.5 28.5 88.1

Strongly Agree

18 11.9 11.9 100.0

Total 151 100.0 100.0

From the table 3.10 it can be seen that the distribution of responses is again

nearly normal with only slight skewness towards strongly agree. This indicates

confirms that enough effort is not being taken and that there is scope for doing more

for inheritance management since nearly sixty percent respondents are neutral of

disagree with the statement 'I do enough to pass business to next generation'.

3.2 HYPOTHESIS TESTING FOR IMPACT ON THE CHANCE OF SUCCESS

The dependent variable in the study is chance of success of inheritance

management in the family business. In order to check whether the selected variables

have impact on Chance of Success, Null Hypothesis that each of the variables taken

one at a time have no impact on Chance of success were stated and tested. For testing

the Hypotheses, Cross tabulation between the selected variable and Chance of

success was done and Chi square test was carried out and Cramer’s V was

calculated. Based on their values it was decided whether to accept or reject the

hypothesis tested. In the sections below the tests for impact of organization and

owner related variables on chance of success of inheritance management in the

family business is presented.

3.2.1 EFFECT OF SIZE OF ORGANIZATION

48

H0 1: The size of Family Business organization has no effect on Chance of Success of Inheritance Management in it.

The results of the cross tabulation and tests for hypothesis testing are shown in tables 3.11 a to c below.

Table 3.11a

Cross Tabulation between Class of Organization and Chance of success

Chance of success in FB Inheritance Total

Very low

Low Medium HighVery high

Very low

Class of organization

Up to 100 16 24 23 37 16 116

101 to 500 0 1 0 5 11 17

Above 501

0 2 2 11 13 18

Total 16 27 25 53 30 151

Table 3.11 b

Chi-Square Tests for Class of Organization and Chance of Success

Test Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 39.321 12 .000

Likelihood Ratio 43.509 12 .000

Linear-by-Linear Association

9.749 1 .002

N of Valid Cases 151

49

Table 3.11c

Symmetric Measures for Class of Organization and Chance of Success

Value Approx. Sig.

Nominal by Nominal

Phi .510 .000

Cramer's V .295 .000


The above results of Chi square test and Cramer’s V show that the null

hypothesis framed and tested as H0 1 above has to be rejected and the alternate

hypothesis that “The Size of the Family Business organization has effect on

Chance of Success of Inheritance Management in it”, has to be accepted.

A correlation analysis between Size of organization and Chance of success

(Table 3.11d) shows a small (Pearson’s Correlation coefficient of 0.255) but positive

correlation between the variables at 1 percent significance level. So as the size of the

organization increases the chance of success also increases. This can be explained by

the argument that as size of business increases there are more systems in place to

make it less dependent on owner and his abilities, so when inheritance has to happen

it affects the business less.

Table 3.11 d

Correlation between Size of Organization and Chance of Success

Chance of success in FB Inheritance

Class of organization


Pearson Correlation

1 .255(**)

Sig. (2-tailed) .002

N 151 151** Correlation is significant at the 0.01 level (2-tailed).

50

3.2.2 EFFECT OF NATURE OF CONSTITUTION OF THE ORGANIZATION

H0 2: The nature of constitution of the Family Business organization has no effect on Chance of Success of Inheritance Management in it.

The results of the cross tabulation and tests for hypothesis testing are shown

in tables 3.12 a to 3.12 c below.

Table 3.12a

Cross tabulation between Nature of Constitution of the Organizations and Chance of Success

Organization


Very low

Low Medium High Very high

Very low

Type of Organization

Proprietorship 10 9 8 9 4 40

Partnership 4 6 10 18 5 43

Private Ltd 2 9 7 22 11 51

Public Ltd 0 3 0 4 9 16

Charitable Trust 0 0 0 0 1 1

Total 16 27 25 53 30 151

Table 3.12b

Chi-Square Tests for nature of Constitution of the Organizations and Chance of Success





20.343 1 .000


51

Table 3.12c

Symmetric Measures for nature of constitution of the organizations and Chance of success

Measure Value Significance

Nominal by Nominal

Phi .508 .001





hypothesis that “The nature of constitution of the Family Business organization has

effect on Chance of Success of Inheritance Management in it”, is accepted.

A correlation analysis between nature of constitution of the Family

Business organization and Chance of success (Table 3.12d) shows a moderate

(Pearson’s Correlation coefficient of 0.368) but positive correlation between the

variables at 99 percent significance level. So as the nature of constitution of the

Family Business organization changes the chance of success also increases. The

organization classes from proprietorship, partnership, private limited and public

limited companies also indirectly represent size and Professionalization in

organization. This can be explained as in the previous case by the argument that as

size of business and Professionalization increases and there are more systems in

place to make it less dependant on owner and his abilities, so when inheritance has

to happen it affects the business less, increasing chance of success.

52

Table 3.12d

Correlation between nature of constitution of the organizations and Chance of success

Chance of success in

FB Inheritance Type of Organization


Pearson Correlation 1 .368(**)



3.2.3 EFFECT OF GENERATION WHICH STARTED THE FAMILY BUSINESS

H0 3: The Generation which started the Family Business has no effect on Chance of Success of Inheritance Management in it.

The results of the cross tabulation and tests for hypothesis testing are

shown in tables 3.13 a to c below.

Table 3.13a

Cross tabulation between Generation which started the Family Business and Chance of success


Very low Low

Medium High

Very high Very low

Generation of

Family Business

I started 2 4 3 15 15 39

Parents started 11 16 18 19 10 74

Grand parents or

above started3 7 4 19 5 38

Total 16 27 25 53 30 151

53

Table 3.13b

Chi-Square Tests for Generation which started the Family Business and Chance of success





3.393 1 .065


Table 3.13c

Symmetric Measures for Generation which started the Family Business and Chance of success

Test Value Approx. Sig.

Nominal by Nominal

Phi.394 .003





hypothesis that “The Generation which started the Family Business has effect on

Chance of Success of Inheritance Management in it”, is accepted.

A correlation analysis between Generation which started the Family

Business and Chance of success (Table 3.13d) shows a small negative (Pearson’s

Correlation coefficient of -0.150) correlation between the variables at 93.5 percent

significance level. So as the Generation which started the Family Business changes

the chance of success also increases. The organization classes from I started, patents

started and Grand parents or above started shows increase in generation. With

increase in generation there will be a decrease in Chance of Success. This finding

agrees with the reported findings by many researchers.

54

Table 3.13d

Correlation between Generation which started the Family Business and Chance of success


Generation of Family Business


Pearson Correlation

1 -.150


N 151 151

3.2.4 EFFECT OF RELIGION OF OWNER OF FAMILY BUSINESS

H0 4: The religion of owner of the Family Business has no effect on Chance of Success of Inheritance Management in it.


in tables 3.14 a to c below.

Table 3.14a

Cross tabulation between religion of owner of the Family Business and Chance of success

Religion Chance of success in FB Inheritance Total

Very low Low Medium High Very high Very low

Hindu 10 15 13 27 3 68

Muslim 4 8 8 13 5 38

Christian 2 4 4 12 20 42

Jain 0 0 0 1 2 3

Total 16 27 25 53 30 151

55

Table 3.14b

Chi-Square Tests for religion of owner of the Family Business and Chance of success


Pearson Chi-Square 37.848(a) 12 .000



20.485 1 .000


Table 3.14c

Symmetric measures for religion of owner of the Family Business and Chance of success


Nominal by Nominal

Phi .501 .000





hypothesis that “The religion of owner of the Family Business has effect on Chance

of Success of Inheritance Management in it”, is accepted.

A correlation analysis between religion of owner of the Family Business

and Chance of success (Table 3.14d) shows a moderate (Pearson’s Correlation

coefficient of 0.370) positive correlation between the variables at 99 percent

significance level. So as the religion of owner of the Family Business changes from

Hindu, Muslim, Christian and Jain there is increase in Chance of Success of

Inheritance Management in Family Business.

56

Table 3.14d

Correlation between Religion of Owner of the Family Business and Chance of success

Chance of success in FB Inheritance Religion


Pearson Correlation 1 .370(**)



3.2.5 EFFECT OF AGE CLASS OF OWNER OF FAMILY BUSINESS

H0 5: The Age class of owner of the Family Business has no effect on Chance of

Success of Inheritance Management in it.

The results of the cross tabulation and tests for hypothesis testing are

shown in tables 3.15 a to c below.

Table 3.15a

Cross tabulation between Age class of owner of the Family Business and Chance of success

Age class of Owner


Very low Low Medium High

Very high Very low

Below 40 years 10 7 8 12 4 41

Above 40 up to50 years

2 4 9 9 7 31

Above 50 to 60years

4 15 7 23 9 58

Above 60 years 0 1 1 9 10 21

Total 16 27 25 53 30 151

57

Table 3.15b

Chi-Square Tests for Age class of owner of the Family Business and Chance of success





13.752 1 .000


Table 3.15c

Symmetric measures for Age class of owner of the Family Business and Chance of success


Nominal by Nominal

Phi .470 .001





hypothesis that “The Age class of owner of the Family Business has effect on Chance

of Success of Inheritance Management in it”, is accepted.

A correlation analysis between Age class of owner of the Family Business

and Chance of success (Table 3.15d) shows a moderate (Pearson’s Correlation

coefficient of 0.303) positive correlation between the variables at 99 percent

significance level. So as the Age class of owner of the Family Business increases there

is increase in Chance of Success of Inheritance Management in Family Business.

58

Table 3.15d

Correlation between Age class of owner of the Family Business and Chance of success


Age class of Owner


Pearson Correlation

1 .303(**)



3.2.6 EFFECT OF LEVEL OF EDUCATION OF THE OWNER OF FAMILY BUSINESS

H0 6: The level of education of owner of the Family Business has no effect on

Chance of Success of Inheritance Management in it.



Table 3.16a

Cross tabulation between level of education of owner of the Family Business and Chance of success.

Highest Qualification



Up to 10th 5 5 6 10 6 32

SSLC to Degree 9 15 14 29 16 83

Masters 2 7 5 14 6 34

Above Masters 0 0 0 0 2 2

Total 16 27 25 53 30 151

59

Table 3.16b

Chi-Square Tests for level of education of owner of the Family Business and Chance of success





1.595 1 .207


Table 3.16c

Symmetric measures for level of education of owner of the Family Business and Chance of success


Nominal by Nominal

Phi .264 .567




hypothesis framed and tested as H0 6 above has to be accepted and that “The level of

education of the owner of the Family Business has no effect on Chance of Success of

Inheritance Management in it” is accepted.

3.2.7 Effect of District from which the owner of Family Business belongs

H0 7: The district from which the owner of the Family Business belongs has no

effect on Chance of Success of Inheritance Management in it.



60

Table 3.17a

Cross tabulation between district from which the owner of the Family Business belongs and Chance of success

District Chance of success in FB Inheritance Total


EKM2 9 9 19 11 50

Calicut 8 6 7 7 3 31

Tvm 0 6 5 11 8 30

Alleppy 0 2 1 3 1 7

Kollam 6 3 3 6 3 21

Trichur 0 1 0 0 1 2

Kottayam 0 0 0 2 0 2

Idukki 0 0 0 5 3 8

Total 16 27 25 53 30 151

Table 3.17b

Chi-Square Tests for district from which the owner of the Family Business belongs and Chance of success

Value df Asymp. Sig. (2-sided)




.732 1 .392


61

Table 3.17c

Symmetric measures for district from which the owner of the Family Business belongs and Chance of success


Nominal by Nominal

Phi .508 .080





hypothesis that “The district to which the owner of the Family Business belongs

has effect on Chance of Success of Inheritance Management in it”, is accepted.

A correlation analysis between district to which the owner of the Family

Business belongs and Chance of success (Table 3.17d) shows a no (Pearson’s

Correlation coefficient of 0.070) correlation between the variables. Hence though the

Hypothesis testing showed that district to which the owner of the Family Business

belongs has impact on Chance of success a relation could not be established based on

correlation analysis. The numbers of samples for many districts were low hence

further investigation of this relationship was dropped.

Table 3.17d

Correlation between district to which the owner of the Family Business belongs and Chance of success


District in Kerala


Pearson Correlation

1 .070


N 151 151

62

3.3 A REGRESSION MODEL BETWEEN CHANCE OF SUCCESS AND THE ABOVE SIGNIFICANT VARIABLES

In order to understand the effect of each of the variables found significant in the analysis presented in the previous section it was decided to try to make a linear regression between them and chance of success. The results from the regression analysis are presented in Tables 3.18 a to c below.

Table 3.18 a

Model Summary with significant organization and owner related variables

Model R R SquareAdjusted R

SquareStd. Error of the

Estimate

1 .558 .311 .287 1.078

Table 3.18 b

Results of ANOVA with significant organization and owner related variables

ModelSum of Squares

df Mean Square F Sig.

1 Regression 76.099 5 15.220 13.090 .000(a)

Residual 168.590 145 1.163

Total 244.689 150

Table 3.18 c

Coefficients of significant organization and owner related variables

VariablesUnstandardized

CoefficientsStandardized Coefficients t Sig.

B Std. Error Beta B Std. Error

(Constant) 1.478 .414 3.569 .000

Religion .232 .111 .162 2.087 .039

Age class of Owner .157 .092 .127 1.697 .092

Type of Organization .108 .110 .085 .982 .328

Generation of Family Business -.143 .125 -.080 -1.142 .255

Turnover Class of organization .536 .156 .331 3.445 .001

63

The above regression analysis shows that the R squared value obtained in

0.311 which is low showing that only a part of the variability of chance of success is

explained by the variables in the regression equation. The regression analysis

reconfirms the importance of the variables, religion of the owner and turnover class

of organization on chance of success.

3.4 CONCLUSION

From the analysis presented in this chapter we have seen that the extent

of coverage of these variables, in the sample of data collected for this research is

adequate. For each key variable under organization related variables, such as size of

organization, generation of business and respondent owner related variables, such as

religion and age class of owner respondent, hypothesis test results to check effect of

the variable on chance of success of inheritance in family business were done.

The organization related variables (in decreasing order) that impact

chance of success of Inheritance management in Family Business are: nature of

constitution of the Family Business organization (correlation 0.368), size of Family

Business organization (correlation 0.255), Generation which started the Family

Business (correlation -0.150). It is worth noting that as the business passes to the next

generation chance of success of Inheritance in the Family Business decreases as

shown by the negative correlation coefficient value.

The respondent owner related variables (in decreasing order) that impact

chance of success of Inheritance management in Family Business are: religion of

owner (correlation 0.370) and Age class of owner (correlation 0.303). The variables

district from which the owner of the Family Business belongs level and of education

of owner of the Family Business have no significant impact on chance of success of

Inheritance in the Family Business.

Though these variables have been identified, in terms of trying to

improve chance of success of Inheritance in the Family Business not all of them are

useful directly. Organization related variables such as size and generation which

started the business cannot be changed for inheritance management purpose. But the

advantages of nature of constitution of the family business and its impact on chance 64

of success of Inheritance in the Family Business can be probed and organization

changed to a suitable type to improve chance of success of Inheritance in the Family

Business. Among Owner related variables none can be changed to improve chance of

success of Inheritance in the Family Business. Therefore identification of the above

relationships will only help primarily in risk assessment. It will also enable

researchers to probe and find out the causes for these relationships, which once

found could help improve practices to improve chance of success of Inheritance in

the Family Business across all categories.

The regression equation can be used to calculate the expected Chance of

success of Inheritance management in a given Family Business. The chance of success

from the response of the respondent can be compared with this to see it is as

predicted by regression equation. If the respondents response is lower it means the

organization is below average in managing inheritance and if it is above the

calculated figure it is better. Thus the regression can be used to generate a

benchmark figure to compare the actual response against, for family businesses with

combination of the variables selected at different levels.

65

∗∗∗∗∗∗∗∗∗∗∗∗∗4.1 MEASURING THE FACTORS

Form the literature review, focus group discussion and expert opinion,

considering the culture and business environment prevailing in Kerala, it was

concluded that the factors that could affect 'Success of Management of

Inheritance in Family Businesses' hence called ‘chance of success’ are ‘Need

for Inheritance Management’, ‘Owner’s effort for Inheritance Management’,

‘Family support’, ‘Extent of Professionalization of Business’, ‘Inheritor

strength’, and ‘Strength of Influences’. Many items were used in the

questionnaire schedule to measure each of the above factors. The items to be

used for measuring each factor were developed using literature survey and

discussion with experts. After the survey, for the analysis, each of the factor

scores has been calculated as the average score of the items taken under each

factor. The details of the items used and reliability of the factor score

calculations are discussed next.

4.1.1 NEED FOR INHERITANCE MANAGEMENT

During focus group discussions it was felt that the extent of feeling

of ‘Need for Inheritance Management’ by the current business owner, would

positively impact actions that would result in successful Inheritance

Management in the Family Business. The three items used to calculate the

score of the factor ‘Need for Inheritance Management’ were ‘Need for

managing inheritance in my Family Business’, ‘Extent of planning required

for managing inheritance in Family Business’ and ‘Extent of conscious

preparations of business for inheritance’. The average score of response to

these three items were used to calculate the score for the factor ‘Need for

Inheritance Management’. The Reliability, Item and Scale Statistics are given

in Tables 4.1 a, b and c below.

66

Table 4.1 a

Reliability Statistics for Need for Inheritance Management

Cronbach's Alpha Number of Items

.878 3

Table 4.1 b

Item Statistics for Need for Inheritance Management

Item Mean Std. Deviation N

Need for managing inheritance in my FB

3.36 1.230 151

Extent of planning required for managing inheritance in FB

3.05 1.202 151

Extent of conscious preparations of business for inheritance

2.93 1.302 151

Table 4.1 c

Scale Statistics for Need for Inheritance Management

Mean Variance Std. Deviation Number of Items

9.34 11.225 3.350 3

From the above tables it is clear that 'Need for Inheritance

Management’ when calculated with the three items ‘Need for managing

inheritance in my Family Business’, ‘Extent of planning required for

managing inheritance in Family Business’ and ‘Extent of conscious

preparations of business for inheritance’ has adequate reliability. Cronbach's

Alpha is equal to 0.878, which is much above the acceptable value 0.7

suggested by Hair et al. (2012).

67

4.1.2 OWNER’S EFFORT FOR INHERITANCE MANAGEMENT

It was felt that the higher extent of ‘Owner’s effort for Inheritance

Management’ would result in successful Inheritance Management in the

Family Business. The five items used to calculate the score of factor ‘Owner’s

effort for Inheritance Management’ were response to items ‘I know to pass

business to next generation’, ‘I do enough to pass business to next generation’,

‘Extent of plan definition’, ‘Extent of plan knowledge to others in family’ and

‘Extent of plan acceptance by family ’. The Reliability, Item and scale Statistics

are given in Tables 4.2 a, b and c below.

Table 4.2 a

Reliability Statistics for Owner’s effort for Inheritance Management


.848 5

Table 4.2 b

Item Statistics for Owner’s effort for Inheritance Management


I know to pass business to next

generation3.17 1.088 151

I do enough to pass business to next

generation3.00 1.260 151

Extent of plan definition

3.09 1.366 151

Extent of plan knowledge to others

in family3.31 1.352 151

Extent of plan acceptance by family

3.59 1.292 151

68

Table 4.2 c

Scale Statistics for Owner’s effort for Inheritance Management


16.16 25.268 5.027 5

From the above tables it is clear that ‘Owner’s effort for Inheritance

Management’ when calculated with the five items ‘I know to pass business to

next generation’, ‘I do enough to pass business to next generation’, ‘Extent of

plan definition’, ‘Extent of plan knowledge to others in family’ and ‘Extent of

plan acceptance by family ’, has adequate reliability. Cronbach's Alpha is

equal to 0.848 which is much above the acceptable value 0.7 suggested by

Hair et al. (2012).

4.1.3 FAMILY SUPPORT

It was also felt that higher extent of ‘Family support’ would result

in successful Inheritance Management in the Family Business. The five items

used to calculate the score of factor ‘Family support’ were items ‘Family

cooperative in passing business to next generation’, ‘Inheritors capable of

running business’, ‘Inheritors willing to take over business’, ‘Acceptance of

inheritance plans without disputes’ and ‘Extent of children and spouse

involvement in management’. The Reliability, Item and scale Statistics ate

given in Tables 4.3 a, b and c below.

Table 4.3 a

Reliability Statistics for Family support


.713 5

69

Table 4.3 b

Item Statistics for Family support

Item MeanStd.

DeviationN

Family cooperative in passing business to next generation

3.09 1.251 151

Inheritors capable of running business 3.22 1.064 151

Inheritors willing to take over business 2.99 1.214 151

Acceptance of inheritance plans without disputes

2.91 1.233 151

Extent of children and spouse involvement in management

2.56 1.417 151

Table 4.3 c

Scale Statistics for Family support


14.78 17.932 4.235 5

From the above tables it is clear that ‘Family support’ when

calculated with the five items ‘Family cooperative in passing business to next

generation’, ‘Inheritors capable of running business’, ‘Inheritors willing to

take over business’, ‘Acceptance of inheritance plans without disputes’ and

‘Extent of children and spouse involvement in management’ has adequate

reliability. Cronbach's Alpha is equal to 0.713 which is above the acceptable

value 0.7 suggested by Hair et al. (2012).

4.1.4 EXTENT OF PROFESSIONALIZATION OF BUSINESS

It was felt that the greater ‘Extent of Professionalization of Business’

would result in successful Inheritance Management in the Family Business, as

70

reported in literature. The six items used to calculate the score of the factor

‘Extent of Professionalization of Business’ were ‘Business ready for take over

’, ‘Level of dependence for HRD on managers’, ‘Level of dependence for

Finance on Managers’, ‘Level of dependence for Marketing on managers’,

‘Level of dependence for Production on managers’, and ‘Managers level of

decision making power’. The Reliability, Item and scale Statistics ate given in

Tables 4.4 a, b and c below.

Table 4.4 a

Reliability Statistics for Extent of Professionalization of Business


.814 6

Table 4.4 b

Item Statistics for Extent of Professionalization of Business

Item MeanStd.

DeviationN

Business ready for take over 3.00 1.125 151

Level of dependence for HRD on managers

2.37 1.379 151

Level of dependence for Finance on Managers

2.92 1.402 151

Level of dependence for Marketing on managers

2.67 1.408 151

Level of dependence for Production on managers

2.68 1.526 151

Managers level of decision making power

2.32 1.111 151

71

Table 4.4 c

Scale Statistics for Extent of Professionalization of Business


15.96 33.172 5.759 6

From the above tables it is clear that ‘Extent of Professionalization

of Business’ when calculated with the six items, ‘Business ready for take over

’, ‘Level of dependence for HRD on managers’, ‘Level of dependence for

Finance on Managers’, ‘Level of dependence for Marketing on managers’,

‘Level of dependence for Production on managers’, and ‘Managers level of

decision making power’ gives acceptable reliability. Reliability is adequate,

since Cronbach's Alpha is equal to 0.814 which is much above the acceptable

value of 0.7 suggested by Hair et al (2012).

4.1.5 INHERITOR STRENGTH

It was felt that the greater ‘Inheritor strength’ would result in

successful Inheritance Management in the Family Business. This is also

reported widely in literature. The nine items used to calculate the score of the

factor ‘Inheritor strength’ were ‘Inheritors capable of running business’,

‘Inheritors willing to take over business ‘, ‘Inheritor's Extent of expertise in

management’, ‘Inheritor's Extent of interest in FB’, ‘Inheritor's Extent of love

and understanding for other in FB’, ‘Inheritor's Extent of leadership qualities

in FB’, ‘Inheritor's Extent of acceptance by business organizations’, ‘Inheritor's

Extent of obedience of traditional and family values’ and ‘Extent of

acceptance in the family of Inheritor’. The Reliability, Item and scale

Statistics ate given in Tables 4.5 a, b and c below.

72

Table 4.5 a

Reliability Statistics for Inheritor strength


.914 9

Table 4.5 b

Item Statistics for Inheritor Strength


Inheritors capable of running business

3.22 1.064 151

Inheritors willing to take over business

2.99 1.214 151

Inheritor's Extent of expertise in management

3.70 .973 151

Inheritor's Extent of interest in FB 2.99 1.281 151

Inheritor's Extent of love and understanding for other in FB

3.64 1.104 151

Inheritor's Extent of leadership qualities in FB

3.56 1.017 151

Inheritor's Extent of acceptance by business organizations

3.18 1.222 151

Inheritor's Extent of obedience of traditional and family values

3.34 1.291 151

Extent of acceptance in the family of Inheritor

3.45 1.310 151

Table 4.5 c

Scale Statistics for Inheritor strength

Mean VarianceStd.

DeviationNumber of Items

30.06 65.790 8.111 9

73

From the above tables it is clear that ‘Inheritor strength’ when

calculated with the nine items, ‘Inheritors capable of running business’,

‘Inheritors willing to take over business ‘, ‘Inheritor's Extent of expertise in

management’, ‘Inheritor's Extent of interest in FB’, ‘Inheritor's Extent of love

and understanding for other in FB’, ‘Inheritor's Extent of leadership qualities

in FB’, ‘Inheritor's Extent of acceptance by business organizations’, ‘Inheritor's

Extent of obedience of traditional and family values’ and ‘Extent of

acceptance in the family of Inheritor’ has adequate reliability, since

Cronbach's Alpha is equal to 0.914 which is very much above the acceptable

value of 0.7 suggested by Hair et al(2012).

4.1.6 STRENGTH OF INFLUENCES

It was felt that the ‘Strength of Influences’ would impact successful

Inheritance Management in the Family Business. The eight items used to

calculate the score of the factor ‘Strength of Influences’ were ‘Influence of

spouse of inheritor’, ‘Influence of family of spouse of inheritor’, ‘Influence of

friends of inheritor’, ‘Influence of my relatives’, ‘Influence of my friends’,

‘Influence of my family culture and traditions’, ‘Influence of traditions of my

caste’ and ‘Influence of modern values such as gender equality’. The

Reliability, Item and scale Statistics ate given in Tables 4.6 a, b and c below.

Table 4.6 a

Reliability Statistics for Strength of Influences


.788 8

74

Table 4.6 b

Item Statistics for Strength of Influences

Mean Std. Deviation N

Influence of spouse of inheritor

2.11 1.129 151

Influence of family of spouse of inheritor

1.78 1.039 151

Influence of friends of inheritor

2.05 .999 151

Influence of my relatives

2.53 1.118 151

Influence of my friends 2.32 1.099 151

Influence of my family culture and traditions

3.02 1.252 151

Influence of traditions of my caste

2.43 1.273 151

Influence of modern values such as gender

equality2.35 1.348 151

Table 4.6 c

Scale Statistics for Strength of Influences


18.60 34.814 5.900 8

From the above tables it is clear that ‘Inheritor strength’ when

calculated with the eight items, ‘Influence of spouse of inheritor’, ‘Influence

of family of spouse of inheritor’, ‘Influence of friends of inheritor’, ‘Influence

of my relatives’, ‘Influence of my friends’, ‘Influence of my family culture and

traditions’, ‘Influence of traditions of my caste’ and ‘Influence of modern

values such as gender equality’ has adequate reliability, since Cronbach's

75

Alpha is equal to 0.788 which is above the acceptable value of 0.7 suggested

by Hair et al (2012).

The Six factors identified for the study of their impact on ‘chance of

success’ have all been measured using the survey responses. Since all the six

factors measured have Cronbach’s alpha value of recommended 0.7 (Hair et

al) or above, all the factor measures were confirmed as reliable and that

enough samples had been taken for their measurement. They were therefore

deemed to be good enough to be used for further analysis and interpretation.

4.2 THE REGRESSION MODEL BETWEEN THE SIX FACTORS AND CHANCE OF SUCCESS

In order to find the effect of the factors ‘Need for Inheritance

Management’, ‘Owner’s effort for Inheritance Management’, ‘Family support’,

‘Extent of Professionalization of Business’, ‘Inheritor strength’, and ‘Strength

of Influences’, on the ‘Success of Management of Inheritance in Family

Businesses’ a regression was carried out between them. ‘Chance of success

was taken as the dependent variable and the six factors were taken as

independent variables. The results from the regression analysis are given

below in Tables 4.7 a to c.

Table 4.7 a

Model Summary of regression

R R SquareAdjusted R

Square Std. Error of the Estimate

.914(a) .835 .828 .530

76

Table 4.7 b

The results of the ANOVA

Sum of Squares dfMean

SquareF Sig.

Regression 204.285 6 34.047 121.345 .000

Residual 40.404 144 .281

Total 244.689 150

Table 4.7 c

Regression Coefficients

Un standardized Coefficients

Standardized Coefficients

T Sig.

B Std. Error

Beta B Std. Error

(Constant) -.838 .184 -4.544 .000

NedInhMgmt .157 .060 .136 2.613 .010

OwnEffortIM .395 .079 .311 4.992 .000

Famlysuport .472 .093 .313 5.080 .000

ProfofBusness .036 .065 .027 .547 .585

InhertorStrngth

.407 .106 .287 3.827 .000

StrgthofInflcrs -.179 .070 -.103 -2.547 .012

From the above results it can be seen that the factors that affect

“Success of Management of Inheritance in Family Businesses” in decreasing

order of importance can be understood from the values of the coefficients and

their Significance values. When all cases are considered together, Family

businesses in Kerala are seen to depend maximum on ‘Family support’ for

increasing the “Success of Management of Inheritance in Family Businesses”.

This is indicated by the regression coefficient of Family support which is

0.472. The next important factor is ‘Inheritor strength’ for which the 77

coefficient value is 0.407. This is followed by ‘Owner’s effort for Inheritance

Management’ which has a coefficient of 0.395. The factor which denotes the

feeling of ‘Need for Inheritance Management’ comes next with a noticeably

reduced influence represented by its regression coefficient of 0.157. The factor

‘Strength of Influences’ is seen to have negative impact on “Success of

Management of Inheritance in Family Businesses”, as indicated by its

negative regression coefficient. This can be explained by the argument that

more influences will draw people involved in Inheritance in different

directions, thus increasing conflict which in turn will reduce ‘chance of

success’. Professionalization of Family business is not seen to have any impact

on ‘chance of success’. This shows that Family Businesses in Kerala still do not

depend much on Professional Managers. There is less of separation of

Ownership from Management in Family Businesses in Kerala. This separation

is what is advised by experts to develop the Family Business to a stage where

it will not have to depend very much on managerial skills of the inheritor to

enable transition of Business ownership to the nest generation. This is because

it is not possible to ensure that, the successors from the family to whom

ownership is passed, have the requisite managerial abilities.

4.2.1 IMPACT OF RELIGION ON FACTORS AFFECTING CHANCE OF SUCCESS

From the analysis presented in the chapter 3 it is clear that religion has

impact on the “Success of Management of Inheritance in Family Businesses”.

This impact is very clear when we look at the mean ‘Chance of Success’ scores

for the three different religion categories (Jain clubbed with Hindu) given in

Table 4.8 below. From the table it is clear that the chance of success in family

businesses owned by Hindus is the lowest, Muslim owned family businesses

has better chance of success and the Christian owned family businesses have

the best chance of success. Both Hindu and Muslim owned businesses have

chance of success below the combined average.

78

Table 4.8

The difference in mean chance of success for different religion cases

Case category takenNumber of

samplesMean

Standard deviation

All religions together 151 3.36 1.277

Hindu 68 2.97 1.184

Muslim 38 3.18 1.227

Christians 42 4.05 1.188

The influence of religion on ‘chance of success’ should be through

difference in planning and execution of Inheritance in Family Businesses and

through social factors peculiar to that comminity. In order to understand this

difference in the factors affecting ‘chance of success’, a regression analysis,

similar to the one discussed in section 4.2 above, was carried out with

respondents of each religion taken one at a time. The difference in values of

the regression coefficients of the six factors has been used to gain insights into

how each family business owners belonging to different religious group give

importance to different factors that affect ‘chance of success’.

The results from the regression analysis with cases where the family

business owner’s religion is Hinduism are given below in Tables 4.8 a to c.

Table 4.8 a

Summary of regression for Owners with religion Hinduism



Estimate

Religion = Hindu (Selected)

Religion = Hindu (Selected)

Religion Hindu

(Unselected)

Religion Hindu (Selected)

.911 .831 .814 .511

79

Table 4.8 b

Results of ANOVA of regression for Owners with religion Hinduism

Sum of Squares

dfMean

SquareF Sig.

Regression 78.042 6 13.007 49.902 .000

Residual 15.900 61 .261

Total 93.941 67

Table 4.8 c

Regression coefficients for Owners with religion Hinduism



T Sig.

B Std. Error BetaStd errr

(Constant) -.920 -3.550 .259

NedInhMgmt .159 .093 1.709 .141

OwnEffortIM .340 .117 2.913 .269

Famlysuport .516 .136 3.797 .319

ProfofBusness -.092 .105 -.869 .073

InhertorStrngth .540 .146 3.708 .405

StrgthofInflcrs -.162 .104 -1.552 .107



order of importance in the case of Hindu Family Business owners are

‘Inheritor strength’, ‘Family support’, ‘Owner’s effort for Inheritance

Management’ followed by ‘Need for Inheritance Management’ which is not

very significant. Again here too ‘Strength of Influences’ is seen to have

negative impact on ‘chance of success’ and there is no impact of

Professionalization of Family business.

80

The results from the regression analysis with cases where the

family business owner’s religion is Muslim are given below in Tables 4.9 a to

c.

Table 4.9 a

Summary of regression for Owners with religion Muslim

R R Square Adjusted R SquareStd. Error of the

Estimate

Religion = Muslim (Selected)


Religion = Muslim (Unselected)


.911 .831 .798 .552

Table 4.9 b

Results of ANOVA of regression for Owners with religion Muslim

Sum of Squares df Mean Square F Sig.

Regression

46.281 6 7.713 25.358 .000

Residual 9.430 31 .304

Total 55.711 37

Table 4.9 c

Regression coefficients for Owners with religion Muslim



t Sig.

B Std. Error Beta BStd.

Error

(Constant) -1.024 .636 -1.610 .118

NedInhMgmt .354 .157 .244 2.251 .032

OwnEffortIM .572 .184 .459 3.106 .004

Famlysuport .524 .227 .352 2.307 .028

ProfofBusness .206 .166 .130 1.245 .222

InhertorStrngth -.154 .270 -.085 -.570 .573

StrgthofInflcrs -.109 .212 -.042 -.516 .60981



order of importance in the case of Muslim Family Business owners are

‘Owner’s effort for Inheritance Management’, ‘Family support’, ‘Inheritor

strength’ followed by ‘Need for Inheritance Management’. This is followed by

‘Professionalization of Family business’ which is not significant. Again here

too ‘Strength of Influences’ is seen to have negative impact on ‘chance of

success’. Strangely it is seen that in this case ‘Inheritor Strength’ is seen to

negatively influence ‘chance of success. The only explanation for this could be

that since Muslims are more conservative they want inheritors to follow the

religious and social norms and not to show too much independence.

The results from the regression analysis with cases where the family

business owner’s religion is Christian are given below in Tables 4.10 a to c.

Table 4.10 a

Summary of regression for Owners with religion Christianity

R R Square Adjusted R SquareStd. Error of the

Estimate

Religion Christian (Selected)


Religion Christian (Unselected)


.913 .834 .805 .525

Table 4.10 b

Results of ANOVA of regression for Owners with religion Christianity

Sum of Squares df Mean Square F Sig.

Regression 48.268 6 8.045 29.218 .000

82

Residual 9.637 35 .275

Total 57.905 41Table 4.10 c

Regression coefficients for Owners with religion Christianity



t Sig.

B Std. Error Beta Std error

(Constant) -.636 -1.483 .229

NedInhMgmt .092 .106 .868 .085

OwnEffortIM .323 .167 1.928 .280

Famlysuport .403 .196 2.060 .277

ProfofBusness -.003 .115 -.030 .003





order of importance in the case of Christian Family Business owners are

‘Inheritor strength’, ‘Family support’ followed by ‘Owner’s effort for

Inheritance Management’. The factors ‘Need for Inheritance Management’

and ‘Professionalization of Family business’ are not significant. Again here

too ‘Strength of Influences’ is seen to have negative impact on ‘chance of

success’.

4.2.2 IMPACT OF CLASS OF ORGANIZATION ON FACTORS AFFECTING CHANCE OF SUCCESS

From the analysis presented in the chapter 3 it has already been

seen that ‘Size class of family business organization’ has impact on the

“Success of Management of Inheritance in Family Businesses”. This impact is

very clear when we look at the mean ‘Chance of Success’ scores for the three

83

different size class categories given in Table 4.11 below. From the table it is

clear that the chance of success in small family businesses with annual

turnover up to rupees one crore is the least. In the next category of businesses

with annual turnover between rupees one and five crore, the chance of

success is the maximum at 4.53. A dip in chance of success is seen in the next

size class with annual turnover above rupees five crore, the mean chance of

success score is 3.71 in this case. Large businesses, the ones with annual

turnover above rupees ten crore have an average chance of success score of

3.91.

Table 4.11

The difference in mean chance of success for different size businesses

Case category taken based on annual turnover in Rs.

Number of samples

MeanStandard deviation

All taken together 151 3.36 1.277

Less than one crore 116 3.11 1.277

Between 1 and 5 crore 17 4.53 0.800

Above 5 crore 18 3.83 1.28

In order to understand the difference in level of the six selected

factors among different size class of organizations, a regression analysis,

similar to the one discussed in 4.2.1 above, was carried out with respondents

of each organization class taken one at a time. The difference in values of the

regression coefficients has been used to gain insights into how each family

business owners belonging to different size group, give importance, to

different factors that affect ‘chance of success’.


family business organization class are those with annual turnover up to

rupees one crore are given below in Tables 4.11 a to c.

84

Table 4.11 a

Summary of regression for businesses with annual turnover up to one crore

R R Square Adjusted R Square

Class of organisation = upto 100 (Selected)

Class of organisation = upto

100 (Selected)

Class of organisation ~= upto 100 (Unselected)

.920 .846 .838

Table 4.11 b

Results of ANOVA for businesses with annual turnover up to one crore

Sum of Squares

dfMean

SquareF Sig.

Regression 158.668 6 26.445 99.825 .000

Residual 28.875 109 .265

Total 187.543 115

Table 4.11 c

Regression coefficients for businesses with annual turnover up to one crore

Unstandardized Coefficients


t Sig.

BStd.

ErrorBeta B Std. Error

(Constant) -.999 .200 -5.004 .001

NedInhMgmt .138 .065 .117 2.114 .037

OwnEffortIM .438 .098 .332 4.486 .000

Famlysuport .461 .110 .294 4.205 .000

ProfofBusness .090 .076 .061 1.196 .234

InhertorStrngth .475 .125 .323 3.785 .000


85



order of importance in the case of family businesses with turnover upto

rupees one crore are ‘Inheritor strength’, ‘Family support’, ‘Owner’s effort for

Inheritance Management’ followed by ‘Need for Inheritance Management’.

‘Professionalization of Family business’ is not important and is also not

significant. Again here too, ‘Strength of Influences’ is seen to have very

negative impact on ‘chance of success’.


family business organization class are those with annual turnover is between

rupees one crore and five crore are given below in Tables 4.12 a to c.

Table 4.12 a

Summary of regression for businesses with annual turnover between one crore and five crore


Class of organisation = 101 to 500 (Selected)

Class of organisation = 101 to 500

(Selected)

Class of organisation = 101 to 500 (Unselected)

.937(a) .878 .805

Table 4.12 b

Results of ANOVA for businesses with annual turnover between one crore and five crore

Sum of Squares

dfMean

SquareF Sig.

Regression

8.985 6 1.498 11.980 .000

Residual 1.250 10 .125

Total 10.235 16

86

Table 4.12 cRegression coefficients for businesses with annual turnover between one

crore and five crore



t Sig.


(Constant) -.185 .686 -.270 .793

NedInhMgmt .899 .174 .783 5.171 .000

OwnEffortIM -.536 .185 -.475 -2.899 .016

Famlysuport .461 .146 .450 3.157 .010

ProfofBusness .002 .214 .002 .012 .991

InhertorStrngth .164 .272 .136 .601 .561

StrgthofInflcrs .337 .169 .286 1.995 .074

This is the class with the highest average score with respect to success

of inheritance management in family business. Looking at the regression

coefficients we can see that, for this class the factor ‘Need for Inheritance

Management’ is very high. ‘Family support’ is also high, but the businesses

being in the growing middle range the owners are very busy managing the

business and find little time for effort towards inheritance management which

shows a value of -0.536 in the regression equation. In this class of business

though there is great need for professionalization it is at dismally low levels,

but it is good that the owners know it as they have reported the same during

the survey. Level of ‘Inheritor strength’ is not enough for better inheritance

management. This is understandable since in mid size businesses there is

need for persons with better managerial skills than small businesses to

manage. The model clearly shows the weakness areas with regards to

improving chance of success in inheritance management of this group. The

results from the regression analysis with cases where the family business

organization class are those with annual turnover above five crore rupees are

given below in Tables 4.13 a to c.

87

Table 4.13 a

Summary of regression for businesses with annual turnover above five crore


Class of organisation = above 501

(Selected)

Class of organisation = above 501 (Selected)

Class of organisation = above 501 (Unselected)

.891 0.793 0.681

Table 4.13 bResults of ANOVA for businesses with annual turnover above five crore

Sum of Squares

dfMean

SquareF Sig.

Regression 9.918 6 1.853 7.042 .003

Residual 2.582 11 0.235

Total 12.500 17

Table 4.13 c

Regression coefficients for businesses with annual turnover above five crore



tSig.


(Constant) 1.218 0.953 1.279 0.227

NedInhMgmt -0.313 0.276 -0.289 -1.133 0.281

OwnEffortIM -.536 .185 -0.475 -2.899 0.016

Famlysuport 0.924 0.420 0.841 2.199 0.050

ProfofBusness 0.290 0.304 0.271 0.956 0.360

InhertorStrngth -0.026 0.329 -0.019 -0.078 0.281

StrgthofInflcrs -0.189 0.234 -0.144 -0.809 0.435

88

This is the class with the average score with respect to ‘chance of

success’ of 3.83 which is not bad. But the high standard deviation of 1.28

indicates the high variability present and hence there is high risk of poor

‘chance of success’ in this group. Looking at the regression coefficients we

can see that, for this class the factor ‘Family support’ is the critical factor. An

increase in the importance of Professionalisation of business is also seen. But

in this case also, the businesses being in the upper range the owners are very

busy managing the business and do not give enough importance to

Inheritance management (regression coefficient of -0.316). They find little time

for effort towards inheritance management which is shown by regression

coefficient value of -0.536. This group depends largely on family support to

see succession in family business through, and does not perceive high level of

strengths in Inheritors.

4.2.3 IMPACT OF TYPE OF ORGANIZATION ON FACTORS AFFECTING CHANCE OF SUCCESS


seen that ‘Type of family business organization’ has impact on the “Success of

Management of Inheritance in Family Businesses”. This impact is very clear

when we look at the mean ‘Chance of Success’ scores for the four different

types of business categories given in Table 4.14 below. From the table it is

clear that the chance of success of inheritance management in family

businesses increases steadily when type of business changes from

proprietorship to public limited companies. This observation is interesting

and it confirms that as management becomes more systematic and organized

(professionalization increases), chance of success of inheritance management

in family business also increases. Proprietorship is individual headed and

controlled and is therefore less likely to have structured management

systems, partnership involves more than one owner and therefore could need

a little more structured management and control mechanism. Private limited 89

company, because of legal requirements will need more systematic

accounting and other management controls. This will be most developed in a

Public Limited Company. The learning from the above is that having better

management systems improves ‘chance of success of inheritance management

in family business’.

Table 4.14

The difference in mean chance of success for ownership type of businesses

Case category takenNumber of

samplesMean Standard deviation


Proprietorship 40 2.70 1.344

Partnership 43 3.33 0.800

Pvt Ltd 7 3.71 0.488

Public Ltd 11 3.91 1.044

In order to understand the difference in the six selected factors

among different ownership type organizations, a regression analysis, similar

to the one discussed in 4.2.2 above, was carried out with respondents of each

organization type taken one at a time. The difference in values of the


business owners belonging to each size group, give different importance, to



family business organization is proprietary are given below in Tables 4.15 a to

c.

90

Table 4.15 a

Summary of regression for proprietary businesses


Type of Organization = Proprietorship

(Selected)

Type of Organization = Proprietorship

(Selected)

Type of Organization = Proprietorship (Unselected)

.923 .853 .826

Table 4.15 b

Results of ANOVA for proprietary businesses


SquareF Sig.

Regression 60.041 6 10.007 31.877 .000

Residual 10.359 33 .314

Total 70.400 39

Table 4.15 c

Regression coefficients for proprietary businesses



tSig.


(Constant) -1.437 .418 -3.434 .002

NedInhMgmt .096 .138 .074 .696 .491

OwnEffortIM .594 .169 .429 3.523 .001

Famlysuport .473 .193 .323 2.449 .020

ProfofBusness .120 .178 .055 .675 .504



91

From the regression coefficient values it is clear that for proprietary

family businesses, perception of need for inheritance management in family

business is very low. The success of management of inheritance is very much

dependent on 'owner’s effort' and depends a lot on ‘family support’. It also

depends to some extent on ‘Inheritor strength’. Professionalization of business

is not done by this group and there is minimum ‘strength of influences’ in the

case.


family business organization is a partnership are given below in Tables 4.16 a

to c.

Table 4.16 a

Summary of regression for partnership businesses


Type of Organization = Partnership (Selected)

Type of Organization

Partnership (Selected)

Type of Organization Partnership (Unselected)

.901 .811 .780

Table 4.16 b

Results of ANOVA for partnership businesses

Sum of Squares

dfMean

SquareF Sig.

Regression 44.970 6 7.495 25.766 .000

Residual 10.472 36 .291

Total 55.442 42

92

Table 4.16 c

Regression coefficients for partnership businesses



t Sig.


(Constant) -.548 -1.353 .205

NedInhMgmt .196 .135 1.450 .154

OwnEffortIM .341 .157 2.175 .282

Famlysuport .435 .201 2.163 .322

ProfofBusness .064 .134 .476 .047



From the regression coefficient values it is seen that for partnership

family businesses, perception of need for inheritance management in family

business is low but higher than for proprietorship. The management of

inheritance in the case of partnership is very much dependent on 'family

support' and ‘Inheritor strength’. Owner’s effort comes only next. Here too

‘strength of influences’ is minimum but more than that in the case of

proprietorship. It does not depend on. ‘Professionalization of business’, is not

done much, by this group also.


family business organization is a private limited company are given below in

Tables 4.17 a to c.

93

Table 4.17 a

Summary of regression for private limited businesses


Type of Organization =

PvtLtd (Selected)

Type of Organization = PvtLtd (Selected)

Type of Organization = PvtLtd (Unselected)

.911 .830 .807

Table 4.17 b

Results from ANOVA for private limited businesses


Square F Sig.

Regression

53.265 6 8.878 35.864 .000

Residual 10.892 44 .248

Total 64.157 50

Table 4.17 c

Regression coefficients for private limited businesses



t Sig.


(Constant) -.493 -1.223 .403

NedInhMgmt .125 .087 1.430 .124

OwnEffortIM .473 .153 3.086 .412

Famlysuport .423 .183 2.309 .249

ProfofBusness -.067 .113 -.593 .051



94

From the regression coefficient values it is seen that for family

businesses organized as private limited companies, perception of need for

inheritance management in family business is at levels similar to that for

partnership. The management of inheritance in the case of private limited

family businesses is very much dependant on ‘owners effort’, 'family support'

and ‘Inheritor strength’. Here too ‘strength of influences’ is becoming more of

a problem because of its larger negative coefficient. It also does not depend

on. ‘Professionalization of business’ is not much in this group also.


family business organization is a public limited company are given below in

Tables 4.18 a to c.

Table 4.18 a

Summary of regression for public limited businesses


Type of Organization = Public Ltd (Selected)

Type of Organization = Public Ltd (Selected)

Type of Organization = Public Ltd (Unselected)

.894 .799 .665

Table 4.18 b

Results of ANOVA for public limited businesses

ModelSum of Squares

dfMean

SquareF Sig.

1 Regression 16.328 6 2.721 5.961 .009

Residual 4.109 9 .457

Total 20.438 15

95

Table 4.18 c

Regression coefficients for public limited businesses



t Sig.


(Constant) -.543 1.141 -.476 .645

NedInhMgmt -.008 .395 -.006 -.019 .985

OwnEffortIM .446 .327 .425 1.367 .205

Famlysuport .305 .426 .222 .715 .492

ProfofBusness -.235 .394 -.184 -.598 .565




businesses organized as public limited companies, perception of need for

inheritance management in family business is low. The management of

inheritance in the case of such public limited family businesses is very much

dependant on ‘Inheritor strength’. This is followed by ‘owners effort’ and

'family support'. Here too ‘strength of influences’ is becoming more of a

problem because of its larger negative coefficient. ‘Professionalization of

business’ seems to have negative influence on chance of success of Inheritance

in Family Businesses. This could be because presence of professional

managers may pose a threat to family business managers with lesser

capability.

4.2.4 IMPACT OF GENERATION OF FAMILY BUSINESS ON FACTORS AFFECTING CHANCE OF

SUCCESS


seen that ‘Generation of family business’ has impact on the “Success of

Management of Inheritance in Family Businesses”. This impact is very clear 96

when we look at the mean ‘Chance of Success’ scores for the three different

types of business generation categories given in Table 4.19 below. From the

table it is clear that the chance of success of inheritance management in family

businesses is highest for the first generation, it then decreases. This agrees

with the reported studies.

Table 4.19

The difference in mean chance of success for businesses in different generations

Case category taken

Number of samples Mean Standard deviation


I started 39 3.95 1.169

Parents Started 74 3.01 1.277

Grand parents or above started

7 3..42 1.777

In order to understand the difference in the factors selected for the

study among different generation of family business, regression analysis,

similar to the one discussed in 4.2.3 above, was carried out with respondents

of each generation type taken one at a time. The difference in values of the


business owners belonging to different generation group, give importance, to



family business is being run by the first generation entrepreneur are given


97

Table 4.20 a

Summary of regression for first generation family businesses

Model R R Square Adjusted R Square

Std. Error of the Estimate

Generation of Family Business = I Started

(Selected)

Generation of Family

Business =I Started

(Selected)


= I Started (Unselected)

Generation of Family Business =

I Started (Selected)

1 .925 .855 .827 .485

Table 4.20 b

Results of ANOVA for first generation family businesses


SquareF Sig.

Regression 44.358 6 7.393 31.376 .000

Residual 7.540 32 .236

Total 51.897 38

From the regression coefficient values shown below it is seen that

for family businesses of first generation, level of need for inheritance

management in family business is low. The management of inheritance in the

case of such first generation family businesses is very much dependant on

‘Inheritor strength’ followed by ‘owners effort’, and 'family support'. Here

too ‘strength of influences’ is becoming more of a problem but relatively

small, because of its small negative coefficient. ‘Professionalisation of

business’ seems to have negative influence on chance of success of Inheritance

in Family Businesses. This could be because presence of professional

managers may pose a threat to family business managers with lesser

capability. 98

Table 4.20 c

Regression coefficients for first generation family businesses



t Sig.


(Constant) -.694 .458 -1.517 .139

NedInhMgmt .129 .146 .100 .887 .382

OwnEffortIM .498 .148 .444 3.359 .002

Famlysuport .400 .161 .254 2.481 .019

ProfofBusness -.259 .159 -.198 -1.633 .112




family business is being run by the second generation entrepreneur are given


Table 4.21 a

Summary of regression for Second generation family businesses



Estimate

Generation of Family Business =

Parents started (Selected)

Generation of

Family Business

Parents started (Selected)

Generation of Family Business = Parents started

(Unselected)

Generation of Family Business = Parents started

(Selected)

.918 .842 .828 .529

99

Table 4.21 bResults of ANOVA for Second generation family businesses

Model Sum of Squares df Mean Square F Sig.

1 Regression 100.232 6 16.705 59.678 .000

Residual 18.755 67 .280

Total 118.986 73

Table 4.21 cRegression coefficients for Second generation family businesses



t Sig.


(Constant) -.861 .258 -3.338 .001

NedInhMgmt .245 .081 .218 3.035 .003

OwnEffortIM .266 .134 .191 1.985 .051

Famlysuport .455 .143 .296 3.181 .002

ProfofBusness .060 .096 .044 .626 .534




businesses of second generation, level of need for inheritance management in

family business is a little higher. The management of inheritance in the case of

such second generation family businesses is very much dependant on

‘Inheritor strength’ followed by 'family support' and ‘owners effort’. Here too

‘strength of influences’ is seen to become more of a problem with larger

negative coefficient. These businesses also do not depend on,

‘Professionalization of business’ which has a very low coefficient. The results

from the regression analysis with cases where the family business is being run

by the third and further generation entrepreneur are given below in Tables

4.22 a to c.

100

Table 4.22 a

Summary of regression for third or higher generation family businesses


Generation of Family Business = Grand parents or

above started (Selected)

Generation of Family Business = Grand parents or

above started (Selected)


Grand parents or above started (Unselected)

.902 .813 .777

Table 4.22 b

Results of ANOVA for third or higher generation family businesses

ModelSum of Squares

dfMean

SquareF Sig.

1 Regression 41.676 6 6.946 22.460 .000

Residual 9.587 31 .309

Total 51.263 37

Table 4.22 c

Regression coefficients for third of higher generation family businesses

Unstandardized

CoefficientsStandardized Coefficients t Sig.


(Constant) -.946 .464 -2.038 .050

NedInhMgmt -.042 .132 -.037 -.317 .754

OwnEffortIM .360 .171 .291 2.098 .044

Famlysuport .615 .237 .430 2.595 .014

ProfofBusness .069 .136 .048 .505 .617


StrgthofInflcrs .046 .164 .025 .281 .780

101


businesses of third generation or higher, level of need for inheritance

management in family business is very low. The management of inheritance

in the case of such third or higher generation family businesses is very much

dependant on 'family support' followed by ‘owners effort' and ‘Inheritor

strength’. Here 'Professionalization of Business' and ‘strength of influences’

are not seen to have much influence on chance of success.

4.3 THE CFA MODEL BETWEEN THE SIX FACTORS AND CHANCE OF SUCCESS

In order to confirm the effect of the factors ‘Need for Inheritance

Management’, ‘Owner’s effort for Inheritance Management’, ‘Family support’,

‘Extent of Professionalization of Business’, ‘Inheritor strength’, and ‘Strength

of Influences’, on the “Success of Management of Inheritance in Family

Businesses” obtained through the regression analysis, a Confirmatory Factor

Analysis was carried out between them. The results from the CFA are given

below in Figure 4.1 and Tables 4.23 a to c.

Table 4.23 a CMIN and other values for the CFA model

Model NPAR CMIN DF P CMIN/DF

Default model 15 30.961 6 .000 5.160

Saturated model 21 .000 0

Independence model 6 576.278 15 .000 38.419

Table 4.23 bRMR, GFI and other values for the CFA model

Model RMR GFI AGFI PGFI

Default model .054 .937 .779 .268

Saturated model .000 1.000

Independence model .437 .367 .114 .262

Table 4.23 c102

RMSEA and other values for the CFA model

Model RMSEA LO 90 HI 90 PCLOSE

Default model .167 .112 .227 .001

Independence model .501 .467 .537 .000

From the results of the CFA modeling shown in tables above we see

that a CMIN value of 30.96 has been achieved which is acceptable, for such

models, though a still lesser value would be more desirable. The GFI value

of .937 for default model also indicates model acceptability. RMSEA value of .

167 is low and therefore model is acceptable (Ref. Hair et.al. 2012).

Figure 4.1 shows the CFA model with path weights. From the

figure it can be seen that the factor ‘Inheritor strength’ with path weight of

2.48 is most important in determining “Success of Management of Inheritance

in Family Businesses” this is followed by the feeling of ‘Need for Inheritance

Management’ which has a path weight of 2.19. The factor ‘Owner’s effort for

Inheritance Management’ is next in importance with path weight of 2.13.

‘Family support’ is seen to come next with an influence of 1.93, followed by

‘Strength of Influences’ with weight of 1.0.

This is more or less similar to the regression model with all factors

taken together. This confirms the validity of the regression model and the

findings based on it.

103

.13

Chance of IM Success

StrengthofInfluencers

.42

e-inf

1.00

1

NeedforInhMgmt

.63

eneed

2.19

1

Inheritorstrength

.02

eih=nheritor

2.48

1 Familysupport

.24

esupport

1.92

1 QwnereffortInhMgmt

.37

eowneffort

2.22

1-.01

.12

.11

ProfessionalisedBusiness

1.75.52

e-prof1

Figure 4.1

The Diagram showing the path weights in the CFA

For more details table 4.24 a and b with the regression weights

obtained from the CFA model run are presented.

104

Table 4.24 a

Regression Weights: (Group number 1 – Default model) from CFA

Estimate S.E. C.R. P Label

StrengthofInfluencers <---Chance of IM Success

1.000

NeedforInhMgmt <---Chance of IM Success

2.192 .338 6.485 *** par_1

Inheritorstrength <---Chance of IM Success

2.475 .384 6.452 *** par_2

Familysupport <---Chance of IM Success

1.919 .321 5.983 *** par_3

QwnereffortInhMgmt <---Chance of IM Success

2.216 .359 6.176 *** par_4

ProfessionalisedBusiness <---Chance of IM Success

1.747 .309 5.655 *** par_8

Table 4.24 b

Standardized Regression Weights: (Group number 1 - Default model) for CFA

Estimate

StrengthofInfluencers <--- Chance of IM Success .486

NeedforInhMgmt <--- Chance of IM Success .705

Inheritorstrength <--- Chance of IM Success .986

Familysupport <--- Chance of IM Success .816

QwnereffortInhMgmt <--- Chance of IM Success .794

ProfessionalisedBusiness <--- Chance of IM Success .656

From Table 4.24 showing the Standardized Regression weights it

can be seen that in decreasing order of importance based on their impact on

‘chance of success’ the factors are ‘Inheritor strength’, ‘Family support’,

‘Owner’s effort for Inheritance Management’, , ‘Need for Inheritance

Management’, ‘Extent of Professionalization of Business’ and ‘Strength of

Influences’. 105

4.4 CONCLUSION

The six factors that were identified for study were measured using

appropriate item score averages. The adequacy of the samples and validity of

the measures of the factors have been established. The regression analysis

showed that the Family Businesses in Kerala depend to a great extent on the

three factors ‘Inheritor strength’, ‘Family support’ and ‘Owner’s effort for

Inheritance Management’ for improving ‘chance of success’. ‘Need for

Inheritance Management’ and ‘Extent of Professionalization of Business’ are

at low levels. ‘Strength of Influences’ is seen to adversely affect ‘chance of

success’.

Analysis of change in the levels of these factors when significant

owner and organization variables change yielded useful insights to their

effect. The results of the overall regression model were confirmed using a

Confirmatory Factor Analysis.

∗∗∗∗∗∗∗∗∗∗∗∗∗

106

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