Transgenerational Entrepreneurial Orientation, Family Involvement, and Succession Planning as Drivers of Long-Term Family Business Sustainability
Year: 2025
Type: article
Abstract: This study investigates the role of family involvement and succession planning in shaping the long-term sustainability of family businesses in Indonesia, with a specific focus on the mediating effect of transgenerational entrepreneurial orientation (TEO). This research responds to calls for integrative models that move beyond examining these factors in isolation. Indonesia offers a unique context due to its dominance of family-controlled firms and informal succession traditions, which shape entrepreneurial value transmission across generations. A quantitative approach was employed using survey data from 210 respondents representing active family businesses in Indonesia. Partial least squares structural equation modeling (PLS-SEM) with SmartPLS 4.0 was used to test reliability, validity, and structural relationships. Additional analyses included HTMT for discriminant validity, CVPAT for predictive relevance, and importance–performance map analysis (IPMA) to identify managerial priorities. The results reveal that family involvement and succession planning both exert significant positive effects on long-term family business sustainability, with TEO playing a mediating role. Family involvement strongly enhances both sustainability and entrepreneurial orientation, while succession planning contributes more indirectly through the development of TEO. The IPMA indicates that family leadership in governance and openness to innovation are highly important but underperforming drivers, suggesting key areas for improvement. The model explains 51.9% of the variance in TEO and 48.6% in long-term sustainability, with significant mediation paths (β = 0.092–0.104, p < 0.05). The cross-sectional design limits causal inference, and the focus on Indonesian firms may constrain generalizability to other cultural contexts. Future research could adopt longitudinal and cross-country comparative designs while also examining the role of digital transformation and generational differences in sustaining family firms. The findings highlight the need for Indonesian family firms to professionalize succession planning while strengthening transgenerational entrepreneurial orientation. Practical steps include formal mentoring, clear successor criteria, and embedding innovation and proactiveness in family governance. This study extends the family business literature by conceptualizing TEO as a dynamic capability that bridges family involvement, succession planning, and sustainability. By integrating these perspectives, it offers a more comprehensive understanding of how family firms can achieve resilience and continuity across generations.
Source: Administrative Sciences
Institution: Tarumanagara University
Language: English
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,689
OpenAlex ID: W7117295285