Factors affecting succession planning in family-owned fish trading SMEs in Mwanza City, Tanzania

The purpose of this study was to assess factors affecting succession planning in family-owned fish trading SMEs businesses in Mwanza city. The research utilized quantitative methodologies to evaluate the effect of individual, familial, and organizational factors on succession planning within family-owned small and medium-sized enterprises (SMEs) in Mwanza city. Chi-square analyses revealed that leadership, delegation, the ability to disassociate from the business, and successor preferences significantly influence succession planning. Moreover, the interest and abilities of the successor plays a crucial role in the planning process. The study further found that family-level factors, including traditions, compensating family members, formal communication forums, and the desire to maintain family control, also significantly affect succession planning. Regression analyses indicated that individual factors such as leadership, delegation, and the abilities of potential successors positively influenced succession planning. At the family level, practices like compensating family members and establishing formal communication channels significantly contributed to succession planning, while traditional practices like favouring the eldest son as a successor did not have a substantial impact. Additionally, the study identified that the readiness of the successor, the presence of a clear and documented succession plan, effective board governance, a well-defined organizational structure, and the existence of a written strategic plan were key predictors of successful succession planning. The findings suggest that businesses with well-defined and specific succession plans, identified successors, and active development plans for the next generation are more likely to achieve success in shaping succession planning within family-owned fish trading SMEs, providing a solid foundation for successful ownership transitions. This research offers valuable insights for future research and policy development concerning SME succession planning and business sustainability.


Introduction
Job creation is a critical development goal for many economies, particularly in Africa, where employment generation has not kept pace with the rapidly expanding working-age population.Despite various policy interventions and relatively strong economic growth in the region since the early 2000s, youth unemployment and underemployment remain significant obstacles to development (Onsomu, Munga, Nyabaro, & BMunene, 2022).In East Africa, poverty and unemployment persist as major challenges for young people, hindering their empowerment and growth.Family-owned businesses which mostly fall under small and medium enterprises (SMEs) are crucial for economic growth in both developed and developing countries (Varga, Sipos, Redeg, & Lukovszki, 2024).Family businesses contribute significantly to the economy, generating over half of the global GDP and employing half of the global labor (Onsomu, Munga, Nyabaro, & BMunene, 2022).
The sustainability of family businesses including family fish businesses is influenced by a multitude of factors, including inadequate leadership, and ineffective succession planning.The absence of well-coordinated succession planning in family-owned fishing enterprises results in challenges in maintaining the businesses for future generations (Magasi, 2021).Research shows family individuals significantly impact the success or failure of such businesses in Africa, with many contributing factors affecting their longevity (Umans, et al 2020).The phrase "shirtsleeves to shirtsleeves in three generations" refers to the common American saying that family-owned businesses often fail by the time their grandchildren take over.Stalk and Foley (2018) report that nearly 70% of family-owned enterprises fail or are sold before the second generation has the chance to take over.Only 10% of privately held businesses have third-generation leadership, often due to poor management, personal extravagance, accounting deficits, cash flow issues, and inappropriate financing sources.
The study highlights the challenges faced by family businesses including fish enterprises in South Africa, emphasizing the need for effective succession planning and the failure of most of these businesses over generations (Harilal, 2021).Tanzania's family fish businesses contribute significantly to job creation, income generation, poverty reduction, and industrial sector development, but face sustainability challenges due to insufficient training, capital shortages, and lack of entrepreneurial culture (Magasi, 2021;Mashenene and Rumanyika, 2014).Other factors that constraint SMEs include poor succession planning that are in place to ensure longevity of the businesses from generation to generation (Magasi, 2021).Furthermore, in a study of Marwa (2019) in Dar es Salaam, Tanzania, found a direct correlation between succession planning and a company's survival, particularly beneficial for family-owned firms, highlighting the importance of effective planning.Mwemezi (2011) conducted research in Tanzania on human resources succession planning difficulties, revealing that Tanzanian companies are often unaware of its function and frequency, leading to small and medium enterprise failure.Succession planning is crucial for a firm's success and continuity, especially in SMEs like Tanzania, where over 60% of SMEs only remain in business for the first five years (Kiwia, et al 2020).Burns (2014) emphasizes the importance of succession planning in small and medium-sized family-owned businesses, particularly in Tanzania where most SMEs only live for one generation.
Mwanza's SMEs in Tanzania face numerous management challenges, including a lack of succession planning, which is a significant obstacle to their survival and growth (Magasi, 2021;Renatus, 2015).Hence this study aims to establish specific factors that affect succession planning.The enduring success of family-owned fish enterprises in Tanzania is profoundly shaped by the efficacy of leadership and succession planning, pivotal factors that determine the continuity of these businesses across generations.Nonetheless, there exists a pressing need for a more profound comprehension of the role and significance of succession planning, particularly within the unique context of family-run fish businesses in Tanzania.Furthermore, a notable gap exists in the research scene, with a dearth of studies that pinpoint the specific factors that influence the effectiveness of succession planning within the realm of family fish businesses in Tanzania.
This study aims to evaluate the determinants of succession planning in family-owned fish trading SMEs in Mwanza city.It specifically seeks to analyze the effect of individual, family, and organizational factors on succession planning within these businesses.By focusing on these levels, the research aims to offer valuable insights for policymakers, SME managers, and consultants, with the ultimate goal of ensuring the sustainability of family-owned enterprises and fostering the development of more effective policies through the Ministry of Industry and Trade.

Literature Review Succession Plan and SMEs
According to Van der Merwe andEllis (2007, cited in Gomba andKete 2016), succession planning involves transferring ownership or management responsibilities from one generation to the next in a family organization, typically initiated by the family business leader.It's also known as Micro, Small, and Medium Businesses (MSMEs).Manufacturing, mining, commerce, and services make up the majority of non-farm economic activity covered by SMEs.SME sizing varies across countries, with common benchmarks including employee count, investments, and turnover rates, based on their development level.Small businesses are often structured businesses with between 5 and 49 employees or an initial capital investment of Tshs.50 million to 250 million to 99 people work in medium-sized companies or make capital investments ranging from TZS 200 million to 800 million.According UNIDO (2013), "Micro, Small and Medium Enterprises (MSMEs) refers to "SMEs" including micro companies because the latter category covers a significant number of businesses in Tanzania.Even though the word "SMEs" is used, this implicitly covers the micro segment, making the Policy's coverage de facto "MSMEs."

Individual Level Factors
Effective succession planning is crucial for SMEs to avoid closure or failure after founder's death or retirement, as it considers individual-level factors like leadership, delegation, and self-reflection (Nyoni, 2019).The study found that the leadership skills of the predecessor significantly influence the success or failure of the succession process, which varies throughout different stages of succession planning.Similar to this, strong leadership is a crucial component in successful succession planning (Scotland, 2010;Mwemezi, 2011).According to Saan, Boateng, and Kamwine (2013), family-owned business founders often name a family member as their successor, with the founder impact being a crucial factor in successful succession planning.Decisions and criteria at every level of the management succession process are highly influenced by the successor's dedication to and interest in the business as well as the caliber of their relationship with the incumbent (Gomba and Kete 2016).The aptitude and competency of the successors are not taken into account in succession planning, according to Obadan and Ohiorenoya (2013).Successor influence and personal needs alignment are critical success factors in succession planning.(Lam, 2015).Buang, Ganefri and Sidek (2013) added that the selection of a successor is primarily based on the entry-level position.

Family Level Factors
Cultural factors such as extended family structure, inheritance practices (like son preference, marriage), and education significantly influence the success of family enterprises (Aderonke, 2019).However, maintaining family companies is difficult due to the problem of inheritance among family members (Musa and Semasinghe, 2014).Natural succession, family factors, accepting successors' decisions, and refraining from criticism are essential for effective management, influenced by birth order and gender (Gomba and Kete 2016).Family business communication is crucial for succession planning, involving formal gatherings and in-laws to ensure everyone's voice is heard and the business effectively informs about progress and concerns (Tanzwani, 2010).Family values, particularly fairness and trust, significantly influence succession planning, as most family-owned business founders hesitate to initiate such planning due to fear of transferring leadership (Musa and Semasinghe, 2014).Basiri and Sabegh (2014) documented organizational factors such as senior management support and encouragement, the rate of employees leaving work have positive relationship with the normal succession planning.The selection of the successor (Saan, Boateng and Kamwine, 2018), preparation level of successor, training of a successor and presence of a written and clear succession plan are paramount in the succession process (Lam, 2015).Successors deem governance process and planning as crucial success factors in succession (Lam, 2015).The absence of a clear organizational structure has been found to hinder succession planning (Tanzwani, 2010).Sharing leadership responsibilities and knowledge is crucial for the longevity of a family-owned firm (Burns, 2019).According to (Gomba, 2014), the business's size, type, and operation all have a significant impact on the succession process.

Conceptual Framework
The conceptual framework is derived from the literature review.The study evaluated a business's succession plan using Organizational factors, individual-level factors and family-level factors.Individual level factors include Leadership abilities, delegating ability, ability to disassociate from the business, success preference, Interest of the successor towards the business and the ability of the successor.Family-level factors examined how inheritance, communication, compensating family members and maintaining family control affect succession planning.Lastly, Organizational level factors examined various issues including the preparation level of a successor, management succession plan, governance, clear organizational structure and written strategic plan.These factors collectively formed the basis for evaluating and understanding the challenges of succession planning within the studied framework.

Research and Methodology
This study employed a quantitative methodology to evaluate the factors that affect succession planning in family-owned fish trading SMEs in Mwanza City.In this study, questionnaires were used as quantitative instrument.Data are were analyzed using SPSS.The study included fish trading SMEs sampled from Mwanza City.It included enterprises engaging in fish trading supply chain.According to Philemon (2010), the sample size for a study should be at least 50 and at least 8 times as many variables as there are in the model, or N=50+(8*M), where N stands for sample size and M for the number of independent variables.Since this study has three independent variables, the sample size therefore was 74 i.e.N=50+8*3=74 respondents.In order to reach this sample size the researchers involved at least 50 family owned fish trading SMEs whereby at least 1 to 2 respondents filled the questionnaires.The respondents were the owners, managers or employees of family-owned fish trading SMEs.
The study utilized purposive sampling to gather perceptions of succession plans in family-owned fish trading SMEs from knowledgeable participants with practical business experience.The study utilized primary and secondary data from various sources, including policies and reports from SMEs, to gather information on organizational factors, family factors and individual factors in relation to succession planning.The field data was gathered through structured questionnaires.Five-point Likert scale ranging from Strongly Agree (5) to Strongly Disagree (1) were employed for the three latent variables.The study used SPSS 26.0 to analyze data on succession planning in family-owned fish trading SMEs in Mwanza, focusing on central tendency, frequency, percentages, and Chi-square test of goodness of fit.Chi-square formula is X 2 = ∑ (Observed -Estimated) 2 / Estimated.

Findings and Discussions
The study examined the effect of individual, family, and organizational factors on succession planning, testing three hypotheses and providing a general discussion of the findings.

Characteristics of Respondents
Table 1 shows respondents' profile.The study found that the majority of respondents were aged 36-60, with 63.5% having primary school education and 33.8% having secondary education.Most SMEs operators were male, with 65.2% being male and 37.8% female.Source: Field Data (2023).

Profile of Sampled Organizations
Table 2 presents profile of sampled organizations.The majority of businesses were under 3 years old, with 47.3% having one employee and 32.4% having one family member.The majority 82.4% had one family manager, with 83.8% having no family manager.Non-family managers were present in 9.5% of businesses, and 2.8% had two (2).The study found that most SMEs belong to the first generation, with 72.3% being first-generation.Most respondents confirmed that the current incumbent plans to hand over to the next generation, but only 2.7% were second-generation.Most businesses lack a written succession plan, strategic plan, or governance board, with many unsure or unaware of these aspects.

Influence of Individual Level Factors on Succession Planning
H1: Individual level factors do influence the succession planning in family fish trading business.
The majority of respondents (45.9%) believe strong and effective leadership influences succession planning in family-owned SMEs.However, 37.8% disagree, and 27% strongly disagree.The majority also disagree with the idea that incumbent ability to disassociate from the business significantly influences succession planning.(Table 3).Source: Field Data (2023).
The majority of respondents disagreed with the preference of family members as successors in succession planning, with 28.4% disagreeing and 27% strongly agreeing.The majority (43.2%) of participants strongly disagreed, with 28.4% undecided, 24.3% disagreeing, 2.7% strongly agreeing, and 1% agreeing that non-family members are preferred for family-owned SMEs succession.The majority of respondents believe that successor interest in the business (54%+20%) and their competencies and experience are crucial for successful succession planning in SMEs (55.4%+36.5%).
The study reveals that strong owner leadership significantly influences succession planning, with delegating duties to subordinates being a key factor, with respondents' opinions on this statement.The null hypothesis was rejected, Χ^2 (4)=47.216,p<0.001 in respect to owner preferring non family member as a successor enhances the family owned SMEs succession.The median response was 2 which means that owner preferring non family member as a successor does not enhance the family owned SMEs.
The interest of the successor towards the business gives lead to success of succession planning was statistically different from zero, Χ^2 (1)=15.622,p<0.001,Median=4.Success of succession planning in family businesses in SMEs is significantly influenced by the successor's interest in the business and their competencies and experience, Χ^2 (1)=25.162,p<0.001.The study reveals that succession planning in family-owned SMEs is significantly influenced by strong leadership, delegating duties, disassociating from the business, and the successor's interest in the business.Table 6 indicates regression for individual-level factors.
The study found that individual-level factors regression analysis yielded significant results (F(6,68)= 4530.698,p<0.001) with an R2 of 0.998, confirming the original model.The standardized coefficient was reduced.These results confirm that individual-level factors influence the succession planning of fish trading family SMEs.Therefore, the alternative hypothesis is accepted.

Effect of Family Level Factors on succession planning
H2: Family level factors have effect on succession planning in family-owned fish trading SMEs.
The study found that 52.7% of participants disagreed with tradition inheritance based on first son preference for succession planning, while 36.5% agreed that compensating family members in the family business influences business continuity, with 27% strongly agreeing and 8.1% disagreeing.Respondents agreed that formal communication forums like family assemblies and constitutions contribute to successful succession planning (36.5%+28.4%)while maintaining family control in business is also a key factor (49.5%+9.5%).Source: Field Data ( 2023).
The results in Table 8 shows that having traditions inheritance based on preferring first son to be chosen as a successor influences success succession planning found to be statistically significant, Χ^2 (3)=37.351,p<0.001with a median response of 1-strongly disagree.Therefore, traditions inheritance based on preferring son to be chosen as a successor does not influence successful succession planning.
This is contrary to the results found by Aderonke (2019) and Musa and Semasinghe (2014).Both studies found inheritance traditions and extended family influence succession planning, but inconsistency may be due to cultural differences, sample size, and time lapse.
Compensating family members in a family business significantly impacts business continuity, increasing the probability of effective succession planning, according to (Scotland, 2010).
Formal communication forums like family assemblies and constitutions significantly influence succession plans, as found by Tanzwani (2010) and Glasop (2005), indicating better family succession outcomes.The study found that a desire to maintain family control in a business lead to successful succession planning, with many respondents agreeing on this conclusion.Buang et al. (2013) also agrees that family and business influence succession planning, with successful succession planning being more successful when maintaining family control in the business..000.000.010.000 Source: Field Data (2023).
The study analyzed factors influencing succession planning in a family business, including traditions, compensation, formal communication, and the desire to maintain family control, using multiple linear regression.Significant regression results were found (F(4.70)=103.651, p<0.001, with an R 2 of 0.856) which implies that 85.6 per cent of the variables fits in the regression model and the model could explain the variability of data by 85.6 per cent.The family level regression results show that only two indicators were statistically significant: Compensating family members working in the family business influences the business continuity contributes to the success succession plan (t=2.820,p<0.01), and availability of formal communication forum such as family assembly, constitution (t=2.756,p<0.01).Contrary other statements were found not to statistically significant: The Traditions inheritance based on preferring first son to be chosen as a successor influences success succession planning (t=1.773,p>0.05) and desire to maintain family control in the business leads to successful succession planning (t=.051, p>0.05).
The regression analysis for family level factors provide significant estimates F (5, 69) = 1631.04,p<0.001, with an improvement of an R2 to 0.992.Therefore, the alternative hypothesis is accepted.

Organization Level factors
H3: Organization level factors have effect on succession planning in family-owned fish trading SMEs The descriptive results presented in Table , the study found that a high level of successor preparation, including choice and training, enhances succession planning, contributing to organizational continuity, with a majority of respondents agreeing (54.9%+45.9%).
The study found that 52.7% of respondents were neutral on the influence of board of governance on succession planning, while 71.4% agreed and 28.4% strongly disagreed.The majority of respondents (47.3%) strongly agree that having a written strategic plan and implementing it can facilitate successful succession planning.The preparation level of the successor such as choice and training of the successor enhances the succession planning statement null hypothesis was accepted, Χ^2 (1)=.486,p>0.05,Median=4.Clear and written succession planning contributes to organization continuity found to statistically significant, Χ^2 (4)=24.243,p<0.001.The descriptive statistic (Median=4) the participants agreed that clear and written succession planning contributes to organization continuity.The statement that board of governance influences the succession planning was statistically significant, Χ^2 (3)=37.351,p<0.001 with neutral response.Source: Field Data (2023).
The null hypothesis was rejected on the statement having clear organization structure describing each employee's job description at, Χ^2 (1)=13.838,p<0.001.The descriptive statistics (Median=4) suggest that respondents agreed that having a clear organizational structure describing each employee's job description influences the succession planning.
Having written strategic plan and implementing leads to successful succession planning was found to statistically difference from zero, Χ^2 (3)=24.919,p<0.001 with 4-agree median response which suggests that preparing a written strategic plan and implement it favours the successful business continuity.
Multiple regression was calculated to predict organizational factors influencing succession planning, including strong owner, successor preparation, clear and written planning, board governance, clear organizational structure, job descriptions, and successful strategic planning.The study found significant results as follows: F(5,69)=6815.590,p<0.001, with R2 of 0.998.This implies that the regression model could explain the variation of the fitted data by 99.8%.However, the regression results revealed that all indicators were statistically significant: Preparation level of the successor such as choice and training of the successor enhance the succession planning (t=-2.47,p<0.05).This resembles the findings obtained by (Basil et al 2014) and (Tanzwani, 2010) as they both found that training has a positive relationship with Succession Planning.
Organization continuity is significantly influenced by clear and written succession planning, with poor planning affecting the process.Board governance, clear organizational structure, and successful strategic planning contribute to this.(Table 13).
Another researcher with similar results is (Burns, 2014) who found that organizational structure, willingness to try new things, formal education and ability to share the knowledge influence Succession Planning.Organization-level factors regression analysis presents significant results F(6,68)= 6463.702,p<0.001, with an R2 of 0.998 which is similar to the original model.The standardized coefficient reduced and the organizational factor was found to be statistically significant at p<0.01.Therefore, the alternative hypothesis is accepted.

Conclusions
The study, conducted in Mwanza City, focused on analyzing the factors influencing succession planning in family-owned fish trading SMEs.Chi-square tests revealed significant influences of individual, family, and organizational factors on succession planning.The study found that strong and effective leadership, delegating duties, the ability to disassociate from the business, and preferences for family or non-family members as successors significantly impacted succession planning.Additionally, the interest and abilities of the successor played a crucial role.The family-level factors, including traditions, compensating family members, formal communication forums, and the desire to maintain family control, also significantly influenced succession planning.Regression analyses further confirmed the importance of the aforementioned factors.Individual factors like leadership, delegation, and successor abilities were found to influence succession planning positively.Family-level factors such as compensating family members and having formal communication forums played a significant role, while other traditional practices like preferring the first son as a successor did not have a substantial effect.
Moreover, the study investigated the effect of organizational-level factors on succession planning.It identified that the preparation level of the successor, clear and written succession planning, board governance, clear organizational structure, and having a written strategic plan were significant predictors of successful succession planning.The findings suggest that businesses with clear and specific succession plans, chosen successors, and active development plans for the next generation were more likely to achieve successful ownership transfer.However, challenges were noted, such as the lack of awareness among successors and family members regarding the succession plan.The study recommends that SMEs should focus on developing and implementing clear succession plans, considering individual, family, and organizational factors, to ensure business continuity across generations.Additionally, government and stakeholders are urged to develop policies and programs promoting succession planning in SME operations.This research contributes valuable insights into the factors shaping succession planning in family-owned fish trading SMEs, offering a foundation for future research and policy development on SME succession planning and business longevity.
The study recognizes specific limitations.Firstly, the research focused on family-owned fish trading SMEs in Mwanza City, potentially limiting the generalizability of findings to other industries or regions.Additionally, relying on self-reported data poses the risk of response bias.The cross-sectional design of the study captures a snapshot, and a longitudinal approach could provide a more dynamic understanding of succession planning processes.The study primarily employed quantitative methods, incorporating qualitative approaches, such as interviews or case studies, which could offer richer insights into the dynamics of succession planning.Furthermore, considering the cultural context and its influence on succession planning practices could enhance the depth of analysis.Future research should explore the aspects of succession planning in diverse business settings, utilizing a mix of quantitative and qualitative methodologies, and incorporating a broader geographical scope for a more comprehensive understanding of the subject.
Additionally, future research can explore the factors moderating the relationship between individual factors, family factors organizational factors, and succession planning.

Figure 1 :
Figure 1: Conceptual Framework From the above conceptual framework, the following hypotheses were made; H1: Individual level factors do influence the succession planning in family-owned fish trading SMEs.H2: Family level factors have effect on succession planning in family-owned fish trading SMEs.H3: Organization level factors have effect on succession planning in family-owned fish trading SMEs.
OpfmOwner preferring family member as a successor contributes in succession planning Opnfm Owner preferring non family member as a successor enhance succession Sib Interest of the successor towards the business gives lead to success of succession planning Sac&e Successor abilities like competencies and experience facilitate the family business succession planning  Error term  =  1  +  2  +  3  +  4  +  Whereby: Fam Family level factors Tipss Tradition inheritance based on first son to be chosen as a successor influences success succession planning Cfmb Compensating family members working in the family business influences the business continuity Fcom Availability of formal communication forum such as family assembly, constitution contributes to the success succession plan Fcb Desire to maintain family control in the business leads to successful succession planning  Error term  =  1 & +  2 & +  3  +  4  +  5  +  Org Preparation level of the successor such as choice and training of the successor enhance the succession planning Psc&t Clear and written succession planning contributes to organization continuity Bog Board of governance influences the succession planning Corgs Having clear organization structure describing each employee's job description influences the succession planning Wsp Having written strategic plan and implementing it leads to successful succession planning  Error term  =  1  +  2  +  3  +  4  +  5  +  Whereby: Spfos Succession Planning in Family Owned SMEs Bpwsuc The business has prepared a written succession plan which is clear and has specific timetable Sr The successor is ready to take the position at any time if she/he is required to do so Cd The CEO/MD is delegating responsibilities to facilitate development of the successor Aware Family members inside and outside the business are aware of the presence of succession plan Devp The organization has prepared a written and active development plan for the next-generation successor  Error term Osel Owner strong and effective leadership have influence on succession planning OddOwner's delegating duties to subordinate influences the succession planning Iad Incumbent ability to disassociate from the business

Table 1 :
Characteristics of Respondents

Table 2 :
Profile of Sampled Organizations

Table 3 :
Descriptive Statistics for Individual Level Factors

Table 4 :
Chi-Square Test Statistics for Individual Factors Table5reveals that strong leadership, delegating duties, disassociating from the business, preferring family or non-family members as successors, and the successor's interest in the business significantly influence succession planning in family-owned SMEs.Significant regression values were found (F(7,67)= 4825.73,p<0.001, with an R 2 of 0.998).This means that 99.8% of individual level factors fit in the regression equation and the model could explain 99.8 per cent of data variation.

Table 5 :
Regression Analysis on Individual Level Factors

Table 6 :
Descriptive Statistics for Family Level Indicators

Table 7 :
Chi-square Statistics for Family Level Indicators

Table 8 :
Regression Analysis on Family Level Factors

Table 9 :
Descriptive Statistics for Organization Level Indicators

Table 10 :
Chi-square Statistics for Organization Level Indicators

Table 11 :
Regression Analysis for Organization Level Factors