THE ROLE OF COMMUNICATION IN THE INTERGENERATIONAL

TRANSFER OF FAMILY-RUN SMALL AND MEDIUM FIRMS

Walter ZOCCHI

LUISS “Guido Carli” University Rome

and Centro Studi sull’impresa di famiglia “Di padre in figlio”, Milan, Italy
walter.zocchi@familybusinessoffice.it

Abstract
This work investigates the management of communication processes within the company and within the
family during succession in Small and Medium-sized Enterprises (SMEs). The paper deepens the
understanding of the relationship between succession and communication by assessing it on a sample of
SMEs located in the Lazio region. We show that the practical relevance of roles, rules, information and
communication is commonly underestimated by the majority of smalland medium entrepreneurs.
Inefficiency at the communication level increases the complexity of the already-fraught process of
leadership transfer. Moreover, the weaknesses at the governance level resulting from inefficient
communication, the misfunctioning of company governance bodies and the lack of a business culture may
reflect negatively on both strategy (not shared by the founder) and the company’s organization structure
(heavily dependent on the family). This is likely to damage the firm not only during succession, but also in
other phases of its lifecycle, causing a decline in company value and competitiveness.

Keywords: Family Business, Communication, Intergenerational Transfer

Introduction
The issue of succession in family-run SMEs is not new to the literature. Quite the opposite: it is one of the
topics most fully dealt with by scholars of family business, given that it represents a time of change in the
firm’s control and ownership (Beckard and Dyer, 1983; Handler, 1994; Morris, Williams and Nel, 1996;
Gersick et al., 1997; Miller, Steier and Le Breton-Miller, 2003).
The major focus of the literature has been on identifying a variety of factors believed to be associated
with effective successions. Yet, little attention has been devoted to some contextual factors that are likely
to turn succession into a strategic opportunity for an organization (the stakeholders’ perspectives, the
strategic context of the succession, the internal organizational context, the governance practices, etc.) and
how these interact with the process itself. The succession process cannot be de-contextualized. The
succession issue arises in a wide cultural and social framework concerning aspects of co-operation and
co-ordination between different generations – aspects which draw on interdisciplinary topics and which
highlight the influence of family relations in running the firm. Therefore, approaching the topic of
business transfer only from the point of view of rationalising the assets, or of company structure, or of the
professional characteristics of the heir and his training, is not enough (Compagno, 2003). Managing
aspects concerning governance structure, assets or strategy in a climate of non- communication or even
intergenerational intolerance risks thwarting all the effort.
This work moves from the perception of the basic role played by the behaviour of the members of a
family controlling and running their own firm, whether they are actively involved in its management or
not. In particular, we intend to study in depth the role of communication processes in the transfer of the
family business to the next generation. The paper addresses a few most relevant research questions: does
informality in communication processes within the family context extend to the family-run SME? How?
When? Why?
And which is the impact of the way communication is managed on the successful transfer process to the
next generation?
In order to provide an answer to these questions we follow a methodology structured into two parts. First,
we review the existing literature on family business succession and the relationship between owner-
founder and successor. In the second part, we develop an exploratory analysis based on both qualitative
and quantitative data.
The empirical findings reveal some important dysfunctional patterns in the management of
communication in family business succession. They also point to some possible further spillover effects
in the long run, providing useful insights for both practitioners and theoreticians. Specifically, we can
here briefly anticipate our conclusions in two points:
 The high level of informality in communication processes between family members themselves,
between family members and company governance bodies, between family members and
management, between family members and the outside world, emerges as one of the main factors
penalising succession in small and medium enterprises.
 The widespread tendency of smaller family firms to prefer excessively informal means of
communication damages the firm as regards management, strategy, and organisation also in other
phases of its lifecycle (i.e. before or after transfer to heirs), entailing a decline in company value
and competitiveness. Thus, excessively informal communication may also compromise some of
the possible positive effects deriving from opening to third-party capital or the entry of non-
family managers.
The paper is organised as follows: first some main contributions on family business succession are
considered, setting up a framework for the subsequent analysis. Next the adopted methodology is
explained.
We then discuss the results and highlight the contribution to the theory, focussing on the role of
communication processes as a tool facilitating firm’s survival and development.
1. Literature review
The perpetuation of family-run SMEs is closely linked to the ability to ensure competent family
leadership across generations, as well as normal competitive factors. As a matter of fact, family-run
SMEs are mainly characterised by two factors: (i) the family feelings; (ii) the family assets. The latter
influence the structure and the transfer of capital, income, investments, company governance bodies and
management (Zocchi, 2004). A family business may thus be seen as a system in which the importance of
the family, including its asset structure, is interwoven with the activity carried out in the firm.
On the basis of this interpretation one can define as “family businesses” all those controlled directly or
indirectly by family members, whatever their legal status and their involvement in its governance.
According to the definition adopted here, family businesses also include those where a majority equity
stake is in the hands of a member of the family who is not involved in its management.
As a result of the complex framework resulting from the interactions between the family, the firm and the
family assets, the topic of the transfer of a family business to the next generation has been studied in
depth under its various forms. Yet, each researcher has been dealing with a relatively small part of the
problem, leading to “a rigid, de-contextualized view of succession”, as emphasized by Le Breton-Miller,
Miller and Steier (2004, p. 325).
Family dynamics are also often discussed. Not only from the perspective of the degree of interdependence
between family and firm in management and ownership (Lansberg, 1983; Ward, 2004), but also in terms
of harmony, trust, openness, transfer of the values and the intangible aspects rooted in the family context
(Schein, 1983; Dyer, 1986; Churchill and Hatten, 1987; Gallo and Melé, 1998; Potts et al. 2001).
The academic approach to the topic of succession in the family business has undergone significant change
over time: while during the 80s succession was usually treated as an instantaneous happening, from the
90s onwards it has been more and more associated with the idea of a ‘process’, the idea of developing, of
a natural transition which forms part of the development of a company. The literature has thus been
recommending different guidelines that have to be set early on to guide the process (Sharma et al., 2003;
Le Breton-Miller et al., 2004; Nawrocki, 2005).
Some contributions on family dynamics also seem likewise to suggest that the existence of good relations
at the family level goes hand in hand with a less traumatic transfer of power and assets, contributing
positively, in turn, to a satisfactory post-succession performance by the company (Morris et al., 1997;
Steier, 2001).
However, observation suggests that caution is in order when proposing such a direct link between respect-
trust in the family and respect-trust in the firm. It is to be hoped that besides the mitigation of levels of
intergenerational conflict, the greatest possible number of context-related variables is considered:
business, family, and environmental. Well-aimed, multidimensional analysis is necessary, therefore, to
explain a phenomenon as varied and multifaceted as that of succession in the role of family firm leader,
where causal relations are rare and anyway always conditioned by complex surrounding variables 1. Thus,
it is in this direction that we will move in developing this work.

2. Methodology
In order to deepen our understanding on the quality of communication practices in family-run SMEs and
their influence on the succession process, we develop an exploratory analysis on a sample of small and
medium family businesses settled in Lazio. To accomplish this task we rely on a two-step procedure:
direct interviews (qualitative data) and a questionnaire (quantitative data).
In a first step, qualitative information was collected by means of 11 in-depth individual (entrepreneur or
entrepreneur’s son/daughter) and pair (parent/offspring) interviews. The participants were identified on
the basis of a number of characteristics (family ownership of the firm, percentage of sector contribution to
province GDP, firm size, performance), in collaboration with the local Manufacturers’ Association
(Confindustria), more aware of the regional situation. All participants were assured of confidentiality and
anonymity, which encouraged them to speak freely. They were all interviewed by the same interviewers,
and the average time it took for each interview was 1 hour. Semi-structured questions were developed by
examining the literature on reported challenges in the succession process as well as on consultation and
communication practices in family firms. The interview format allowed for further probing questions, in
addition to the standardized questions asked to each participant. All the responses were taped and each
interview was then transcribed. This facilitated content analysis and comparison of interviewees’
responses to each question.
The qualitative data enabled us a better understanding, for practical purposes, of the dynamics of the
relationship between family and firm, fostering the comprehension of the main issues related to the
management of communications.
In a second step, the information gathered through the interviews was used to build the questionnaire.
Quantitative data collection relied on a partly multiple-choice questionnaire, filled in by CEOs and
successors of family firms belonging to the local Manufacturers’ Association (650 firms). The response
rate was 12% (78 firms returned the completed questionnaire).

1
It is no coincidence that for some time the need has been noted to direct studies towards the development of
thorough theoretical frameworks as regards the succession to the founder. Among others, see Sharma 2004; Zahra
and Sharma, 2004; Le Breton-Miller et al., 2004.
The combination of quantitative and qualitative methods allowed us to obtain a clearer understanding of
the variables subject to analysis (Easterby-Smith, Thorpe and Lowe, 1991).

3. The structure of the sample

Altogether the features of the companies investigated both through the interviews and the questionnaire
reflect quite faithfully the social and economic identity of the Lazio area.
They are generally small firms (80% have no more than 50 workers and a turnover of €10M); one in five
is part of a group; they operate mainly in the service sector and were established during the last forty
years.
Almost all of them are joint-stock, mainly limited, companies (Srl), although the local productive sector
features mainly one-man businesses. The figure is nevertheless in line with the characteristics of the
members of the local Manufacturers’ Association studied in this research.
Four out of five firms are wholly family-owned. The majority of such firms (60%) reported no more than
5 shareholders and only 13% had more than 10 shareholders. Furthermore, ownership is highly
concentrated: for 79% of firms the family owns the whole equity, only in three cases does it hold less than
51%, and family equity is never lower than 28%. On average, three members of the family work in the
firm, and in 63% of the cases these are also shareholders 22.
Over half of the companies studied do not employ outside managers (of course, this figure should be
considered in the light of the size of the considered firms). However, when correlating the presence of
outside managers with the makeup by age group of the firms, it can be inferred that amongst older firms
(at least 40 years old) the presence of both family managers and outside managers in the top management
team is widespread. Though slow, there is some opening.
Half the firms investigated are managed by someone over 50 years of age and are currently experiencing
succession. Only 23% of firms have already faced transfer of ownership and/or control; this changeover
in the vast majority of cases coincided with transfer from the first (founder) to the second generation. No
more than 8% of firms have gone through a fifth generation transfer unharmed, confirming the critical
nature of the phase under study (Figure 1).

2
The figure for active family members is in line with other areas of Italy. See Centro Studi sull’impresa di famiglia
“Di padre in figlio” et al., 2006. It is worth recalling that the vicissitudes of a family firm should be studied while
bearing in mind the different points of view linked to the stakes related to the firm as shown in the following
diagram:

This topic was examined in more depth in an earlier work. See Zocchi, 2004, p. 46ff.
 Figure 1 – Succession processes in the sample3

4. Analysis
4.1 Strategy and management devices for the relationship between founder entrepreneurs and the
younger generation
The prevailing cultural model in our sample assigns the main role to the family group. In more than two
out of three cases, the favourite leadership candidate is a family member. A view of succession finalised
to the interests of the company means considering the transfer to the next generation as being successful
even when least-cost long-term considerations would involve selling all or part of the capital to outsiders.
But this possibility seems to be unacceptable to local entrepreneurs4. Fewer than 4% of them revealed an
intention to sell the firm or sell equity to new entrepreneurial non-family partners. Equity sale is
perceived almost exclusively in terms of resorting to institutional investors. On the other hand, no
objection is made to the excessive time limitation of institutional investment (3-5 years). The presence of
a financial partner with short-term speculative aims and with no intention of taking any active role in
management seems almost to reassure these entrepreneurs 4.
As a result of the cultural model which views the firm as a ‘closed possession’ of the family, ascribes
primacy to the male heir and (apparently) excludes wives from any role, succession is seen as a basically
linear issue within the framework of the natural predestination of the heir within the family, and
unquestioned loyalty to the unwritten tradition: “We do it like this because we’ve always done it like
this…”. This attitude results in the pattern summarized in Figure 2.
Basically, what has so far emerged is in line with empirical evidence found in the literature relating to
other areas of Italy.
In the dynamics between incumbents and successors, the behaviour of whoever controls strategic,
organisational and management decisions seems to play a fundamental role. The head of the family, who
in smaller firms is often also the head of the business, is crucial (see Ward, 1987). The head of the family
directs the life of the family; he lays down the guidelines for the management of the firm. It is his
responsibility to pass on to all the members of the family, no-one excluded, the same knowledge, the

3
None of the firms interviewed reported being at the third generation. The 25% of ‘no replies’ is made up of
interviewees who said the transfer had taken place but did not give any information about the number of generations.
4
The low propensity of Italian entrepreneurs towards equity sale was remarked by previous studies (Barca, 1994;
Perrini, 1998; Zocchi et al., 2001; Giacomelli and Trento, 2005). The latter work especially reveals an increase in
provisions aimed at limiting the transfer of capital.
same convictions, the same fears, the same judgements, the same belief; even the human, social and
economic values required for composing into a single united whole the problems of the family and of the
family business. He is responsible for the culture underlying the success, or failure, of the family
business5.

The succession process is…

- outlined vaguely, only as a rough programme, with the risk of becoming an outlet for latent conflict
previously kept
under control;
- under the control of the founding entrepreneur (centralised management and responsibility);
- a source of pressure on the education of young successors, for whom ‘on-the-job’ experience in the firm is
preferred 16;
More specifically, from the point of view of the heir the following emerge:
- claims for independence vs. the need for a guide (idealised and influential entrepreneur/father-figure);
- a desire to emphasise one’s own knowledge and skills, and for a better definition of roles;
- attempts at more constant communication on an equal footing with one’s parent;
- a need for more detailed planning of one’s career;
- a desire for greater responsibility, especially as regards relations with stakeholders, “which is the most
importantpart of the job and which Dad is still doing”;
- a demand for more support for professional growth, possibly from outside figures also able to act as a
‘critical sounding board’, as a counsellor and an instructor at the same time.

Figure 2 – The succession pattern in the sample

But will the figure of the head of the family survive in the future? The social, cultural and formal
evolution that the Italian family is undergoing (divorces, one-member households, alternative forms of
marriage, legitimate and natural offspring, etc.) is likely to have its consequences on the management of
economic activities in family firms. What effects might arise in the future for family businesses? This is
the key to innovative interpretations which lay the foundations for new types of investigation in the
family business field.

4.2 Responsible communication as a tool for business continuity

Research has likewise highlighted how within the entrepreneurial families at the head of the small and
medium enterprises interviewed interpersonal conflict seems to be limited. At the same time,
communication, whether within the family or the business context, seems to be almost non-existent. In
the business, occasions for the formalisation and sharing of decisions are admittedly rare; both in the firm
and at home, for the fathers’ generation communication with family members seems to be limited to rare
moments of discussion with sons and even rarer exchanges with other members.
From the direct interviews we carried out, a minority group of entrepreneurs emerges, generally young
and from a medium to high social-cultural level, who are to some extent aware of the limitations of this
cultural model. A minority which perceives this lack of communication as an obstacle to their
professional growth.

5
Closely related is the issue of outside work experience. In contrast with trends revealed by recent national data
(Giacomelli and Trento, 2005; Fondirigenti, 2006), one out of two younger generation entrepreneurs in Lazio
declares having made use of this opportunity. However, the length of the outside experience remains unknown and
so is of limited significance for the study.
These youngsters also seem to be aware that methods of communication regarding firm management are a
shaping tool for business culture, feeding the trust of the stakeholders, preserving cohesion between
shareholders, and guaranteeing the proper functioning of company governance bodies.
Suitable communication between parents and offspring in the firm makes the transformation of a strategic
vision into a driving force for the company’s development possible. Of course, this does not come about
spontaneously. As we all know, a business is a system. Communication, together with relationships and
management, is one of the ‘special’ systems operating as part of production, the central engine of the
firm’s efficacy. But a communication system is not automatically present in a firm. It must be created, as
an expression of a long-term strategic orientation, assuming as its fundamental value the successful
working and lasting development of the enterprise.
Family members usually rely on rather ‘informal’ methods of communication. The data gathered
indicates that 65.6% of communication flows between family members involved in the governance bodies
of the firm are based on informal meetings, often occasional, following no specific procedure, and held in
unsuitable places. This habit is favoured by family contact, by the opportunity to use moments of the day
not taken up with working (dinners, Sunday lunches, various other social occasions, etc.). In contrast, the
more ‘serious’ decisions are often relegated to formalistic rituals in the hands of ‘form-filling’
professional consultants (especially accountants) called on to describe, often in ‘ad hoc’ minutes,
decisions which on paper are taken in accordance with collegiate procedure and the ‘assembly’ mentality,
but which really reflect the boss’s orders, redrafted in the impersonal surroundings of the accountant’s
office.
Two Lazio family enterprises out of three let the balance between the firm’s institutional arrangements
depend on informal mechanisms, whose working relies on emotional relationships, taking for granted the
fact that family relations almost automatically imply bonding and trust: “Problems are solved more easily
because we all give each other a hand”. Indeed, a small-medium family firm can be interpreted as a
“system of feelings on whose ‘order’ depend the condition of existence and development in time and
space” (Bertini, 2007; Di Lazzaro, 2007).
Herein lies perhaps one of its most evident weak points, which also reflects on its communication
dynamics.
As a matter of fact, the poor definition of ‘where, when and how’ to communicate in the firm at a rational
level is not judged as being optimal by any of the generations of entrepreneurs interviewed. We proposed
a number of possible reasons for explaining why communication is so informal in their firms to the
interviewees (they replied giving their level of agreement on a Lykert-type scale, Fig. 3): not one of these
gained more than 50% acceptance, showing that dislike of more formal and suitably structured
communication is not perhaps so deeply-rooted.
In the light of 65.6% of informal meetings mentioned above, the opinion that more formalised processes
can represent a positive development is expressed by fathers and sons only rationally (during the filling in
of a questionnaire or during an interview) and is not applied to their real situation.
Fewer than 20% of the interviewees seem to have realised that transposing family communication
patterns into the family-run business entails a number of problems which affect the company’s efficient
and successful functioning. Let us examine these problems in detail, inferring them partly from economic
theory and partly from the interviewees’ comments. Communication lacking in clear and precise ‘when,
where and how’ weakens, in the first place, the company governance. A proper system of management
and control permits the attainment or preservation of that cohesion amongst company members which
comprises the real value added of a family business. If there is no communications protocol, the
governance bodies which strategically and organisationally manage the company (meetings, board of
directors, boards of auditors) often end up only having a formal role, operating on paper or not at all, and
therefore not contributing any value added.
 Figure 3 – Opinions regarding more structured and formal communication in family businesses

Ineffective governance, in turn, results in both limited clarity as regards firm strategy amongst permanent
staff, customers and suppliers, and disorientation as regards who is in charge, making it difficult for all
the stakeholders to trust in the enterprise. Amongst the small family businesses we interviewed, it was not
rare for it to emerge that the strategic design defining the firm’s identity in terms of aims, areas of
activity, management and organisational philosophy existed only in the founder’s mind, and was not
shared by him with his main assistants, whether they be members of the family or not. This makes the
development of a basic strategic orientation at the firm level very difficult. The firm’s strategic
orientation may, in fact, be seen as the result of learning or unlearning processes, individual and shared,
which implicate the firm’s management especially, and, to the extent the latter is shared and united, the
staff of the entire firm6.
Not only. Ineffective governance is also a risk factor in that it may translate into the lack of a functional
organisation chart recognising full independence to each role. More often than not, in the context of
mediumsmall family businesses in Lazio, the organisation chart suffers greatly from the founder’s
influence, i.e. is only formally valid and does not represent the real situation. “It ends up with him doing
everything and I never know what my job is and what my role is in the company”, the young heirs often
stated.
Poor and improper communication, together with a strategy which is not shared by the founder, an
organisation structure which is too dependent on (and not independent of) the family, and company
governance bodies which do not function properly, in our view contributes to a decrease in the economic
value of every family business, and, if widespread, of a good part of the Italian enterprise system (Fig. 4).

6
See Coda, 1988
 Figure 4 – The role of communication processes in the firm

The tendency illustrated here implies an important consequence: perhaps it explains the lack of entry by
new shareholders into medium-small family businesses, and the limited involvement of outside managers
in the running of the firm.
A special feature of the family business is indeed that capital and labour – whose dynamic combination
results in the firm – are both supplied by members of the family, at least at the initial phases, with the
resulting overlap of aims and ways of thought from profoundly different systems (the family and the
business). An attempt to distinguish between these two systems, therefore, is via the ‘opening’ of the two
elements, capital and labour77. But in order for this to happen, it is necessary to achieve certain conditions
permitting the firm to develop and thus to move on to this outsourcing.
If the model shown in Fig. 4 is valid, these ‘openings’ can occur only after considerable changes in the
communication practices used in family businesses, both within the firm and when communicating with
the outside world. An essential condition for the carrying out and the success of these changes is,
therefore, that the firm has ‘tidied up’ within. Only if everybody’s roles and responsibilities are clear and
well-defined, if the governance structure clearly distinguishes between family and firm, if the strategic
goal to be achieved is clearly outlined, if there is administrative and informational transparency, opening
up to outside managers and shareholders/partners can effectively become a condition leading to a
qualitative leap for the firm. The independence of family assets from the firm’s assets must also be
achieved. Permanently, not only during the hand-over from one generation to the next.

7
The outsourcing of capital and labour do not generally take place simultaneously. As the firm develops, it is first
the labour which gradually undergoes a process of managerial activity and outsourcing. Only in a later phase the
family firm considers whether to open up to outside capital or not.
However, it is particularly when succession takes place that communication inefficiencies risk becoming
most apparent, this being an unexpressed opinion revealed by some of the younger generation
interviewees currently going through this phase. The future economic agent will be hindered by the
negative aspects of the practices described above and his introduction into the firm can only be penalised
by these factors.

Topic Type of rules

Included In Unwritten No No
in the written agreements regulation reply
charter family
agreements

Exit from the family business 30.2% 5.7% 20.8% 30.2% 13.1%
(reasons, payment and how it is
evaluated)
Requirements for entry into the firm 28.3% 5.7% 24.5% 30.2% 11.3%

Transfer of ownership of holdings 26.4% 9.4% 28.3% 20.8% 15.1%

and shares between family members
Governance, salaries, criteria for 13.2% 20.8% 32.1% 26.4% 7.5%
board choices and career
development
Assessment of family assets 11.3% 7.5% 26.4% 41.5% 13.3%

Granting of benefits to family 5.7% 13.2% 45.3% 22.6% 13.2%

members

Figure 5 – The presence of rules in the firm, by specific topic

The shift from an awareness of the problem to a practical carrying out of greater internal organisation (to
be achieved partly by means of more strictly defined and managed communication processes) is,
however, difficult. This is evidenced by a reluctance to ‘abide by the rules’ aimed at regulating a series of
aspects concerning the situations when ways of thought relating to the business might conflict with those
relating to assets or the family. In this sense, the rules may therefore help create value not only for the
firm, but also for the family group. Such rules would permit the separation of shareholders’ discussion
about basic choices from management issues, favouring greater bonding within the family group and,
especially, lessening the negative effects of disagreement between shareholders on the firm’s
management. In other words, the limited awareness that entrepreneurs of both generations have regarding
the governance bodies leads inevitably to their improper functioning (Fig. 5).
A relative majority of around 40% of the sample admits the lack of any rule aimed at regulating relations
between firm, family and assets. In particular, this regards the topics of entry into and exit from the firm,
the transfer of shares between family members and, especially, the assessment of assets 8. Quite the

8
The term ‘assets’ here is used in a broad sense to include, as well as shares in the family business or other
businesses, income, luxury goods, capital and non-capital estate, liquid assets, intangible assets. These categories of
goods are often not explicitly considered when assessing the business; however, they may comprise significant
compensation factors for those members of the family excluded from ownership of the firm because they lack
entrepreneurial spirit.
reverse, a regular overall assessment of the entrepreneur’s assets would permit a limitation of the extent
of any conflict over value. Furthermore, at present an assessment of family assets becomes indispensable
in the light of the new law concerning family agreements, which permits the transfer of the firm to a
member of the family in exchange for suitable compensation to the other forced heirs.
Only 30 – 35% of interviewees declare the presence of written rules in the charter or in family
agreements.
The drawing up of the latter does make clear to those who sign it any divergences in behaviour, also
permitting the provision for agreements and pacts on topics which it would be difficult to discipline in the
charter. A pact may also turn out to be useful as regards the handling of the firm’s generation transfer:
where there are clear rules which have been agreed upon, transition processes are much less problematic.
However, family entrepreneurs in Italy generally prefer to concentrate first on tax or corporate planning;
they tend to procrastinate as regards the rest.
When considering the specific topics for which the sample feels the need for specific rules, two issues
stand out: corporate governance and related aspects (rules exist in 32.1% of cases) and, even more so, the
granting of benefits to family members (45.3%). The rules regulating these issues, however, are mainly
unwritten, which considerably reduces their force should disagreement arise.
While the younger generation is relatively shrewder, it is difficult to convince the founder’s generation to
change, or even persuade them of the risk inherent in the practices they adopt. As shown by Figs. 6 and 7
(and as already revealed by Fig. 3), their awareness (point 1 of Fig. 6) that in smaller family businesses
communication is too informal, is quite general (66%).

Figure 6 – Level of agreement amongst entrepreneur-fathers regarding methods of communication (1)

However, there does not seem to be a strong propensity to more formalised communication (Fig. 7).

Level of ag reement amongst entrepreneur-

“There is no need for a lot of meetings fathers
especiallywhen communication is between father Very Quite So-so Little Not a tall
and son; we understand each other
automatically . . . a look is enough.” 18.9% 20.8% 32.1% 18.9% 9.3%
 Figure 7 – Level of agreement amongst entrepreneur-fathers regarding methods of communication (2)

Nor does the data indicate the existence in the fathers of an awareness of the possible repercussions that
the traditional way of managing communication, together with the mere transposition to the firm of
specifically family-based rules, customs, styles and values, may have on governance and organisation –
this despite the low level of agreement on points 2, 3 and 4 in Fig. 6. From a comparison with the
information gained by means of the direct interviews, this result seems to reflect a need to reply correctly
rather than realistically. Overall the replies therefore highlight a background of strong contradiction,
especially by fatherentrepreneurs.
In a similar context, for the minority of the next generation who are better qualified and aware of the
problem, the task certainly appears difficult.

5. Conclusions
The aim of the paper is to deepen the understanding of the relationship between the senior and the
younger generation entrepreneur during succession while investigating the management of
communication processes within the company and within the family. Our interest is justified by our desire
to highlight the strategic worth of the succession process for firm development, and in so doing, to
emphasise the relevance of an efficient management of communication.
Notwithstanding the countless merits attributable to family businesses, the empirical evidence gathered by
an exploratory analysis on a sample of SMEs located in the Lazio region has revealed how the practical
relevance of roles, rules, information and communication is commonly underestimated by the majority of
small and medium entrepreneurs. At the same time, the analysis has permitted us to establish the
existence of a minority of younger generation entrepreneurs who instinctively acknowledge the strategic
potential of communication in shaping the organization culture, in transferring and internalizing rules,
habits, values and styles, in conveying a shared company vision. This same minority is aware of the
potential of efficient communication, organization structure and governance both for creating value for
the firm and for facilitating the already-fraught process of leadership transfer.
The latter, functioning as a time of change, reflection and evaluation, thus offer the opportunity – if
grasped – of amending to some weaknesses. Among them, the inefficiencies in the management of
communication. A clear practical implication of our findings is that family-run SMEs need to develop a
deeper awareness of the ‘communication system’, not existing naturally in the firm, and therefore needing
to be created. In order to succeed in doing this, it will sometimes be necessary that the owner-founder
exhibits an unconditional willingness to “let himself be reshaped”.
A strong sense of responsibility will thus be required, both to the incumbent and to the heir. It is the
incumbent’s responsibility to give a good example, teaching his heir to apply best practices which he in
turn will pass on one day. It is the responsibility of the young successor, for his part, to get a thorough and
wellplanned training, as well as schooling in the practice of written communication between family
members, and strict communication discipline between family members and the workforce. The laying
out of clear rules regarding ownership, firm management and personal assets is also to be hoped for. The
distinction between shareholder, director and member of staff must also be clear, with due awareness of
the relative responsibilities and rights. In this way, the sources of conflicting interests regarding family
members, the business and assets, which are today unfortunately ever more frequent in Italy, could be
minimized.
Of course, this work claims no exhaustiveness nor conclusiveness. Certainly, additional work is needed.
First, to make the hypotheses underlying the analysis work more explicit. Next, to evaluate the range,
reliability and validity of our findings, which in the present setting remains highly debatable. This paper
only represents a very preliminary and tentative step towards the analysis of the interactions taking place
between communication mechanisms in the family and communication mechanisms in the firm. A
straightforward and worthwhile avenue for future research might well be to more directly test the model
presented in Figure 4, by identifying operational variables and assessing their relations.
Yet, this unambitious exercise could hopefully make it clear that also by means of profound change in the
communication practices between family members themselves, between family members and the firm’s
governance bodies, between family members and outside managers, between family members and any
other stakeholder, can our family businesses move towards a strengthening of the original entrepreneurial
design, towards a consolidation of sources of competitive advantage, towards the creation of value for all
the shareholders and stakeholders.

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