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Cultural values
Cultural values and their and their
implications to family implications

business succession
281
A case study of small Chinese-owned family
businesses in Bandung, Indonesia Received 26 March 2019
Revised 11 May 2019
Grisna Anggadwita 24 May 2019
Accepted 27 May 2019
School of Economics and Business, Telkom University, Bandung, Indonesia
Werda Bagus Profityo
Bandung Institute of Technology, Bandung, Indonesia
Dini Turipanam Alamanda
Faculty of Social Science and Political Science,
Garut University, Garut, Indonesia, and
Anggraeni Permatasari
President University, Cikarang Baru, Indonesia

Abstract
Purpose – The family business is one of the business entities that contribute to the economy of a country.
Succession in the family business occupies a strategic position, especially in maintaining the company’s
sustainability. The Chinese family business has unique characteristics in maintaining and growing its
business with the cultural values that underlie how their business. The purpose of this paper is to discuss the
cultural values of Chinese ethnic and their implications in the succession process in small family businesses in
Bandung, Indonesia.
Design/methodology/approach – This research uses a qualitative method with the in-depth interview
method as a data collection technique. The sampling technique uses purposive sampling, while to test the
validity of research data using a triangulation technique. A total of four small Chinese-owned family
businesses participated as informants in this study. The study will identify the stage of succession process in
the Chinese family business.
Findings – There are several stages identified in the succession planning of small Chinese-owned family
business in Bandung which include succession antecedents, succession activities and desired outcomes. The
results showed that small Chinese-owned family business in Bandung has not applied the rules and
procedures in the succession process. Most of the Chinese family business in this research still holds
Confucianism culture; they prioritize boys as business successors, who have a greater responsibility rather
than successor with other gender.
Practical implications – Several implications are discussed. One of them is the Chinese family business
holding cultural values in the process of family business succession.
Originality/value – This research is expected to provide theoretical and practical implications for
academics and family companies with similar cases.
Keywords Cultural values, Succession planning, Small family business, Chinese family business,
Unique characteristics
Paper type Research paper

1. Introduction
The family business has been proven to contribute to economic growth both of developed Journal of Family Business
and developing countries, including Indonesia. The low number of family businesses that Management
Vol. 10 No. 4, 2020
have survived for generations has been the focus of researchers in recent decades, one of pp. 281-292
which is the process of succession planning. Based on some data, the family business © Emerald Publishing Limited
2043-6238
dominates the number of companies in developed countries, for example in Asia and North DOI 10.1108/JFBM-03-2019-0017
JFBM America 90 percent, South America 85 percent, Europe and Africa 70 percent and Australia
10,4 65 percent. The data showed that family business is very influential on the economy of a
country (Bernard, 2013).
The growth of the family business is inseparable from the process of transformation and
transition from generation to generation. In addition, strong leadership, family values,
organizational transformation, succession, culture and attracting talent are needed to build
282 longevity from generation to generation and the development of family businesses (CEO
Stars, 2016). A strong kinship system represents a prominent feature of Indonesian culture
and the main motivation for Indonesians to build a family business (Ramadani et al., 2017).
Culture has an important role in shaping the work system within the family enterprise
because it can serve as glue that integrates ownership, management and family sub-systems
(McCollom, 1988; Tsai, 2011; Karam, 2017). The family values within the company are
inseparable from the culture brought and created by the family. Culture will show the
values, norms and attitudes prevailing within the company. According to Sorenson (2013),
prevailing family business values are usually the basis for reflecting family identity and
values. Family companies, which are able to survive and develop, are companies that instill
the culture properly in each change so that it can be accepted by the company’s
stakeholders. Thus, an understanding of the culture within the family business is needed to
develop more insight and knowledge in running a family business.
Chinese ethnic typically consist of small minorities in a country and region abroad, yet
they play an important role in the economic landscape in their region, such as Southeast Asia,
where they hold most of the company’s wealth in the region (Chen, 2001; Weidenbaum, 1996;
Yeung and Tung, 1996). Cultural values are often seen as important factors in determining the
organizational practices and business practices of Chinese business people. Chinese family
businesses were significantly influenced by traditional Chinese culture and common
characteristics in terms of business operations (Wah, 2001; Yan and Sorenson, 2006). In
Chinese society, influenced by Confucianism, the family is the core element of all social
relations (Ambrogio, 2017). The family business model was one of the important reasons for
the success of Chinese companies (Dana, 1999). The value of Chinese culture is influential in
determining a differentiated family business model: familism and three aspects of the family
could be described as nepotism, paternalism and family ownership (Wong, 1993). In this type
of family company, the majority of key positions are occupied by family members. Chinese
culture emphasizes on two important aspects of family enterprise. The first is the gender of
successors under parent and child relationships. The second is about business development in
industries dominated by men or women. The gender of the successor was considered less
important because the priority attention is about the potential ability of successors, such as
education and managerial skills (Brockhaus, 2004 in Qin and Wang, 2012).
One phenomenon closely related to family business is succession planning or transition
between generations. Based on the survey results of Jakarta Consulting Group (2014) as
much as 67.8 percent had prepared the successor through succession planning, while
32.2 percent was not or not yet prepare it. This process is one of the problems in the family
business because it affects commercial sustainability, including inaccurate decisions in
identifying of future leaders generations. Previous research had highlighted the problematic
dynamics that arise in a succession process consisting of the fear of loss of control,
preferential treatment by the next generation and social status (de Vries, 1993). An effective
succession planning within a family company is in the earliest possible time to involve
family members within the company.
Chinese family-owned companies have different and unique succession planning stages,
where the company has strong values in every business process, so they are able to
maintain their business in several generations of leadership. Many previous studies have
discussed the topic of Chinese family business research, but studies of the influence of
cultural factors on leadership succession are still limited. This study tries to fill the gaps that Cultural values
occurred in previous research. So, this study aims to analyze cultural values in the and their
succession process of small Chinese-owned families in Bandung, Indonesia. This study is implications
expected to provide theoretical and practical implications for academics and family
companies with similar cases.

2. Literature review 283

2.1 Chinese family business
Various studies have been conducted to analyze the role and contribution of family
businesses to the country’s economy, and have become an interesting phenomenon for
further research. Family business is a business that involves family members of at least two
or more family members who oversee company finances (Aronoff et al., 2003) and they
influence company policy (Donnelley, 2002). A company is recognized as a family business
when there has been a transfer of leadership from one generation to the next (Longenecker
et al., 2003). Furthermore, Zubir (2008) enriched that the meaning of family business is a
business that is owned and managed jointly by people who have family relationships.
Family business ownership has dominated Chinese companies since the early nineteenth
century (Wang, 2008). According to Wah (2001), family in Chinese society is the center of all
relationships because of the influence of traditional Confucianism. Thus, it affects the
Chinese family business in relation to family, education, employment, social ethics, group
conformity and centralized authoritarian values, where the collective good of groups and
communities satisfies individual needs (Gatfield and Youseff, 2001). Confucian theories
require that boys need to take family responsibilities after their father, especially for the
eldest son. The values and norms of traditional culture are usually regarded as the main
factors that determine organizational and managerial practices in Chinese family business
activities. Zhu and Warner (2004) found that kinship-based ownership structures can
facilitate the construction of business networks such as ensuring upstream suppliers and
downstream buyers. In general, the most important characteristic of Chinese family
business is the power centralization through the dominance of family ownership and
control. Managerial practice in Chinese family businesses is influenced by inherent cultural
values, this characteristic that distinguishes Chinese managerial systems from others. The
unique characteristics of Chinese organizations include highly centralized decision making,
low activity setting, paternalistic leadership style, strong emphasis on collectivism and
group behavior, and strong family management and ownership. The influence of Chinese
cultural values on organizational and managerial practices can be briefly classified into
people management, organizational structure, leadership style, and business orientation and
strategy (Wah, 2001). This study examines the cultural values embedded in Chinese family
businesses that influence their succession process.

2.2 Succession planning

The succession process plays an important role and gives a significant influence in
determining the future of the desired family business (Ramadani and Hoy, 2015).
Succession planning is a process of leadership transition between generations within a
family enterprise as an effort of business sustainability (Ramadani et al., 2015; Aronoff
et al., 2003). Thus, succession planning is one of the founder challenges in maintaining and
developing the company further. Higginson (2010) suggested important factors in the
succession process such as the transfer of knowledge and abilities, building good
relationships between generations, and being open to ideas and experiences. McNamara
et al. (2009) also found that careful succession planning was proven to have a successor
who was able to overcome the problem. In addition, successors can also introduce positive
cultural, social and economic changes.
JFBM The purpose of succession planning is to achieve the optimal transfer of control and
10,4 responsibility in family business for the next generation (Kaneff, 2011). The internal
succession process for family businesses is a very complex and important issue (Kamei and
Dana, 2012; Gashi and Ramadani, 2013). A research conducted by Morris et al. (1997) shows
that only 30 percent of family businesses survive until the second generation, while the next
generation does not succeed in carrying out their functions so the company cannot survive
284 and develop. Dyck et al. (2002) highlighted that the succession process can represent
strategic opportunities for companies in emerging markets characterized by dynamic
change. Duh (2015) found that success in choosing future successors requires knowledge
transfer involving: mentoring, training and strategic planning among other elements.
Relevant literature indicates that succession is the most important problem faced by
family businesses. The main causes of succession problems in Chinese family businesses
are lack of succession plans, successional abilities, internal and external pressure, culture
and lack of trust between each other (Chen and Hsu, 2009). The lack of a proper succession
plan is the main reason why family business does not continue. Many families ignore the
succession plan, they think they only need to train the successor and surrender the business
to their successors. Thus, succession is a problem for the majority of family businesses
(Handler, 1994). Chinese family business needs to learn the principles of balance between
business and family interests by integrating family culture values into business
management (Wah, 2001). Previous studies have identified Chinese cultural values as
important factors in determining Chinese organizational practices and business practices.
This study examines and explores further the conceptual model of succession planning
based on a study conducted by Ramadani et al. (2017) model with some modifications to the
results of the study, including succession antecedents, succession processes, succession
activities and desired results. Succession antecedents are factors that influence
consideration in the succession process which includes organizational issues,
organizational conflicts and candidate issues. Cultural values are a factor highlighted in
this study. According to Eppink (2011), culture is a characteristic of society that contains an
overall understanding of social values, social norms, science, social structure, religious,
intellectual and artistic. In addition, gender issues are also discussed as part of the value of
Chinese culture in the succession process. Gender is one of the factors that affect the
performance of a family business. Based on the study by Fėlix and David (2019), it showed
that the presence of women in family businesses has a positive impact on business
performance compared to family businesses that are only managed by men. The results of
other studies also revealed that family businesses controlled by women objectively and
subjectively have performance that is no worse than men (Peake and Marshall, 2017).
Succession process is the activity of management in preparing the rules and procedures
for selecting future successor. Meanwhile, succession activities consist of family
communication and assessment activities. Family communication is an activity where all
family members are involved in business meetings and discussions to identify candidates
for the next generation. Meanwhile, for assessment activities, some candidates who meet the
criteria complete a series of tests to involve them in the company during a certain period.
The professional experience gained will complement their insights to manage their business
more effectively in the future (Figure 1).

3. Methodology
This research uses a qualitative method with the case study approach. Qualitative methods
are used to understand the phenomenon of research holistically in a natural specific context
and by utilizing scientific methods (Moleong, 2011). In addition, qualitative research is
considered appropriate in exploratory studies because it provides an opportunity to interact
directly with research subjects, thus avoiding bias during the interview process (Dana and
 Cultural values
Succession Antecedents Succession Process Succession Activities Desired Outcomes
and their
Organizational Issue:
implications
Management Succession Evaluation Process:
Family Communication:
• Culture • Rules and Procedures • Program development
• Ownership Type • Meeting and discussion
• Turnover
• Performance • Problem solving
• Size
• Strategy
• Structure
Assessed Activities
285
• Candidate Availability Gender Equality:
• Successor participant in
the company • Female have an
opportunity in leading
a family business
Candidate Issue:
Gender (Male/Female):
• Characteristics
• Competencies
• Experiences

Conflict Organization:
• Internal Family Conflict
• Talent Retention
• Nepotism
• Gender Issue
Figure 1.
Succession planning
model
Source: Ramadani et al. (2017)

Dana, 2005; Dana and Dumez, 2015). The case study approach is conducted by focusing on
intensive and detailed cases (Yin, 2013), so that the results can describe the case
comprehensively. This study uses four cases of small Chinese-owned family business in
Bandung, Indonesia. According to Yin (2013), the number of literal replication is three to four
cases, while for theoretical replication is six to eight cases. A total of four respondents
participated in this study. A case study research is conducted to find meaning and is not
intended to generalize. This study also tried to describe the problem formulation in the case
studied to reveal the social situation thoroughly, extensively and profoundly (Sugiyono, 2014).
This study aims to discuss the cultural values of Chinese ethnic and their implications in
the succession process in small family business in Bandung, Indonesia. A purposive sampling
technique was used in this study, where the respondents of this study were people who were
considered to understand the social situation of the research object. According to Polkinghorne
(2005), the purposive sampling technique in qualitative research shows that it does not matter
how much data are collected from how many subjects, on the contrary, it is more important to
collect precise, accurate and rich data with meaningful information. Several factors explored
deeper in this study were taken based on the research conducted by Ramadani et al. (2017)
consists of succession antecedent (organizational and candidate issue), succession process,
succession activities (family communications and assessed activities) and desired outcome.
This study uses semi-structured in-depth interview techniques; this allows researchers to
explore more deeply when additional information is considered important for research.
The data source of this research consists of primary data and secondary data. Primary
data were obtained through in-depth interviews with research informants; meanwhile,
secondary data were obtained from reference sources relevant to the study. The interview
process was conducted in a direct face-to-face meeting between the researchers and the
informants in the place of each Chinese family business, the average interview time took
1–2h. To avoid the loss of information, the researcher also asked permission to the
informant to use the recorder to record the conversation between the informants and the
researchers. Prior to the interview, the researchers briefly explained the background
description of the research topic. After the interview process, the interview result was
changed to an interview script written on the interview form to obtain informed consent that
JFBM the data provided were appropriate and applicable to the study, and to ensure the
10,4 confidentiality of the interview (Kaiser, 2009). Based on the agreement with the informants,
the name shown in this study only uses the initials of the name. Each family business is
independently studied using multi-case processing techniques comprising data reduction,
data viewing and verification of conclusions (Hubberman and Miles, 1994).

286 4. Finding and discussion

Chinese ethnic in Indonesia spread in various regions of Indonesia. The Chinese community
has heterogeneous characteristics where differences are based on origin and socio-economic
class, and the level of assimilation (Dana, 2014). Even though Chinese in Indonesia uses
Indonesian names, they have never been fully integrated with indigenous people. According
to Coppel (2008), based on data from the 2010 population census, the Chinese ethnic
population is 1.2 percent of the total population of Indonesia. Coppel noted that about
60 percent of Chinese people speak Indonesian as daily language, and there are a large
percentage of additional languages using their local language, such as Javanese or Sundanese.
The number of people using various Chinese dialects as daily language is quite small, about
20 percent of the total Chinese ethnicity in Indonesia. Chinese entrepreneurs in Indonesia in
1998 controlled 70 percent of the private sector, it was noted that 5,000 medium businesses
and 250,000 small businesses were owned by Chinese entrepreneurs (Dana, 2014).
The results obtained through the depth interview and observations to four small
Chinese-owned family businesses. The respondents in this study used the initials name, to
keep the confidentiality of the respondents, each of the initial names we used were KB, FS,
KM and KF. All respondents in this study are the second generation of Chinese family
business with the type of business is a culinary business. Based on interviews of all
respondents, we can identify the influence of Chinese cultural values at the succession
planning stage in the Chinese family business.

4.1 Succession antecedents

Based on the results of the interviews identified several antecedents in succession planning
such as organizational issues, candidate issues and gender issues. Culture is one of the
organizational issues in the succession planning in Chinese family business. Chinese ethnic
strongly uphold their cultural values. KB states that:
I’m a boy so I have to take care of my mother and continue family business […].
Based on the interviews that the informants inherited the Chinese culture in the family
business where the son as the successor who has an important role as the leader of the
company, it makes all members obedient to the rules based on company decisions. Man et al.
(2016) emphasized the importance of normative factors, especially the sense of obligation and
good “quangxi” created as part of the family unit and company during the succession process.
According to Eppink (2013), culture contains of overall social values, social norms,
science, social structures, and religious, intellectual and artistic that characterizes society.
In addition, Chinese ethnic in Indonesia use certain principles that they have held for a long
time. One of them is the principle of “Ching Li Fa” which means “eat first after that we talk
business,” meaning that before negotiating about business usually Chinese people invite
business associates to spend time eating together. It aims to establish intimacy with
co-workers, so negotiations are calmer and less tense. The Chinese ethnic are also known for
their unlimited hard work.
Furthermore, FS states that:
I worked in the office for less than 2 years, but because I am a boy and the first child, I have to
continue my father’s business […].
According to FS, the boys are inherited to continue the family business; a similar thing is Cultural values
expressed by KM stating that the business successor in the Chinese culture is the son as the and their
leader of the family business. Gender issues become one of the things that arise in planning implications
succession in Chinese family business. Here are the results of interviews with KB:
I continue my mother’s business because I am a boy and have a great responsibility to take care of
my mother, if the daughter is not allowed to continue the family business because she has the
responsibility to keep her husband and family. 287
However, cultural shifts seem to have taken place in Chinese family businesses, where other
respondents did not consider gender issues. According to FS:
In my family, whether male or female alike, the important thing can be responsible to the family
business and able to run the business in accordance with the wishes of parents.
The explanation of FS is not different from KM and KF that men and women can
become corporate leaders, the most important thing is to have the ability to run the
business and responsible in leading the company in accordance with the wishes of the
previous generation.
Based on the results of the study, Chinese ethnic provided an opportunity for all their
children to continue the family business because all children both women and men have the
same rights in the family business ownership. Regardless of whoever becomes the next
leader, the most important as a successor, both men and women, must have strong will,
intention and determination, and sufficient ability to take control of the business. However,
based on data obtained and supported by observations, four Chinese family businesses from
the first generation are predominantly led or controlled by a man, usually the oldest son of
the previous generation, while other families occupy positions as managers or other
department heads. Gender is related to psychological, social and cultural differences
between men and women (Remiswal, 2013).
Here are the results of interviews with KB:
Well maybe like I said before those men are hard workers for family business and women have
responsibility to her husband.
Based on the explanation of KB, those who continue their family business must be men
because they work harder and are responsible for their work to achieve family business
success in the future. Chinese ethnic are more involved in business, both small and large
scale. They have the experience of doing business for generations; therefore, Chinese ethnic
offspring are also directed not to become employees. Among Chinese people working
independently is still seen as more successful than being an employee.

4.2 Succession activities

Several succession activities were also identified in this study. Here are the results of
interviews with KB:
Well when a child has often helped mother and was told the compositions used in making martabak
and how to make a good batter.
The same is expressed by FS, KM and KF. Here are the results of interviews with
respondents:
Since I was a child, I have helped father and taught the process directly. (FS)
Parents always guide how to produce and choose the materials used. (KM)
I’ve been helping out in the store before, given lessons on how to choose the flour used to make the
dough into noodles. (KF)
JFBM Early on, all respondents have been involved in business activities. Thus, at this stage it has
10,4 been done well by previous generations ranging from providing guidance to prospective
successors until invite potential candidates to know more about family business by
involving potential successors in corporate activities. These things are taught by Chinese
parents to their children by involving them in the business and engaging their child in the
work their currently exerts. The successor is not only required to understand the theory but
288 in practice is also directly involved, seeing and experiencing. Through this way, the Chinese
children learn the business philosophy of their parents. Children who are able to manage the
business of their parents will be given the opportunity to develop the business is still under
the supervision of their parents. While for children who are considered by their parents less
able to manage the business, they tend to be limited only as executors. Policies and decision
making remain in the hands of parents, not infrequently even daughters who are authorized
if they are considered capable of managing. Based on the results of the study, the authority
they have may only be done with the permission of the previous generation.

4.3 Desired outcomes

At this stage, an evaluation of succession activities is performed to determine whether the
successor is viable or not to be family business leader. Based on the explanation to four
informants, the development programs on family business follow the changing of trend and
lifestyle, by utilizing technology and internet network as a bridge between companies and
consumers. Based on interview results, KB and FS each have a strategy to overcome
employee turnover. According to KB how to cope with high turnover, the company has a
strategy to overcome by giving rewards and appreciation in the work and provide bonuses
to the employee. Meanwhile, to overcome high employee turnover, self-introspection is
needed regarding internal problems that trigger employee turnover. After getting the cause
of the problem, the company leader gives motivation to the employee. However, according to
KM and KF that the high turnover of employees is not a problem because their business is
still relatively small and has not had many employees. Turnover according to Robbins et al.
(2003) is the act of permanent resignation made by employees either voluntarily or not.
In addition, successors are also evaluated on their strategies for dealing with business
competition. Based on FS’s explanation, to overcome business competition, the company
innovates by opening branches in strategic places and expanding business. Here are the
results of interviews with FS:
We always make new innovations in the face of competition so as not to lose compete with similar
businesses; we also often hold promos to attract the attention of consumers.
Meanwhile, according to KF:
[…] we better maintain the taste and reasonable price for a bowl of noodles.

5. Conclusion and recommendation

Based on the results of the study, there are several stages identified in succession planning
in small Chinese-owned family business which include succession antecedents, succession
activities and desired outcomes. In contrast to the study conducted by Ramadani et al.
(2017), the stages of the succession process were not identified in this study. In addition, the
results showed that small Chinese-owned family business in Bandung has not applied the
rules and procedures in the succession process. Most of the Chinese family business in this
study still holds Confucianism culture, where they prioritize boys as business successors,
who have a greater responsibility rather than successor with other gender. It also raises
gender issues. However, there are differences opinions among respondents in response to
gender issues, there are several Chinese family businesses that provide equal opportunities Cultural values
and rights to their successors regardless of gender. However, they apply specific criteria for and their
business successors including having strong will, intention and determination, and implications
sufficient ability to control the business.
The next stage is a succession activity in which the founder provides an opportunity for
their successors to learn business activities, provides guidance and direction to increase the
knowledge and motivation of successors in learning to do business. The involvement of 289
future successors in business activities also begins at this stage. In this study, it was
identified that the founder did not release directly the authority of the company to the
successor but had to prior permission to the previous generation. The next stage is the
desired outcomes by carrying out a success evaluation process in succession activities,
including the implementation of development programs that have been carried out in an
effort to improve the performance of family businesses. In addition, at this stage an
evaluation was also conducted regarding internal problems that triggered employee
turnover and the problem solving capability of the successors in the face of business
competition. This research also identifies that the successor is still experiencing weaknesses
in problem solving; they have not been able to solve the problems that occur so that
authority cannot be fully given by the founder.
Currently, gender equality has been recognized globally, so gender is not a relevant issue
anymore in family business. The family business can provide equal opportunities to future
candidates regardless of gender. Collaboration between successors, without differentiating
gender, is needed to complement each other in improving family business performance.
Family involvement in business processes also needs to be improved in maintaining family
position in business. In the development program stage, the next successor can maximize
the use of information technology, such as the utilization of social media optimally and
consistently by updating information about the products or services offered to develop
market share and increase product sales, build good interactions with customers, and
display interesting product content so visitors on social media are interested in exploring
the products offered.
Research on China’s family business is still limited, so governments and business
practitioners can provide their perspectives to further understand the role of Chinese family
businesses, especially in Indonesia. Ethnic Chinese play an important role in the economy in
Indonesia, so the government plays a role in taking policies related to the sustainability of
Chinese family businesses. This study can be further developed by conducting a survey that
focuses on Chinese family businesses, so as to provide an understanding of business
expectations, challenges and obstacles, and efforts to increase business value.

6. Limitation and future research direction

A recent survey of the accounting agency (PricewaterhouseCoopers, 2018) showed that the
crisis of the succession occurred in Chinese family business and needed better handling
soon. The issue of leadership and management remains a concern in succession. The main
challenge for family business entrepreneurs according to the PwC survey is innovation and
economic environment. This research is focused only on the issue of succession and touches
on a little about innovation and economic environment, the next research is expected to be
more integrated in exploration so that the results could be more impactful.
This study is limited to focusing only on four small Chinese-owned family businesses in
Bandung, even though there are already many Chinese family businesses that have
medium-sized enterprises. So, it is necessary to investigate Chinese family business in
applying cultural value based on a different scale of enterprises size. In addition, this study
also has limited area coverage; further research is expected to expand the scope of study
areas such as provinces or national.
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Corresponding author
Grisna Anggadwita can be contacted at: [email protected]

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