Abstract:
Small and medium enterprises are a vital economic base for any economy as they have
the ability to create employment. A family enterprise is an enterprise that is influenced
by two or more family members through their participation, ownership, strategic
preference or culture. Most enterprises start as family enterprises. Empirical studies
show that as vital as they are, family enterprises have very low survival rate. This study
sought to investigate the challenges that hinder sustainability of small and medium
family enterprises (SMFEs) after the exit of the founders in Kenya. Specifically, the
study looked at managerial skills, entrepreneurial skills, human resource management
skills, individual behaviour and succession planning.
The study used a mixed research design of exploratory, descriptive survey, ex-post facto
and quantitative designs. Stratified random sampling was applied stratifying the
population into trade, manufacturing and service strata. The list of licensed small and
medium enterprises from Nairobi city council and Thika municipality served as the
sampling frame. A sample of 247 enterprises was randomly selected from the strata. A
preliminary study found out that SMFEs constitute 74.6% of all the SMEs in Kenya.
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Data was analyzed using Statistical Package of Social Sciences (SPSS) version 19 as a
tool of analysis. Linear regression relationship curves were developed showing positive
relationship between all independent variables and the dependent variable. The study
found out that there is strong positive influence on sustainability of SMFEs after the exit
of the founders attributable to a unit of change on all independent variables namely
managerial skills, entrepreneurial skills, human resource management, skills succession
plan and individual behaviour. The principal confidant has a negative influence on
sustainability of an SMFE after the exit of the founder.
The study recommended that leaders and owners of SMFEs require managerial,
entrepreneurial, HRM skills and succession plan to effectively lead the enterprises to
long term sustainability. Their individual behaviours also influence the sustainability of
the same enterprises.
