Effects of governance on the sustainability and continuity of family businesses in Botswana

Abstract

Family businesses have become a topic of growing interest among scholars and policy makers at both international and local levels, particularly given the sector’s contribution to the world economies. The increasingly volatile employment climate that prevails in many African settings today has increased the focus on small and medium enterprises as engines of economic growth and employment creation, and Botswana is no exception. The majority of family businesses are small to medium enterprises. The main objective of this study was to investigate the effects of governance structures and systems on the sustainability and continuity of family-owned and controlled businesses in Botswana. A study of this nature was important in view that some key sectors of the Botswana economy are dominated by small and medium family businesses. Of concern is the lack of continuity from one generation to the other among family businesses. Therefore, an understanding of the family dynamics and family business governance systems is important for managing the success and survival of the family business. Studies on small and medium enterprises have been carried out in Botswana mostly focusing on their problems, but not on their governance and sustainability. This was done using a cross-sectional research survey design. The target population for the study comprised small and medium family-owned businesses drawn from the manufacturing and professional services sectors and registered with the Business Botswana and Local Enterprises Authority in 2017. A sample of 144 familyowned businesses based in Gaborone and Francistown was polled. Quantitative data for the research was collected using a questionnaire. The quantitative research methodology adopted applied correlation and regression analysis, utilised Pearson correlation tests and Levene’s independent sample tests were performed to measure the relationships between five independent variables and the sustainability and continuity of family businesses in Botswana. This research empirically tested five hypotheses relating to governance factors that affect the sustainability and continuity of family businesses in Botswana. The research findings support the notion that the presence of governance structures, effective communication, decision-making, succession planning, and a vision, mission and strategy have a positive effect on the sustainability and continuity of family businesses. This research also established that small and medium family businesses face the same challenges as any other formation by ownership of non-family small and medium enterprises. Evidence is also provided that the challenges faced by family businesses in Botswana do not differ significantly with challenges faced by small and medium family businesses, with most respondents citing a lack of funding as the major challenge. For small and medium enterprises to continue playing their critical role in the economic development of Botswana, they need to formalise and adopt systematic approaches to strategy formulation and implementation, succession planning, governance structures and compliance. It is recommended that future studies focus on developing systematic generic models and assist small and medium familyowned businesses to implement and improve on their sustainability and continuity of businesses in Botswana.