Relational Competencies as Determinants of Knowledge Transfer within Intra-Family Succession by Isabella R. Hatak1and Dietmar Roesslb ________________________ In the course of succession there is a high risk that knowledge embedded in the predecessor leaves the organization. Due to their informal organization structures and the associated relevance of tacit knowledge, the knowledge transfer poses a major challenge for family firms. This paper discusses the challenges of knowledge management within intra-family succession against the background of the knowledge-based view. As a knowledge transfer is crucial for a successful business continuation, factors that promote the interpersonal knowledge transfer are identified. Since the quality of the relationship between successor and predecessor is considered a key determinant of knowledge transfer, the role of relational competence in the knowledge transfer process is analyzed. A laboratory experiment has been conducted in order to test the derived hypotheses. In its conclusion, the paper presents the empirically confirmed correlation between relational competence and knowledge transfer within intra-family succession. ________________________ Introduction A firm’s specific knowledge, as well as the ability and willingness to transfer it, is considered a key strategic asset in the course of generating competitive advantages (Spender and Grant 1996). Knowledge is viewed as the sum of expertise, skills and abilities applied by individuals in the form of theoretical knowledge and modes of dealing to solve problems (Leonard and Sensiper 1989). It can include facts and information, as well as understanding gained through experience, education or reason. In the course of succession there is a high risk that tacit knowledge embedded in the predecessor leaves the organization. Given 4.5 million business successions per year within the European Union (EU 2009), a successful knowledge transfer is of high economic relevance.

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Isabella Hatak is senior researcher at the Institute for Small Business Management and Entrepreneurship and at the RiCC-Research Institute for Co-operation and Co-operatives at the WU Vienna University of Economics and Business. Dietmar Roessl is professor at the WU Vienna University of Economics and Business and head of the Institute for Small Business Management and Entrepreneurship and head of the RiCC-Research Institute for Cooperation and Co-operatives. Address correspondence to: Isabella Hatak, [email protected]

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The typical characteristics of family firms, like their small size, informal organization structures and a restrictive information policy (see for example, Westhead and Cowling 1998; Gallo 1995) applied by the main entrepreneur, implicate lower pressure and a lower propensity to make knowledge explicit. As the dictum of “not everybody needs to know everything” causes a hoarding of tacit knowledge on the part of the entrepreneur (Sonnenfeld and Spence 1989; Lansberg 1988), the transfer of exclusive knowledge induces a shift of power having extensive consequences on the overlapping systems of family and firm. Therefore, a successful knowledge transfer can take place only if the predecessor is willing to supply his knowledge and to forgo his influence within the firm and his “patriarchal position” within the family. Due to hidden intentions of the successor, the predecessor is confronted with uncertainties concerning the successor’s handling of information in the future. In this regard, we assume that the perceived relational competence of the successor can absorb the succession-immanent behavioral risks via the dimension “trust” so that the predecessor can accept the behavioral uncertainties concerning the other party’s goodwill, which results in an effective knowledge transfer (Szulanski 1996). Whereas the importance of the successor’s technical skills and capabilities as to the continuation of the firm, for example, has been extensively discussed within family firm succession (see for example, Cabrera-Suarez, De Saa-Perez, and Garcia-Almeida 2001; Barach and Ganitsky 1995; Ward and Aronoff 1994), the study of relational competence as a determinant of an effective knowledge transfer within intra-family succession has largely been ignored. This study will therefore analyze the relationship between relational competence and knowledge transfer. The paper is structured as follows: (1) First, the challenges of knowledge management within intra-family succession are discussed against the background of the knowledge-based view (Nonaka’s theory of knowledge creation and knowledge-creating space is applied to the family business succession process). (2) As a bilateral active 2

knowledge transfer is crucial for a successful business continuation, factors that promote the interpersonal knowledge transfer are discussed. Since the quality of the relationship between successor and predecessor is an important determinant of the knowledge transfer, the role of relational competence in the knowledge transfer process is analyzed. (3) A preliminary laboratory experiment has been conducted in order to test the derived hypotheses. (4) Correlation analysis (Pearson) suggests that there is a strong positive relationship between perceived relational competence and knowledge transfer. (5) The paper closes with implications for further research and for knowledge management within the intra-family succession process.

Challenges of Knowledge Management within Intra-Family Succession As no generally accepted definition (Chittoor and Das 2007) concerning the term “family firm” exists, a literature-based definition needs to be applied. In this paper, a family firm is defined as a firm (1) in which several family members – not necessarily the core family – hold capital shares (Westhead and Cowling 1998) or work in the firm as contributory staff members, (2) whose capital majority is held by one or more family members that make strategic decisions (Barnes and Hershon 1976), (3) on whose economic development the family depends existentially (Sharma and Manikutty 2005), or (4) which has an important influence on the mind-set and on the lifestyle of the family members involved (Habbershon and Williams 1999). In a generation change, the entrepreneur as the central information source leaves the firm. This leads to the questions which knowledge the predecessor possesses and how this knowledge is handled within the succession process: Is the firm going to irrecoverably lose the knowledge together with the predecessor, or will it be transferred to the successor or to an-

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other employee and, thus, tied down to another personal information source, or will it be secured within the firm, independent of individual people?

Identification Problem The first step towards an efficient information supply is the identification of the knowledge required by the business departments. Therefore, it has to be clarified which relevant knowledge the entrepreneur possesses und which additional knowledge is needed for future operations. In order to ensure the flexibility of a firm, dysfunctional knowledge assets that make future businesses difficult have to be identified and strategies for an organized “unlearning” of these knowledge assets need to be developed. Due to the need for coordinating different information sources (predecessor, successor, employees, and storage media which are independent of individuals in a firm) within the succession process, these tasks become even more complex. In this context we can differentiate between three different kinds of knowledge: knowledge which is tied down to (1) the predecessor, (2) other company-internal individuals (e.g. long-time employees), and (3) storage media which are independent of individuals in a firm. Whereas the first and second types are forms of tacit knowledge, the third kind constitutes explicit knowledge. According to Polanyi (1985; see also Nonaka and Takeuchi 1995), tacit knowledge is personal knowledge anchored in values, actions and experiences. Explicit knowledge is articulated in the form of documents or databases for example. The conflicts resulting from the overlap of firm and family sphere in family firms imply a restrictive information policy. The dictum of “not everybody needs to know everything” causes a hoarding of tacit knowledge on the part of the entrepreneur (Sonnenfeld and Spence 1989; Lansberg 1988). Furthermore, this parsimony, which is typical for small and medium sized enterprises (Roessl 2005), leads to an avoidance of a resource-intensive storage of 4

explicit knowledge. Therefore, knowledge and skills are not multi-existent in the firm. Due to the low turnover of the main decision-maker, a large amount of tacit knowledge is generated over time, without the necessity to distribute this knowledge within the firm. Deficits in the knowledge documentation are the consequence. As the predecessor has established a personal network of customers, suppliers and the relevant public (Mugler 1998) and, thus, does not need to share his experiences and expertise with other employees, the existence of the firm depends on his tacit knowledge. Hence, as a first step, an identification of this knowledge is necessary. In this connection, the fact that the predecessor is not directly aware of his tacit knowledge poses a significant challenge. Moreover, the knowledge which has been accumulated by the predecessor over time has to be evaluated concerning its aptitude for the future, as changes in the basic conditions may have devaluated formerly important knowledge. In order to solve this identification problem, the predecessor has to reflect on his actions and decisions so that he can envision the knowledge which is of importance for the successor, as a precondition for its articulation and, thus, its explicit circulation. To avoid incommensurability of the successor’s knowledge with the predecessor’s transferred knowledge and to disclose the successor’s knowledge deficits, the successor also has to make himself aware of his tacit knowledge.

Transfer Problem Basically, the problems associated with the transfer of knowledge can arise from the lack of infrastructure for knowledge management in the family firm: The high proportion of tacit knowledge and the inadequate technical infrastructure in small family firms hinder the application of complex knowledge management tools and hence the knowledge transfer. Because of the low turnover of the main decision-maker no routines have been established. Furthermore, personal, trust-based relationships resulting from flat structures and hierarchies 5

promote the use of direct and informal communication channels for sharing information and experience (Szulanski 1996). Although the informal communication can have a positive effect on the socialization of knowledge, it can also exacerbate its externalization. As the transfer of explicit knowledge is comparatively unproblematic, the knowledge transfer within a generation change in the family firm primarily addresses the problem of maintaining the predecessor’s tacit knowledge. For an organization, explicit knowledge is easily available and hence can be used from a variety of persons (North 2001; Nonaka and Takeuchi 1995), as it can be recorded and transferred by sharing information and communication technologies. Basically and essentially, the transfer of tacit knowledge – according to the knowledge spiral of Nonaka and Takeuchi (1995) – can be carried out in two ways: In the course of socialization the predecessor’s tacit knowledge is immediately converted into the successor’s tacit knowledge through shared experience. The successor learns through observance, imitation, as well as trial and error. As the knowledge remains not only tacit on the part of the predecessor, but also on the part of the successor, the effectiveness of the knowledge transfer can only be evaluated on the basis of the successor’s subsequent actions. Moreover, the knowledge transfer within socialization is time-consuming. In the course of externalization, the predecessor’s tacit knowledge is made explicit and, thus, becomes transferable through direct communication. A prerequisite for a successful externalization is that the predecessor is able to translate his tacit knowledge into a suitable coding (language, figures, etc.). The problems associated especially with the transfer of tacit knowledge in small family firms result primarily from the interlocking of the systems “family” and “firm”, because the predecessor’s knowledge of not only the system “firm”, but also the system “family”, has a specific importance, which originates from the intrinsic logic of the systems (Kailer 2002). The transfer of exclusive knowledge induces a shift of power and can have extensive 6

consequences on the overlapping systems of family and firm: If the predecessor refuses to transfer his knowledge, he can ensure his influence within the firm and his “patriarchal position’ within the family: As the continuation of the firm and its continuation by members of the family organization constitute the main goals of the family firm, role conflicts can occur. As an entrepreneur interested in a successful continuation, the predecessor can evaluate a family member as being unqualified for becoming his successor; but in his position as member of the family organization he can still prefer this family member as successor. Normally the predecessor has to transfer his knowledge to the family member in his role as successor, but facing the successor’s lack of technical and motivational competencies he fears for the firms’ future and conceals his knowledge in order to maintain his influence and to delay the succession.

Factors Promoting the Transfer of Knowledge within Intra-Family Succession As an active transfer of tacit knowledge is crucial for a successful continuation, factors that promote the interpersonal knowledge transfer from predecessor to successor need to be identified. These factors include 1) internal social capital, which encourages the ability of knowledge identification and transfer, 2) the predecessor’s commitment to change, which in turn promotes the willingness to transfer knowledge, and 3) the quality of the relationship between successor and predecessor, which can promote or hinder the knowledge transfer considerably (Chirico and Salvato 2008). As bilateral knowledge transfer emerges from repeated interactions and is intensified through “close-knit-groups”, whose members identify themselves with a larger collective (Kogut and Zander 1992), the knowledge transfer is favored in family firms: If the familyinternal relations are backed with social capital, stable relations can be built in the long run (Nahapiet and Goshal 1998), promoting the transfer of tacit knowledge (Sirmon and Hitt 7

2003). Interdependence and repeated interaction foster social capital (Chirico and Salvato 2008). Thus, the density of communication within the family has to be increased, as the development of shared beliefs based on consensus leads to renewed collective actions (Sorenson 1999). Another factor that affects the generation of social capital and therefore facilitates the knowledge transfer is delineation: As strong communities, family firms distinguish insiders from outsiders on the basis of kinship and thus enhance closure through the emergence of shared norms (Arregle, Hitt, Sirmon, and Very 2007; Etzioni 1996). The resulting common system of meanings strengthens social capital (Tagiuri and Davis 1996; Chirico and Salvato 2008), which in turn promotes an active knowledge transfer. The willingness to transfer knowledge is determined by commitment to change (Chirico and Salvato 2008; Randall, Fedor, and Longenecker 1990). Commitment to change increases cooperative behavior and enables the flexible use of individual potentials (Herscovitch and Meyer 2002; Sharma and Manikutty 2005). This commitment results from the satisfaction the individuals derive from the feeling that they are contributing to the success of their own business and to its continuity over time. However, as in family firms “feelings and emotions related to change are likely to be deeper and more intense” (Dyer 1994, p.125), commitment can also be a source of resistance to change (Roessl 2005). Thus, the predecessor has to commit himself to change in order to enable an efficient knowledge transfer. Basically, succession makes great demands on predecessors. Due to the time gap between the (completed) knowledge transfer by the predecessor and the application of the transferred knowledge by the successor, the particular problem of the knowledge transfer within intra-family succession consists in the reduced applicability of control and sanction mechanisms in order to ensure specific future actions by the successor, even though these actions strongly influence the performance of the family firm. Due to the latitude of opportunism of the successor, the predecessor is confronted with risks (adverse selection, hold 8

up, moral hazard) as to the successor. On the one hand, the predecessor can reduce the successor’s latitude of opportunistic behavior, and therefore the uncertainties, and accept the agency costs (e.g. bargaining and control costs, costs for the initiation of sanction potential if the successor misappropriates the transferred knowledge) which are connected with the implemented control and sanction mechanisms. On the other hand, the predecessor can reduce the successor’s inclination to behave opportunistically and accept the uncertainties concerning the behavior of the successor and the correlating risk costs (as the latitude of opportunistic behavior still exists). This decision to accept behavioral uncertainties can only be made against the background of a sustainable trust-based relationship, as trust, which is understood as the trustor’s expectation that the trustee will voluntarily refrain from behaving opportunistically, can absorb the succession-immanent behavioral risks (Hatak and Roessl 2010; Luhmann 2000). Therefore, in order to initiate and maintain an active knowledge transfer within intra-family succession, the relationship between predecessor and successor can be coordinated on the basis of trust and must be so if other coordination mechanisms are not available at all, or if they are relatively, as to the reduced risks, costly (Cabrera-Suárez, De Sáa-Perez, and García-Almeida 2001). Referring to trust as a coordinative basis for the relationship between predecessor and successor, and thus for an effective knowledge transfer, the predecessor has to decide whether the successor is trustworthy; yet this characteristic is to a large extent concealed before entering into a trust-based relationship. Trust therefore rests on the accredited intensity and stability of the successor’s motivation. In the course of assessing the successor’s behavioral intention, the predecessor is confronted with subjective uncertainties concerning the latter’s real preferences and also with objective uncertainties concerning the effects of exogenous factors and the behavioral restrictions. Therefore, in the course of developing his trust, the predecessor will strive for reducing his subjective uncertainties with the help of additional 9

information (Hatak and Roessl 2010). As information gaps cannot be completely closed, trust requires the extrapolation of existent information from the past into the future (Luhmann 2000). In the context of reducing subjective uncertainties, the relevance of relational competence becomes apparent: Knowledge will only be transferred if the predecessor gets information from which he can infer it to be more likely that the successor will voluntarily refrain from behaving opportunistically (Weiss 1992). As the subjective perception of the successor’s trustworthiness is mainly influenced by his personal characteristics, we hypothesize that the perceived relational competence of the successor constitutes such information for reducing the predecessor’s subjective uncertainties regarding the behavior of the successor. Relational competence refers to the ability of a party to initiate and maintain relationships. As relational competence forms an abstract entity, modeling the relationship between relational competence and knowledge transfer requires the identification of empirically observable equivalents for relational competence. Therefore, by analysing approaches for measuring relational competence we have derived the following indicators: -

empathy and solidarity (Erpenbeck and Heyse 2007; Edwards and Ewen 1996): The successor is characterized by empathy and solidarity so that he can notice, evaluate and consider the needs, reactions and behavioral pattern of the predecessor.

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ability to get in contact with others (self-disclosure; see Erpenbeck and Heyse 2007; Kauffeld, Grote, and Frieling 2007; Edwards and Ewen 1996): The successor can initiate the relationship with the predecessor due to his ability to communicate personal information the predecessor would normally not discover.

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persuasive power (charisma; see Erpenbeck and Heyse 2007; Kauffeld, Grote, and Frieling 2007): The successor is able to depict for example the goals of the relationship convincingly so that they are based on mutual agreement. 10

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social-mindedness (Erpenbeck and Heyse 2007; Kauffeld, Grote, and Frieling 2007; Edwards and Ewen 1996): The successor has a benevolent orientation towards the predecessor and does not expect a counter-performance for every performance.

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ability to communicate (Erpenbeck and Heyse 2007; Edwards and Ewen 1996): The successor has the ability to plan the communication systematically, as well as the verbal skills to shape the communication with the predecessor.

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ability to cooperate (Erpenbeck and Heyse 2007; Kauffeld, Grote, and Frieling 2007; Edwards and Ewen 1996): The successor has the ability to interact with the predecessor, as he refuses to behave unfairly without being detected.

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ability to handle conflicts (Erpenbeck and Heyse 2007; Kauffeld, Grote, and Frieling 2007; Edwards and Ewen 1996): The successor is able to uncover conflicts and solve them in a consensus-oriented manner. We assume that, as additional information, relational competence relates positively –

via the dimension “trust” – to the knowledge transfer from predecessor to successor: Basically, the fulfillment of the expectation that the successor will voluntarily refrain from behaving opportunistically (= honoring of the trust decision) depends on two factors: the ability and the willingness of the successor. Due to the information asymmetries between predecessor and successor, the predecessor is not only unsure whether the successor is able to honor the trust decision, but also whether he is willing to behave accordingly. The successor’s relational competence can now reduce the predecessor’s subjective uncertainties concerning the willingness of the successor (Sichtmann 2007; Shaw 1997; Mishra 1996). Based on his relational competence the successor behaves in a trustworthy manner, that is, he does not misappropriate the information disclosed by the predecessor. Due to this behavior the predecessor expects the successor to refrain from behaving opportunistically also in the future. Therefore, as shown in Figure 1, we assume that there is a positive relationship 11

between relational competence – via the dimension “trust” – and the knowledge transfer, which becomes manifest in the amount and correctness of information disclosed by the predecessor.

risk perception

risk propensity

trust propensity

Figure 1 Relational Competence’s Impact on Knowledge Transfer

Apart from the perceived relational competence as personal characteristics of the successor, we assume that certain characteristic traits of the predecessor and also situational factors are related to the amount and correctness of the information disclosed by the predecessor. We hypothesize that there is a positive relationship between the propensity to trust as a personality trait and the likelihood the predecessor will disclose information openly and honestly with the successor: The propensity to trust might be understood as the generalized willingness to trust others. As the predecessor is confronted with limited information in the course of assessing the potential successor’s trustworthiness in a specific situation, he will develop generalized expectations based on past interactions with others 12

(Rotter 1967). As substitute information such generalized expectations, that is the propensity to trust, can then influence the trust and thus also the amount and correctness of information disclosed by the predecessor (= knowledge transfer) in a specific situation (Currall and Judge 1995; Mayer, Davis, and Schoorman 1995). Basically, knowledge transfer is risky: The successor has the possibility to misappropriate the shared knowledge and thus, he can cause losses on the part of the predecessor. Therefore, the risk associated with the knowledge transfer is rooted in the electoral freedom of the successor between honouring and betraying the predecessor’s decision to disclose information (Coleman 1990). As risk is inherent in transferring knowledge, we hypothesize that the risk propensity relates positively to the likelihood the predecessor will transfer knowledge (as shown in Figure 1). Moreover, we hypothesize that the situational risk perception is negatively related to the likelihood the predecessor will transfer knowledge because disclosing information in such situations goes along with higher risks (as shown in Figure 1). The risk perception involves the predecessor’s beliefs about situation-specific likelihoods of gains and losses, neglecting the influence of the particular successor (see for example Mayer, Davis, and Schoorman 1995; Coleman 1990). To sum up, we assume that not only the successor’s relational competence, but also the trust and risk propensity as personality traits of the predecessor, and the situational risk perception, relate to the knowledge transfer process.

Research Method A laboratory experiment was conducted in order to analyse the relationship between relational competence and knowledge transfer. Sixty subjects, undergraduate business students (36 male, 24 female) from the WU Vienna University of Economics and Business, participated in this experiment yielding 60 useable data. Their mean age was 25.5 years (SD = 6.3). 13

Before assigning the subjects randomly to control and experimental group, we measured the participants’ levels of trust and risk propensity. The validity and reliability of the trust propensity scale of Costa (2000), which is based on Wrightman’s RPHNS, has been demonstrated in previous research (see for example, Spaeth 2008). It consists of seven items with a five-point Likert scale ranging from strongly agree to strongly disagree. The widely used and reliable scale of Sitkin and Weingart (1995) for measuring risk propensity consists of five items with a 5-point Likert scale ranging from strongly agree to strongly disagree. Following the experiment, we measured the participants’ situational risk perception by means of Sitkin and Weingart’s perception scale (1995), which consists of four items with a 5-point Likert scale ranging from strongly agree to strongly disagree. Cronbach’s alpha values were calculated in order to assess the internal consistency of items in the scales. The used measures have been shown to have good internal consistency, with Cronbach's alpha values for the trust propensity scale of 0.94, for the risk propensity scale of 0.86 and the situational risk perception scale of 0.78. Concerning the experiment, the participants were presented a written scenario, describing a situation in which they were predecessors who are confronted with intra-family succession. In order to promote the success of this process they can transfer their knowledge to a potential successor. More precisely, the participants’ task was to prepare themselves for a meeting with the potential successor by studying the given inside information as to their firm, the market, the competitors and future potentials and some information about the potential successor. Referring to the options measured within the setting, the participants could disclose inside information with the successor, that is, they had the possibility to transfer correct or wrong information to the potential successor. So, after having studied the scenario, participants had to make decisions concerning 1) the amount (open information) and 2) the quality of the information (honest information) shared with successor. The control group and the 14

experimental group were presented the same written scenario apart from the successor’s description: In the experimental group the successor was described as a highly relationally competent person (using the derived indicators), whereas the control group was confronted with a successor that possessed of average relational competencies. In sum, the experiment, including the questionnaire as to the personal characteristics and perceptions, lasted approximately one hour per participant. The intensity of “knowledge transfer” was measured by summing up the amount of open information (16 data could be shared at most) and the amount of honest information (that is, the share of correct information in open information; a maximum of 16 data could be transferred honestly). In order that all variables have the same weight, the preliminary value of “honest information” was multiplied with 1.6. The variable “relational competence” was treated as a dummy variable in the analysis.

Results Data analysis involved several steps. In a first step, internal consistency measures were calculated. As mentioned in the previous chapter, the internal consistency measures of all multi-item scales (Cronbach’s alpha) meet the statistical threshold in empirical research. In a second step, data was graphed leading to the assumption that the variables “knowledge transfer”, “relational competence”, “trust propensity”, “risk propensity” and “situational risk perception” are normally distributed and that linear relationships exist between them. Moreover, variance inflation factors (VIF) were calculated in order to test independence requirements. The highest observed VIF equals 1.213, which is far below the critical value of 10 indicating that multicollinearity does not occur to be a problem for the quality of the analysis of the modelled relationships.

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In a third step, Pearson’s Correlation Coefficients (r) were calculated in order to test the hypotheses as to whether and how strong pairs of variables are related. Basically, the closer r is to +1, the more closely two variables are related. As hypothesized, we found that that relational competence and knowledge transfer are highly correlated (r = 0.73, p < 0.01). Moreover, both risk propensity and trust propensity are positively correlated with knowledge transfer (r = 0.21, p < 0.05; r = 0.12, p < 0.05, respectively). Subsequent analysis revealed that risk propensity and situational risk perception are negatively correlated (r = -0.35, p < 0.01). Furthermore, results indicate that situational risk perception correlates negatively with knowledge transfer (r = -0.35, p < 0.01). Thus, the hypothesis concerning the positive relationship between relational competence and knowledge transfer can be corroborated. Figure 2 Correlating Relational Competence with Knowledge Transfer

Summing up, as shown in Figure 2, the hypothesis concerning the strong positive relationship between relational competence and knowledge transfer can be corroborated. Correlation analysis also revealed that the hypotheses as to the relationship between trust propensity, risk propensity, situational risk perception on the one hand and knowledge transfer on the other hand can be accepted. 16

Conclusions The primary role of our research was to determine what role, if any, relational competence plays in the process of transferring knowledge within intra-family succession. Therefore, we have defined indicators of the perceptions of the successor’s relational competence that are consistent with the definitions provided. Knowledge transfer was measured in terms of actual behaviour; that is the amount and correctness of information disclosed by the predecessor. The transfer behaviour subject to relational competence was measured within an experimental setting. Results showed that the constructs relational competence and knowledge transfer are highly correlated and that this relationship is highly significant. The extent of trust propensity and risk propensity and also the situational risk perception were assessed directly (through survey items). Results showed that these personality factors and perceptions correlate with knowledge transfer. Therefore, the proposed model can be confirmed. There are several limitations to the study: First, as the number of participants is quite low and the distribution between the genders is unequal, the conducted experiment has to be seen as a preliminary study. But this limitation can be resolved by further conducting experiments and employing a regression analysis in order to disambiguate the effect of relational competence on knowledge transfer. Second, the mode of action of relational competence could not be observed the way it has been modelled (via the dimension “trust”). To resolve this limitation, a methodology that taps into the predecessor's expectation that the successor will voluntarily refrain from behaving opportunistically is needed. Third, the knowledge transfer is modelled and tested unidirectional: from a given predecessor to a given successor. However, the successor can also hinder the knowledge transfer: The knowledge transfer is made difficult if the predecessor and the successor are not willing to communicate due to family conflicts or if the successor does not perceive the predecessor as a relevant 17

information source due to his education and socialization (Szulanski 1996). Because of the typical lack of transparency concerning the firm’s management, the successor is often not appreciative of the previous firm’s management and of the relevance of tacit knowledge (Cabrera-Suárez, De Sáa-Perez, and Garcia-Almeida 2001). But this limitation associated with the unidirectional modeling can be resolved by attaching the mirrored model and by adapting the experimental design (usage of online strategic/operational games). Summing up, “the commingling of business and family roles” (Harvey and Evans, p.345) increases the need for trust-based relationships within the family firm in order to enable a successful transfer of knowledge from predecessor to successor: By identifying and analysing the key role of relational competence in the knowledge transfer process – via the dimension “trust” - we tried to meet the requirements stated by Cabrera-Suárez, De Sáa-Perez, and García-Almeida (2001), where the process through which knowledge is transferred within intra-family succession should be further explored. To conclude, the successor’s relational competence is positively related to the knowledge transferred from predecessor to successor. Therefore, and because Eddlestone and Kellermans (2007; see also Kellermans and Eddlestone 2004) found that relationship conflicts resulting from interpersonal relational incompatibilities among actors within a group (Jehn 1995) primarily hamper the knowledge transfer in family firms, particular attention should be paid to methods (workshops, coaching, training sessions) that strengthen the relational competence of the successor in order to promote a successful transfer of tacit knowledge (by socialization and externalization) from predecessor to successor.

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