Activities involved in succession process 7

Journal of Contemporary African Studies, 21, 1, 2003

Entrepreneurial Succession and
Post-Founder Durability: A Study of
Indigenous Private Manufacturing Firms
in Igbo States of Nigeria
Chikwendu Christian Ukaegbu

The years following the fall of Soviet Communism have witnessed a heightened domestic and
international enthusiasm for democracy and the free market. This new world order, backed by
neo-liberal ideology, currently wields influence throughout Africa, where deliberate efforts have
continued in the direction of private sector development. Private sector development, in turn, has
placed indigenous entrepreneurs at the centre stage of productive activity.

In response to these developments, federal and state governments in Nigeria' s nascent
democracy have articulated their intentions for industrial development premised on the free
market model. These governmental intentions include the attraction of more foreign investments,
attempts to restore the confidence of foreign investors, the improvement of conditions to enhance
industry, and the rejuvenation of physical infrastructure to support and facilitate industrial
activities. Other governmental objectives include greater efforts to make the best of the export
processing zones still under construction, and the continuation of the privatization process started
and stalled by previous administrations. Political intent, however, is one thing. Aggressive and
committed governmental effort is quite another. After all, previous administrations had stalled on
similar intentions towards industrial development.

In the same vein, representatives of the organised private sector, led by the Manufacturers
Association of Nigeria, lament the continued decline of industrial capacity utilisation, low
consumer demand due to the high level of poverty in the country, and the financial difficulties
experienced by small- and medium-scale enterprises. They also point to the country's excessive
dependence on imported raw materials and machinery .They advise the government to strengthen
legal institutions to guarantee law and order for business to flourish. Implicit in the demands of
the organised private sector is the neo-liberal paradigm. This paradigm excludes government
from direct economic activity, but assigns it the role of creating an enabling environment for
private entrepreneurial initiatives to flourish.

Both the government and the organised private sector have legitimate concerns. But another
concern is that of enterprise durability. In this study enterprise durability means the prospects for
a firm to exist for long after the death of its founder without a significant decline in human and
material input as well as organisational output. For lack of a better term, I have called this
scenario post-founder durability. This problem receives only occasional attention from the
indigenous business community, scant attention from academic observers, and almost no
attention from policy-makers. The fact is that medium- and large-scale enterprises owned by
indigenous Nigerian entrepreneurs have continued to spring up and some of these firms have


production facilities and organisational structures comparable to their multinational or state-
owned counterparts. But little is known about their organisation and management, and their
potential to endure is difficult to predict, especially after the death of their founders.

Prospects for economic development become limited where the wealth accumulated by each
generation of indigenous entrepreneurs is lost when the owners die. Development, therefore, is
anchored in the principle of cumulative legacy. A legacy of generational extinction of
accumulation makes for underdevelopment or undevelopment. Put differently, many
indigenously-owned private investments in Nigeria usually blossom under the leadership of their
founders. What are their prospects for survival after the founders have either died or are
incapacitated by age or illness?

Entrepreneurs innovate, open new markets, and bear risks. They find new combinations of
materials, processes, and products. They create employment, commercialise new inventions and
invest in new opportunities (Marsden 1990; Kilby 1971; Schumpeter 1961). However, it is one
thing to commit entrepreneurial will and energy to establishing a large commercial enterprise. It
is quite another to create an organisational structure that can enable the enterprise to survive and
endure. Investments may grow and flourish with the committed leadership or excellent
managerial acumen of the founder, but may not survive his exit.

Medium- and1arge-scale indigenous private manufacturing enterprises in Nigeria have expanded
since the end of the Nigerian civil war in 1970. These enterprises, which arguably hold the key to
the country's economic development, deserve more research attention than they currently get. It
is important to understand their internal structure, management, and entrepreneurial succession
plans as well as their potential to be durable springboards for societal accumulation. Aspects of
the internal structure and growth of the firms under consideration have been variously analysed
by some observers (Forrest 1993; Brautigam 1997).

Most other studies of enterprises in Africa have concentrated on medium- and small-scale
enterprises (MSEs), firms employing fewer than 100 workers (Biggs and Srivastava 1996).
These studies have focused on a variety of subjects including the contribution of MSEs to
employment generation (Mead 1994); their role in economic development (Liedholm and Mead
1999); and their chances of survival or closure (McPherson 1995). Using the proportional
hazards model McPherson identified several factors which affect the survival or closure of firms
in four countries of Southern Africa. These include firm size, location, speed of growth,
investment sector, and the gender of owner. McPherson's study focused on MSEs, used firms in
multiple sectors, operational enterprises, and included firms in which owners were alive, but did
not emphasise post-founder durability. In fact there is in Nigeria a tendency for business ventures
to fail upon the death of their founders, and the public awareness of the phenomenon as a
national problem about which something should be done.

The present paper focuses on post-founder durability in the Igbo states of Nigeria, using case
studies derived from medium and large firms (employing 55 to more than 100 workers) whose
owners had died. The case study method is used to point to a phenomenon that could pose a
severe obstacle to capital accumulation and thereby limit economic development in the Igbo
states, Nigeria, or Africa for that matter. The author summarises observations on several
enterprises that failed or were shut down for a considerable number of years after the death of


their founders, and highlights some implications of the findings for the theory and policy of
economic development. This paper is an exploratory rather than explanatory endeavour,
concluding with suggestions for more focused and in-depth studies on the subject.

Methodological Summary
The case stories presented in this paper were collected from medium- and large-scale indigenous
private enterprises founded and owned by Nigerians in the former Anambra and Imo states,
presently split into five as a result of the creation of new states in 1991 and 1996. The five states
now are Abia, Anambra, Ebonyi, Enugu and Imo, all of which are predominantly inhabited by
the Igbo. The study started in 1989 after some guided trips to indigenous firms by my Industrial
Sociology class at the University of Nigeria, Nsukka, as part of the practical experience for the
course. In 1991 the author collected observational, survey and interview data during six months
of intensive fieldwork. The primary objective was to explore the extent to which entrepreneurial
roles in indigenous private manufacturing firms facilitated or handicapped their success and
durability. However, the general proposition was that the prosperity of any economic enterprise
depends on the collective efforts of its entrepreneurs, managers and workers. Data were collected
from the three groups using separate questionnaires and interview schedules. A total of 20
functioning firms participated in the study. Firms were selected from a variety of industries,
namely pharmaceuticals, paper, shoe, automobile parts, machine tools, beverages, plastics,
paints, chemicals and grains processing, Six non-functioning firms were included as a result of
spontaneous decisions made during the fieldwork. It was felt that understanding why they had
stopped production would help to explain some dimensions of enterprise performance and
durability. In-depth interviews with owners, managers and in some cases offspring of the owner-
founders showed that their failure or suspension of activity was not always the result of
managerial or entrepreneurial inadequacies. Rather, questions of trust, family and partnership
squabbles and inheritance problems were paramount. The details of the methodology and the re-
suits of the survey on the structure and management of the enterprises have been published
elsewhere (Ukaegbu 1995, 1998, 2000).

The present paper focuses on the status of five firms whose owners had died. It also contains the
responses of some living entrepreneurs on the phenomenon of entrepreneurial succession and
durability .The latter were used to try to interpret the factors that might have contributed to the
experiences of the post-founder failed firms. Another field study of the same firms was
conducted in 2001, 10 years after the maiden study in 1991. The five firms which had been shut
down after the deaths of their founders were revisited. It was also observed that an additional
four owners of other firms or group of companies had died since the 1991 study. The post-
founder status of those firms is incorporated in this paper. Over- all, the 2001 study showed that
the deplorable situation of the initial five firms had not changed. Three of the four firms whose
owners died after 1991 faced the same problems as their counterparts whose owners had died
before 1991. Aspects of family relations and cultural practices appeared to be of paramount
significance, and examining these factors brought added explanations and insights to the problem
at hand.

Post-founder failed firms were ones that either suspended production for a prolonged period or
were permanently closed down after the death of their founders. To tackle the issue, observations
and interviews focused on owner-founders and/ or the heirs-apparent of functioning firms as well


as on stories of non- functioning enterprises told by surviving associates and distant observers of
deceased founders. The concept of entrepreneurial succession is particularly central in this case.
This study differentiates between on-founder performance and enterprise durability. On-founder
performance refers to what happens to a firm when its founder is alive and in control of the
enterprise. Durability issues refer to what happens to a firm or group of firms after the founder
relinquishes control due to old age, illness, or death. But plans for durability can and should
indeed be built into the objectives, vision and administration of the enterprise when the owner is
still in control.

Enterprise Durability in Theoretical Perspective

Succession, in organisational theory and practice, refers to the process of transferring managerial
control from one leader or one generation of leaders to the next. It includes the dynamics
preceding the actual transition as well as the after- math of the transition (Shepherd and
Zacharakis 2000). In the context of family business, Sharma et al (2001) define succession as the
actions and events that lead to the transition of leadership from one family member to another.
By extension, entrepreneurial succession is the process by which ownership and control of the
production or commercial infrastructure accumulated by one generation of a nuclear or extended
family is transferred to the next. In the context of this paper, it entails the transfer of a
commercial investment of any type from the owner-founder to his prospective survivors. These
could be members of a nuclear family in a monogamous household such as a wife and children,
or members of a compound family in a polygynous household, namely wives and children.
Survivors could also be members of the extended family such as uncles, aunts, nephews, nieces,
cousins, and affines. In most cases in this study, however, entrepreneurial succession has
followed or is expected to follow the rules of inheritance in Igbo society. Here, the owner-
founder actually bequeaths his enterprise(s) to his offspring. Or, where he is still alive and in
control, his offspring are assumed to be the heir(s)-apparent to his assets, including his
commercial enterpnses.

The literature on the subject shows that although a viable succession plan often results in a
smooth transition, certain factors do constrain the process. For instance, many people avoid
thinking about succession because to do so means acknowledging one's mortality (Kets de Vires
1993). This may be more prevalent among young owner-founders, who feel that they have many
years of life, health and strength ahead of them. Further, conflict can arise between the founder
and the heirs-apparent upon the realisation by the former that more responsibilities to the latter
mean less power and visibility to him, the founder. Conflict can also escalate within the family as
many members campaign, lobby, or engage in intrigues to secure power in the prospectively new
entrepreneurial dispensation. Consequently, choosing the appropriate successor even from one's
own children poses a problem (Handler 1991). The founder's choice may be reversed, or the
enterprise may disintegrate upon the death of the founder as a result of posthumous antagonisms
among family members. Therefore, maintaining good family relationships is extremely important
for a successful and effective succession (Sharma et aI2001).

It could be argued, in the context of Igbo society in particular and Africa in general, that the
propensity for intra-family antagonism over entrepreneurial succession upon the death of the
founder or even when he is still alive will be greater in polygynous than in monogamous
households. This is because each sub-family ('kitchen' as it is translated in some Igbo dialects)


usually views itself as a separate entity within the polygynous complex, instead of perceiving
itself as part of an integrated whole usually expected of members of monogynous families. That
should not be construed to mean that all polygynous households are conflict-ridden and
detrimental to entrepreneurial succession, nor that all members of monogynous households are
epitomes of consensus. Successful transition, Handler (1991) notes, is a function of mutual
respect between generations and accommodation by actors in the succeeding generation. A major
problem lies in how to create the shared values that can facilitate a smooth and successful
succession (Dryer and Handler 1994; Hall 1986). How then can an owner-founder design and
consummate a smooth and successful succession? Although there is no magic answer to this
question, the literature on the subject has some proposals using ideas from behavioural
economics.

According to Isaacharoff (198) the endowment effect, a concept in behavioural economics,
refers to the propensity of people to value what they already have more dearly than what they
expect to have, or what they have the opportunity to acquire in the future. People place a higher
value on an object that they have owned (Shepherd and Zacharakis 2000). Put somewhat
differently, when a person already owns an object its loss has greater value than the ability to
acquire the object prior to ownership. For example, a person refuses to exchange a shirt for a pair
of shoes not necessarily because the former is more useful to him than the latter but because the
shirt is already in his possession and therefore would not be easy to part with.

Shepherd and Zacharakis propose that where the endowment effect applies in family business
succession, it would be expected that once the successor owns and controls the family business
he or she would value the business more than he/she did prior to ownership. However, the
successor's value of the business may not equal that of the founder because, as students of the
endowment effect theory (Isaacharoff 1998; Knetsch 1989) have found, value increases with the
duration of ownership. Consequently, the founder or the past leader who is handing over control
of the family business is likely to place greater value on the business than will the new leader or
successor. The mode by which the successor obtains the business and the amount of financial
and non-financial investments (sunk costs) he/she makes into it influences the value he attaches
to it. In behavioural economics, the idea of sunk costs suggests that people' s aspiration levels
increase with the amount of investment made. The higher the sunk costs, the more the owner will
do to achieve a higher aspiration level (Zeelenberg and Van Dijk 1997).

Sunk costs are financial or behavioural. With respect to the family business successor, financial
sunk costs include what Shepherd and Zacharakis (2000) call 'buy in costs'. This is the money the
future leader has to invest into the family business in order to obtain management control. Here,
the son, daughter or any heir-apparent to the enterprise incur& costs if he/she has to purchase
equity in the company before taking it over. In the case of multiple children, each child would be
made to purchase equity, the amount of which determines his/her status in the organisational
hierarchy of the enterprise. Having financial sunk costs presupposes that the founder's children
are grown-up and earn money from independent work either within or outside the family
business. The financial sunk cost requirement is of potential utility to the succession process, the
owner-founder, and the business. It is a test of prospective successors' ability to buy the amount
of equity that can transfer management and control of the business to them: heirs-apparent may
thus have proven to be good and effective managers of their own personal resources. There is an
unintended and possibly a dysfunctional con- sequence of the financial sunk cost proposition.


Heirs-apparent or prospective successors could expropriate the resources of the family business
to obtain requisite revenue with which to purchase equity .Where that is the case, such a
cannibalisation could bleed the family business to an untimely death even before succession is
consummated.

By contrast, behavioural sunk costs include the time and effort invested into the family business
by the future leaders in order to obtain management control. According to Shepherd and
Zacharakis (2000), the offspring or heirs-apparent would have invested significant time and
effort if they worked their way up the organisation as opposed to jumping immediately into a
management control position without 'paying their dues'. Hence source dependence, that is, how
the object/business was obtained, is a crucial factor to predicting how the heir-apparent will
value the enterprise.

The basic idea in the theory of sunk costs, whether financial or behavioural, is that people's
attachment to an object depends on whether it was obtained by their efforts or by chance.
Because windfall gains are unearned, they tend to be less valued than earned gains and so are
more vulnerable to being easily spent or gambled. Shepherd and Zacharakis (2000) found that
American university students who were potential heirs to family businesses valued those
businesses more when they invested both financial and behavioural sunk costs and earned the
right to take over the business. Further, the more the financial sunk costs, the less the willingness
of the prospective successor to undertake the type of risky investments or decisions that could
jeopardise the durability of the enterprise, such as selling the business.

The above summary of the literature on the endowment effect and sunk cost theories derives
from studies conducted mainly in developed countries. This author is not aware of any study that
has used the theories to investigate entrepreneurial succession and enterprise durability in
Nigeria. Neither is there the intention to conduct formal tests of the theories in the present study.
Instead, the theories will be used to infer what might have happened to some of the failed
enterprises discussed in this paper, and to suggest that formal studies of entrepreneurial
succession in Nigeria and elsewhere in Africa will benefit from the assumptions of the theories.

The issue of enterprise durability is examined below. The cases consist of enterprises whose
owners were deceased at the time of the study. The cases are best characterised as stories
attempting to chart the intersection of family, culture and the future of economic accumulation in
a developing country.

Enterprise Succession-Durability Problems: Case Stories of Post-Founder
Enterprise Death Syndrome

Case 1: The Magnificent but Desolate Paint Factory
A magnificent paint factory, in a town in Anambra state, was abandoned for five years because
of intra-family squabbles over who, among the founder's offspring, should inherit or occupy the
top position in the enterprise. The death of the founder of this large-scale firm generated much
acrimony and litigation among the children of his four wives. The first and oldest son invoked
the principle of primogeniture characteristic of traditional Igbo culture and laid claim to the
directorship of the firm. The sons of the other three wives rejected his claims. As a security
guard at the company premises informed this author, a court ordered the suspension of


production until a verdict was reached on the future of the firm. The magnificent buildings in the
company premises were so badly neglected and dilapidated that banana trees and grass grew
inside them, even though the floors were paved with concrete.

In an unsolicited opinion during an interview in a functioning brewery , a manager
spontaneously recalled the case of the shutdown paint factory and used it as an example of the
uncertain future of private indigenous enterprises. He said:
For example, X [name of firm], the industry was forgotten. The industry was left for over five
years and grass growing [in it]. The children concentrated on sharing his plots [their father's real
estate]. If a problem arose they sold a house and shared the money. They are trying to reactivate it
now after five years.

The manager of the paint factory under dispute evaded my questions on the circumstances
surrounding the shutdown of the enterprise. Instead, he gave nonnative, philosophical responses
such as, "Indigenous companies should have good management. They should pay their workers
well. Raw materials should be supplied promptly. " In the end he mentioned that the deceased
owner had shared his assets among his children prior to his death, during which time his first son
inherited the factory as his own share. The founder died in 1983. Recall that the maiden study
was conducted in 1991. If the factory was shut down for five years pending litigation it means
that the firm operated for three years after the founder's death, after which the intra-family
conflict started. This scenario is consistent with our observation in the theoretical framework.
The founder's decisions about succession could be challenged or even reversed posthumously
due to intra-family antagonism. When the author visited the firm again in 2001 the premises had
become even more dilapidated. Production had not been reactivated except for a few drums of
paint, which a tenant or security man at the premises described as skeletal production pending
fu11-scale resuscitation. The scene was a case of multiple wastage of land, buildings and
machinery for a decade and a half, and counting.

Case 2: Posthumous Family Interference
In a town in Anambra state, the general manager of a chemical plant resigned in less than one
year after the death, in 1990, of his employer and founder of the company because the latter's
wives, children and extended family interfered with the functioning of the firm. The founder was
nationally recognised as a pre-eminent pioneer industrialist. The children were more interested in
the finances of the company than in its growth and durability, a respondent said. The wives and
the brothers of the deceased owner insisted on influencing who was or was not employed. Hence
the general manager, with a record of long and effective service in the company, resigned in
frustration. The company floundered and its future became uncertain. A respondent in this study
told the author in 1991 that the children of the founder were trying to resuscitate the enterprise.
The manufacturing enterprise, huge by Nigerian standards, had not been resuscitated by August
2001 when the company premises were visited. The eldest son of the founder, in an interview,
indicated a desire and an on-going plan to reactivate the factory . The fact is that the investment
was dormant for 10 years and may remain so for more years.

Case 3: The Neglected Oil Palm Estate
In Imo state a very wealthy and pioneer businessman who died in the 1980s left assets valued at
over four hundred and twenty million naira. His assets included an oil palm estate, a large
vegetable oil processing plant, and a leading beer brewery. The vegetable oil plant had stopped


production; the oil palm estate had become almost a forest due to neglect; and the brewery was
only just managing to continue production. In an interview with one of the deceased
entrepreneur's sons, it was revealed that the siblings of the polygynous family of four wives were
in conflict. In the process the brewery was shut down by court order. A manager in a company in
another state spontaneously recalled the demise of this business empire. He used it as a sad
example of the problem of post-founder uncertainties among Nigerian businesses. He lamented:
When owners die, their businesses tend to die. Take for example Chief A. He owns a vegetable oil
factory at B [location of company]. When he died, his children went to court over the way he
shared his assets, claiming that he was unfair. The court gave orders that the factories be sealed
pending the decision of the court. Having sealed the factory, the top management staff that had the
experience had to go. The people making soap could not make [soap ] again. When Chief A was
alive there was no problem. If that company had been made public, this wouldn't have happened.

Each sub-family or sub-household was interested in the amount of the patriarch's assets it could
secure for itself. Although the overt conflict took place among the siblings, especially the males,
mothers covertly pushed their children to fight for what they perceived as the rights of their sub-
households. Siblings and co-wives accused one another of embezzlement, negligence, and
misappropriation of company resources. In a frank interview with the author, the oldest son of
this deceased business mogul regretted that his father shared his assets more as inheritable
property according to Igbo rules of inheritance than by a rational allocation of positions and
functions for enterprise continuity. That, according to him, was not conducive to the continuity
of the large-scale modem commercial organisations which his father had worked very hard to
establish, nurture and consolidate during his lifetime.

Case 4: The Demise of a Celebrated Fleet
In a major commercial town in Abia state, a famous pioneer transporter of pre-civil-war fame
grew bigger after the war, He had over 100 tankers used for hauling petroleum products across
the country .Six years after his death in the mid-1980s all the tankers, and a large parking space
specifically made for them, had been sold and the revenue shared by members of his polygamous
family. During a visit to that town the author found that the man ' s once elegant residential
building in a formerly choice part of the town had become rickety .And none of his children or
any of his three surviving wives did business with any potential or optimism to approximate the
scale and scope of their father or husbands' financial accumulation.

As was the case with many of my interviews, an independent artisan near the premises,
unsolicited, used this case as an example of the problems of indigenous private enterprises. He
said:
Look at Y [the deceased business magnate]. He died about six years ago. His sons sold that empty
land over there at two and half million naira [N2.5 million]. They sold the tankers, the whole
transport all gone. That's that.

This same informant referred to another very wealthy businessman (also very familiar to this
author) whose immense wealth was squandered by his numerous children from several wives,
even though he had shared his assets amongst his heirs-apparent before he died. The collapse of
the petroleum transporter's business fortunes was so total and pitiable that a famous musician
sang a song of lamentation, alluding to it as a regrettable case of the ruination of long years of


entrepreneurial effort and accumulation. This author saw no need for a second visit in 2001
because the enterprise had completely disappeared by 1991.

Case 5: The Abandoned Empire
The business empire of the richest man in one of the towns in Enugu state suffered an
irredeemable disintegration upon his death. Once a beehive of activities, the business premises
had been abandoned and became desolate and overgrown beyond recognition. Similar to the
businesses described earlier, the problem started with acrimony among sub-families of the
polygynous complex. Suspicions and accusations of embezzlement, dishonesty, non-
accountability and use of charms were very common. Prior to his death, the founder had
deployed some of his children, a good number of them university graduates, in different
divisions of his group of companies. Yet acrimony, decline and signs of disintegration crept in
even when he was alive, especially during his old age. His death marked the final chapter in the
life of his business empire. Some of his children established their own businesses. But none of
those businesses came close to the legacy of scale, scope, diversity and success left behind by
their father.

Of the four groups of companies whose owners died after 1991, only one survived the post-
founder shock, as will be shown later. In one case the family members were embroiled in intense
conflict for several years, during which time the major manufacturing company was closed. The
other was producing very much below its 1991 capacity, leaving its general manager pessimistic
about the future. And the third group of companies locked up its factory division because the de-
ceased founder's only son had shown no interest in carrying on with production.

Inheritance, Succession and the Future of Accumulation

The above stories lead us to distinguish what should be a fine line between inheritance and
succession. Indeed. succession is a form of inheritance. Inheritance refers to the acquisition of a
possession, or condition, or the receipt of a right or title discernible by law or certain prescribed
rules from the ancestor at his death. Succession goes further than that. It is the act or process of
one person taking the place of another in the enjoyment of, or liability for his rights or duties or
both (Webster's 1993). Children and their mothers may want to inherit the wealth of their fathers
and husbands, respectively, and use such resources as mere entitlements for their daily living and
comfort. But they may not be interested in, or capable of occupying the role of the entrepreneur,
the risk bearer, the wealth multiplier, the organisation mover, or the surrogate founder, all of
which enable the foundation enterprise to retain its initial identity. Apart from lack of interest or
lack of capability among potential successors, intra-family conflicts pose obstacles to the
continuity of enterprises. Since the present study did not follow the succession plans of the
founders, it is not clear to what extent the problem was caused by the founders' own errors and
eccentricities. In his study of the growth of indigenous capital in Nigeria, Forrest (1993) found
that a culture of secrecy among indigenous entrepreneurs effectively blocks delegation, rules out
partnerships and undermines the chances of succession. The latter, combined with intra-family
conflicts, portends a tenuous future for both individual and family accumulation in particular and
economic development in general. For, as noted earlier, a culture of intragenerational extinction
of accumulation is not conducive to economic development.


From the case studies, business enterprises owned by entrepreneurs in polygynous marriages are
very likely to collapse upon the death of their founders. This also implies that enterprises owned
by monogamous businessmen have a greater chance of surviving their founders or owners.
Neither of these hypotheses was formally tested in this study. It was simply a coincidence that
many of the collapsed businesses whose founders had died were owned by men who were in
polygynous marriages. In fact, two of the failed enterprises in the 1991 study were owned by
living entrepreneurs. The first collapsed because of partnership conflicts. The second failed for
several reasons: mismanagement and lack of commitment by expatriate technical partners,
misappropriation of funds by local managers, and the over-concentration of decision-making in
the founder. It does appear, though, that the wealthier a businessman becomes, the greater his
propensity to marry more than one wife. This differs from the picture of traditional Africa in
anthropological literature. It used to be that polygyny was a source of labour and wealth, hence
need underlay the urge for multiple wives and children (Beattie 1964). However, it seems that in
modern Africa, wealth has become the source of polygyny. As a caution against a premature
generalisation, some managers and owners in this study mentioned an instance where children of
a deceased polygynous businessman expanded the family's foundation enterprise.

As noted above, four founders died after the first study had been completed in 1991. In 2001,
three were in monogamous marriages. The only enterprises in this group which survived the
post-founder shock were the ones owned by a polygynous man. The head of this family, in his
seventies, and founder of several enterprises, was hospitalised at the time of the first fieldwork in
1991. A good number of his 16 children from several wives were highly educated. There were
engineers, lawyers, and holders of the master's degree in business administration among them.
His fifth son, the general manager of his paper mill, was confident that his father had laid the
foundation for a successful entrepreneurial succession and enterprise continuity before his old
age and ailment. His father had placed the export and import division of the group in the hands
of his first son. He placed another of his sons (an engineer) in a strategic position in a paper
recycling company, arid allocated other responsibilities within the business complex to other
children. The fifth son, a graduate with an American MBA, was in charge of the family's large
paper company. He eventually became the chairman and managing director (CMD) of the group.
He expressed some uncertainty and anxiety about what might happen when their father died, but
ended our interview with optimism that his family was poised for stability and continuity of the
business enterprises. Following the subsequent death of the founder, the companies have
survived, increased their work forces, improved their machinery, and were on the verge of
computerisation of their printing processes in 2001. This was a case of a successful transition in
a polygynous environment.

In contrast, the owner-founder of a group of seven large-scale manufacturing companies
appeared to have laid the foundation for a successful succession and enterprise continuity, but to
no avail. This business magnate, in his middle sixties in 1991 and alive at the time of this paper,
is a devout Catholic and respected knight of the church. He is monogamous and has several
highly educated children. Among his children are a lawyer, a political scientist, two
microbiologists, an economist, an MBA graduate, and a brewing technologist trained abroad. He
placed some of his children as heads of factories and some in high positions in others. The
general manager of one of the firms, who was not related to the family by blood or marriage,
said, "The MD [Managing Director] wants his children to take over when he is alive. He wants


his people to take over." But by 2001, six of the seven factories had stopped operation. The
seventh had declined beyond recognition, from a workforce of 200 in 1991 to only 10 in 2001.

By having their children work in their enterprises these two older entrepreneurs acted in
accordance with assumptions of the behavioural sunk cost perspective of entrepreneurial
succession. Contrary to Kets de Vires (1993), they thought about succession and did something
about it by putting their heirs-apparent in strategic positions. That one group of companies
succeeded when the founder died and the other failed while the founder was alive deserves an in-
depth investigation.

But Kets de Vires is also right. Not every owner-founder of family business plans or even thinks
about entrepreneurial succession. It would appear, as postulated earlier, that the younger the
founder the less thought and importance he attaches to the problem of succession. A major threat
or obstacle to successful entrepreneurial succession and, by implication, post-founder durability,
is the lack of awareness of the problem by owner-founders. There were several field cases to
substantiate this proposition. I will illustrate with two examples here.

In 1989, my industrial sociology class at the University of Nigeria, Nsukka, made a field trip to a
large manufacturing firm with a work force of over 1 000. The owner-founder of the factory, a
young man bubbling with health, prosperity and optimism, personally gave the class a tour of his
factory. The students asked him many questions ranging from the origins of his enterprise,
through managerial structure and processes, to employee motivation, acquisition of production
resources, and the marketing of his products. He answered those questions impressively. With
less than a high-school education, he demonstrated an unusually comprehensive understanding of
the technical and administrative workings of production organisations in general, and his
company in particular. After the bar- rage of questions and a lively interaction between the
owner-founder and the students, I casually asked him:
Mr 'B'[owner], you are a vibrant and successful young man [about 40 years old or less]. You have
many years of life ahead of you. Where do you think this factory will be in the next 40 years?

Unlike his quick reactions to the students' questions, this time his answer was very slow in
coming. The amount of effort he made and the anxiety he felt (pulling the collar of his shirt, with
eyes dilated) as he thought of an answer showed that the question took him by surprise. After a
relatively long interval, he responded that he had sent one of his relatives for training in Taiwan
to improve his technical and managerial skills and to prepare him for a high position in the
factory upon return. Further dialogue between us alerted him to the fact that training a relative
for a special position in the factory is one thing, but designing an organisational structure to
enable the enterprise to continue after his lifetime was quite another.1 He was able to
differentiate management from ownership and control in the context of family business.

In another instance during the course of the study, the managing director and owner of a group of
eight large companies was asked about his plans for the durability of the companies upon his exit
from heading them, which could be the result of retirement due to old age, incapacitation by
illness, or by death. To try to respond to the question, the owner-founder appeared subdued, bent
his neck downward, stared at his table, pondering, indeed almost to the point of meditation, for
several minutes, and then said:


Your question is quite okay. We have plans to make sure that when I am not here the company
continues. That's why we indigenised the management. If I am lucky personally to have good
children, they will take over the mantle. It is more or less a family business.

The protracted interview with the MD, a man in his late forties and married to several wives,
showed that entrepreneurial succession and enterprise durability were not on the front burner of
his thoughts and plans. What he saw as his most nagging problem was the conflict between
himself and his brothers whom he had helped and made wealthy but who later turned against
him. He expressed the fear that they could take over his fortunes if he died or became ill. He
hoped, as he put it, that God would help his children to maintain successfully the continuity of
the business.2

Conclusion and Implications of the Study for Further Research

This study identified some trends of thought that need further research. Cultural factors
embedded in family structure and traditional norms of inheritance may pose obstacles to
successful entrepreneurial succession and enterprise durability. Younger entrepreneurs are less
likely than their older counterparts to have clear succession plans. Ineffective succession plans
by founders pose obstacles to enterprise durability. These conditions can, and do, influence post-
founder durability in any geo-cultural environment, be it in the First or Third World.

The most conspicuous cultural practice exposed in this narrative is polygyny, a well-known form
of marriage in Africa in which a man marries more than one wife at the same time. The majority
of the cases of enterprise closure observed in this paper involved polygynous owner-founders.
But there were a few cases where enterprises survived the exit of polygynous founders. It must
be reiterated, however, that this paper is an exploratory examination of post-founder durability.
The sample was small and randomly selected. Recall that this started as a study of functioning
enterprises. This author met failed businesses by accident and examined their experiences for the
sake of curiosity .It is, therefore, premature to conclude that the culture of polygyny is
detrimental to enterprise succession and durability .After all, conflicts over inheritance and
succession are also common in the monogamous societies of the West.

It is easy for students of culture and development, especially those who see African culture as
anti-development, to conclude that polygyny as a cultural practice is anti-accumulation and
therefore hampers economic development, especially when examined in the context of
neoliberal/modernisation theory. Harrison and Huntington's (2000) influential but ambivalent
book on cultural values is a good example. Contributors to that book gave vivid yet inconclusive
x-rays of the link between culture and economic development. Daniel Etounge-Manguelle, for
instance, pointed out numerous traits of African culture which he considered to impede economic
development. His dismay with African culture led him to conclude that "more efficient and just
African institutions depend on modifications to our culture". That is an indirect way of saying
that African culture is the main obstacle to the continent's economic development. But some
analysts of the interaction between culture and development are cautious in their articulation of
the cultural culpability argument.

For Weisner (2000), it is wrong to conceptualise culture and values as inflexible and permanent
traits inculcated early in life that permanently become part of a national cultural character. Hence
it is equally wrong to argue that culture supersedes resource-based, institutional, and politico-


economic factors. Porter (2000) observes that unproductive economic cultures often arise less
from deeply embedded societal traits than ignorance and the misfortune of being guided by
flawed theories and political leaders that do not understand the workings of the international
economy.

Both Porter and Weisner suggest that policy can change or transform culture, as numerous world
examples show. That policy can transform culture means that a policy argument is superior to a
cultural argument in the analysis of economic development. This is well captured in TU Wei-
Ming's (2000) concept of multiple modernities. By this concept Tu Wei-Ming means that the
success of the East- Asian Confucian societies in becoming fully modernised without being
thoroughly Westernised clearly indicates that modernisation can assume different cultural forms.
Hence there can be alternative modernities to Western modernisation. With this line of thought,
Tu Wei-Ming envisions the possibility of Buddhist, Hindu, Central Asian, Islamic, Latin
American and African forms of modernisation.

Recall that Confucianism was once regarded as a retrogressive value system incapable of
generating economic development. It suddenly turned around in the 1970s and 80s to produce
the miracle economies of East Asia. In the late 1990s it was blamed for the Asian financial crises
of that period. This is what I call the prevarications of the cultural theory of development. This
does not mean a total denial of the role of culture in national development. Rather, its influence
should not be overblown to the point of cultural determinism. Some observers and analysts of the
intersection of culture and development have captured the prevarications of the cultural theory of
development. In his study of culture, mental models and national prosperity among government
and business leaders in Colombia, Lindsay (2000) began with the statement that culture is a
significant determinant of a nation' s ability to prosper. This statement was diluted by his
empirical findings, which led him to conclude as follows:
The results of our work in the five cities of Colombia led us to conclude that it is not culture per se
that affects the quality of choices regions make but rather the way individual leaders think about
wealth creation.

Because mental models or mindsets that facilitate or inhibit competitiveness for wealth creation
are widely distributed across the population, the fundamental task is not to change culture but to
create conditions for the competitive mindset to flourish (ibid.). Lucian Pye (2000) chronicled
the pendulum and oscillations of opinions about the role of the Asian values in the 'tiger'
economies in the last four decades. He asked how the same set of values could have provided
both the dynamos and dominoes, that is, boom and bust of the tigers. By this call Pye means that
there is need to fully understand why a cultural system applauded as the engine of an
unprecedented speed of economic development became responsible for the downfall of the
miracle it supposedly created.

The change in women' s status in many parts of the world is propelled not by massive cultural
change in those societies but by decisions enacted and enforced by a small segment of the
population that has the instruments of power and authority to enact policies that transform
longstanding institutional patterns and practices (Htun 2000). In this regard, countries can
develop and modernise without compromising much of their culture, provided that their leaders
take development seriously and are committed to achieving it. The latter is a very important
parameter in the developmental states of East Asia. Their leaders have seen economic


development as an urgent problem, pursued it with a nationalistic fervour and seized every
opportunity to attain national development. If we take the case of Islamic Northern Nigeria, it
took the concern and commitment of Islamic leaders in the region to sensitise their followers to
Western education. Upon the realisation that other parts of the country accelerated in educational
achievements, those leaders made policies and established infrastructures to provide Western
education for their population. This was done without compromising Islamic culture. There are
as many Christians as there are Moslems among the Yoruba of Nigeria. But both groups can
pride themselves on parity in the attainment of Western education. Come to think of it, the Asian
values of harmony, group orientation, filial piety , respect for hierarchy and authority , valuation
of family, and emphasis of social equilibrium are embedded in African traditional cultural
values. In East Asia, Asian values found expression in miracle economies while Africa reels in
underdevelopment. Answers must be sought in circumstances other than culture. Perhaps their
different histories of modern statehood are a good starting point.

Granted, polygyny as a cultural practice does have its problems, especially within the context of
relations among co-wives, their children, and between the wives and their husband. Inheritance
problems and conflicts exist in traditional polygynous and monogamous families in Igbo society.
When considered within the context of enterprise succession and durability in a modern
economic setting, polygyny cannot be successfully labelled as singularly problematic and anti-
accumulative until its effects are thoroughly studied in conjunction with the effects of
monogamy. This entails the study of large samples of functioning and non-functioning firms,
potential and real cases of succession, the existence or non-existence of succession plans, the
relative effects of cultural, managerial, entrepreneurial, micro and macroecononiic, and political
factors on enterprise performance, entrepreneurial succession and post-founder durability.

Entrepreneurial succession, like most forms of inheritance, is a conflictual process in many
human societies. Common sense suggests that the larger the number or enclaves of stakeholders
in a given distributional situation, the greater the chances of distributional conflict. Polygyny
increases the number or enclaves of stakeholders in the entrepreneurial succession environment.
It is therefore methodologically plausible to hypothesise that polygynous marriage will be more
detrimental to successful entrepreneurial succession and post-founder durability than would its
monogamous alternative. In the meantime, it is only a hypothesis. Admittedly, informal pointers
to the possible deleterious effect of polygyny on inheritance are scattered here and there in Igbo
society, and indeed across the country. Only when the phenomenon is systematically and
thoroughly studied, in conjunction with the non-cultural factors mentioned above, can
conclusions on its effect on modern entrepreneurship and accumulation be confidently reached.

Acknowledgements
This study was conducted with grants from the University of Nigeria, Nsukka, a Fulbright
Fellowship at the University of California, Berkeley, and additional resources from the
University of Wyoming faculty-grant-in-aid UWGIA 9390, 2001. Acknowledgements of
individuals who in one way or another influenced this study have been made in earlier papers. I
thank my Industrial Sociology class of 1989 at the University of Nigeria, Nsukka, for their
conscientious reports of the field trips that helped to shape this study. This paper also benefited
immensely from lively discussions by my students in the Advanced International Development
seminar I offered at the University of Wyoming in the Spring of 2001. I thank the anonymous


reviewers of JCAS whose insightful comments provided better focus for this paper. Thanks also
to Gale Bandsma for her secretarial help.

Notes
1. After our conversation and analysis of the question of succession he, with a handshake,
said to me: "Thank you very much. You are the best man that has ever visited this
company", meaning that he had learned something he had not thought about before. That
interaction made me think that other entrepreneurs may not be aware of this problem.
Hence I formally designed and conducted the present study

2. After the interview, the entrepreneur asked me to wait while he entered a small room next
to his spacious office. He came back and handed me an envelope filled with money. He
said: "Use this for your petrol and thank you for your questions and conversation." I
should be the one to thank him for giving me a long interview. I refused his gift but he
insisted that I accept it and asked me to return at my convenience for more discussions on
the subject of post-founder durability. Those spontaneous gestures corning from someone
I had never met before meant that the owner-founder felt he had been exposed to
something important, but to which he had not previously given a thought. In other words,
he had learned something central to his business life.

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