Power Orientations of Entrepreneurs and Succession Planning

The high mortality rate of entrepreneurial firms has been widely acknowledged, and studies indicate that of the few businesses which do survive the initial start-up phase, even fewer endure beyond the life of the founder.1 In an effort to better understand this phenomenon, this article explores one personality characteristic of entrepreneurs-their need for power-and examines its relationship to the entrepreneur's willingness to "let go" of the business and plan for succession. One reason for the demise of entrepreneurial firms is the inability of entrepreneurs to transfer their skills, knowledge, contacts with key customers and suppliers-in essence, their power-to the next generation. Trow's seminal study indicated that firms led by entrepreneurs who did not plan for succession were worse off financially after succession than those firms led by entrepreneurs who developed and shared succession plans. Trow maintains that a crisis of leadership ensues if succession planning is neglected.2 The problems related to entrepreneurs letting go of their leadership positions have been identified by numerous researchers.3 For example, Levinson describes entrepreneurs as individuals who start their own business in an attempt to escape the authority rivalry of powerful parent figures and use others as instruments to build and shape their organization. The business is seen as an extension of the entrepreneur and as a medium for personal gratification and achievement. Since businesses are extensions of founders, Levinson suggests that founders are likely to have difficulty delegating authority and often refuse to retire despite repeated promises to do so. The entrepreneurs Levinson studied not only appear to have a high need for power and control, but also depend upon their organizations as the primary source for satisfying those power needs. Similarly, Kets de Vries describes the entrepreneur's primary mode of behavior as being "non-conformistic rebelliousness aimed at exerting power and control over an environment perceived as dangerous and uncontrollable." The entrepreneur accordingly becomes heavily dependent upon prestige, power, and self-confidence obtained from his organizational position as a means of obtaining a higher sense of self-esteem and security. Other studies indicate that entrepreneurs who have a strong need for power and control over others are reluctant to delegate and unwilling to prepare new leaders for leadership responsibility. The research results reported in this article offer some new insights into the power needs of entrepreneurs which suggests that not all entrepreneurs fit the stereotype of the "power hungry" leader. The study measured two types of power orientations of entrepreneurs (social and personal), and investigated the relationship between these orientations and the entrepreneurs' degree of involvement in succession planning activities. DEFINITIONS AND HYPOTHESES Previous studies have indicated that entrepreneurial behavior is influenced by the need for power. However, research on the subject of power suggests at least two types of power needs. McClelland describes how a high need for power (n-power) has traditionally been frowned upon in our freedom-conscious society. He proposed the notion of "two faces of power," (1) personal power and (2) socialized power. Uleman also makes a distinction between two types of power motives which are similar to McClelland's social and personal power types.7 The following definitions of personal and social power were used for the purposes of the present research. Personal Power: The motive for power expressed through a desire for authority and control over others. Winning out over others and the feeling of being powerful becomes the goal for the personal power type. The power holder gains feelings of status and prestige from his or her control over others. Coercion and restriction of freedom in the influence of others is common, as personal dominance is used to obtain personal gratification. …