Study Reveals Why Leadership Succession Determines Success or Failure of Lagos Small Businesses
Leadership transition inside family and owner-managed businesses often determines whether a company grows or collapses. A new study by Olalekan Olawunmi of Lagos State University, Nigeria, together with Jubril Jawando and Bolawale Odunaike, examines how leadership succession works within small and medium-sized enterprises (SMEs) in Lagos. Published in 2026 in the International Journal of Sustainable Social Science (IJSSS), the research shows that businesses are far more likely to survive when leadership transfer happens voluntarily rather than through pressure or obligation.
The study highlights how internal succession—when leadership passes from one member of a generation to another within a family or close business circle—can either strengthen business continuity or lead to stagnation and decline. Understanding how these transitions work is crucial because SMEs play a major role in employment, economic growth, and local entrepreneurship across Nigeria and many other developing economies.
Why Leadership Succession Matters in Small Businesses
Small and medium-sized enterprises form the backbone of many national economies, particularly in emerging markets. In Nigeria, thousands of SMEs are family-owned or run by closely connected individuals. When founders retire, fall ill, or step aside, leadership must pass to another individual within the organization.
However, succession is rarely straightforward. Many businesses struggle with leadership transitions due to family expectations, personal conflicts, or a lack of preparation for the next generation of leaders.
Olalekan Olawunmi and his research team argue that poorly managed succession often leads to business instability. Without a clear leadership transfer process, companies can lose strategic direction, experience internal conflicts, or even shut down.
By contrast, well-managed leadership transitions can help businesses maintain stability while introducing new ideas and innovation.
Exploring Leadership Transition in Lagos-Based SMEs
To understand how succession actually unfolds in small businesses, the researchers conducted an in-depth qualitative study focusing on SMEs in Lagos State, Nigeria’s largest commercial center.
The research used an exploratory design and collected data from 40 participants involved in business leadership or succession processes. In addition, the study analyzed four detailed case studies from different sectors:
-Food and beverages
-Fabrics and textiles
-Herbal medicine
-Wood, furniture, and charcoal production
Participants included business owners, successors, and other individuals directly involved in leadership transitions.
Researchers conducted in-depth interviews with these participants to capture personal experiences, decision-making processes, and the challenges surrounding leadership transfer. The interview data were then analyzed using thematic analysis with NVivo 14 software, allowing the researchers to identify patterns and recurring themes in the succession process.
Two Distinct Types of Leadership Succession
One of the most important findings of the study is the identification of two main types of intragenerational succession within SMEs.
1. Wilful Succession
Wilful succession occurs when leadership transfer happens voluntarily and with genuine interest from the successor.
In these cases:
-The successor actively chooses to take over the business
-Leadership training or mentoring often occurs before the transition
-The successor has a personal commitment to business growth
According to the study, businesses that experienced wilful succession were more likely to remain stable and continue growing.
These companies often showed:
-stronger innovation
-improved decision-making
-long-term business sustainability
2. Unwilful Succession
Unwilful succession occurs when leadership transfer happens due to pressure, obligation, or lack of alternatives.
In these situations:
-The successor may feel forced to assume leadership
-Personal interest in the business is limited
-Preparation for leadership roles is often inadequate
The research shows that unwilful succession frequently leads to organizational stagnation, poor management decisions, and eventual business decline.
Without motivation or clear leadership capability, successors may struggle to maintain the business direction established by founders.
Cooperation Is Key to Successful Transitions
The researchers also applied two theoretical frameworks—Stewardship Theory and Game Theory—to explain how leadership transitions succeed or fail.
Stewardship theory suggests that leaders who see themselves as caretakers of a business are more likely to act in the long-term interest of the organization. Game theory, on the other hand, helps explain how cooperation or conflict between stakeholders influences outcomes.
According to Olawunmi and colleagues, successful succession processes typically involve cooperative decision-making among founders, successors, and other stakeholders.
When families and business partners work together to plan leadership transitions, the likelihood of long-term success increases significantly.
“Cooperative succession processes anchored in shared commitment and trust strengthen business continuity and performance,” the researchers explain in their analysis.
Implications for Entrepreneurs and Business Families
The study offers important lessons for business owners, families, and policymakers who want to support sustainable entrepreneurship.
Several practical insights emerge from the research:
1. Early succession planning is essential.
Business founders should begin preparing successors long before leadership transitions occur.
2. Successors should be genuinely interested in the business.
Motivation and passion are critical factors for leadership success.
3. Training and mentoring improve leadership readiness.
Future leaders benefit from structured learning and practical experience within the company.
4. Open communication reduces family conflict.
Transparent discussions about leadership roles help prevent disputes during transitions.
These findings are particularly important for family businesses, where emotional relationships and financial interests often intersect.
Supporting SME Sustainability
Beyond individual companies, the research also highlights broader implications for economic development.
SMEs contribute significantly to employment and innovation in developing economies. When leadership transitions fail, the consequences extend beyond a single business—affecting employees, suppliers, and local communities.
By promoting better succession planning and leadership development, governments and business support organizations can help ensure the long-term sustainability of small businesses.
Programs that offer leadership training, mentorship opportunities, and succession planning guidance could strengthen the resilience of SMEs across emerging markets.
Author Profile
Olalekan Olawunmi is a researcher and academic affiliated with Lagos State University, Nigeria, with expertise in entrepreneurship, business continuity, and organizational leadership. His work focuses on the sustainability and management of small and medium-sized enterprises.
The study was conducted in collaboration with:
Jubril Jawando, researcher in business management and entrepreneurship
Bolawale Odunaike, academic specializing in SME development and organizational strategy
Together, the research team examines leadership dynamics, succession planning, and sustainable growth strategies for small businesses.
Research Source
Olawunmi, Olalekan; Jawando, Jubril; Odunaike, Bolawale. (2026).
“Navigating Leadership Transitions: Successes and Failures of Intragenerational Succession in Lagos-Based SMEs.”
International Journal of Sustainable Social Science (IJSSS), Vol. 4, No. 1, pp. 67–86.
URL: https://aprmultitechpublisher.my.id/index.php/ijsss/index
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