The Effect of Business Strategy, Social Responsibility and Succession on Family Business Sustainability

Ardianta Selasa, September 08, 2026
Illustration by AI
FORMOSA NEWS

Business Strategy Drives Long-Term Sustainability in Payakumbuh Family Businesses, Study Finds

Well-defined business strategies play a crucial role in ensuring the long-term sustainability of family-owned enterprises, surpassing the direct impact of corporate social responsibility and leadership succession. A scientific study conducted by Nora Susanti, Yulhendri, Rika Verawati, and Alfattory Rheza Syahrul from Universitas PGRI Sumatera Barat, alongside Agung Sudjatmoko from BINUS Business School and Hikmil Kumala from Padang State University, investigated the drivers of family business longevity in Payakumbuh City, Indonesia. Published in 2026 in the International Journal of Contemporary Sciences (IJCS), the research reveals that strategic planning is the primary pillar for keeping family firms competitive and operational across generations.

Background and Economic Importance of Family Businesses

Family-owned enterprises represent a major pillar of global and regional economic growth, contributing significantly to employment generation, local income development, and community welfare. In West Sumatra, family businesses form the backbone of the local culinary and traditional food manufacturing sectors. Payakumbuh City serves as a major hub for small and medium enterprises (SMEs), housing notable industry clusters such as the Lampasi Tigo Nagari rendang center and the Balai Panjang weaving center.

Despite their economic contributions, family businesses face severe intergenerational survival challenges. Global data indicates that only 30 percent of family firms survive the transition from the first to the second generation, 15 percent reach the third generation, and merely 3 percent remain operational past the fourth generation. In Indonesia, many family enterprises collapse because younger descendants opt for careers in government or alternative industries rather than taking over family operations. Understanding the specific mechanisms that drive business sustainability is therefore vital for securing regional economic stability.

Research Methodology

The research team surveyed 241 family business owners operating in Payakumbuh City, West Sumatra. The participants were selected using simple random sampling from a total recorded population of 612 family businesses. Field data collection took place between April and June 2022 using structured questionnaires based on a five-point Likert scale.

To evaluate the relationships among business variables, the authors employed Partial Least Squares Structural Equation Modeling (PLS-SEM) using SmartPLS version 4.0. The structural model examined four core constructs: business strategy (focusing on branding, product design, pricing, promotion, and distribution channels), social responsibility (evaluating commitments to employees, environment, and community), succession planning (assessing family relationships, personal readiness, and financial status), and business sustainability (measuring productivity, cost control, market share, and relationship management).

Key Findings

The statistical evaluation generated several critical insights regarding family business operations in Payakumbuh City:

  • Dominance of Business Strategy: Strategic management acts as the essential core for maintaining family business continuity. Formulating clear product designs, competitive pricing structures, and effective distribution networks directly determines long-term market survival.
  • Social Responsibility Drives Succession: Social responsibility demonstrates a statistically significant positive direct effect on succession planning ($T\text{-Statistic} = 5.959 > 1.96$; $p\text{-value} = 0.000$). Strong community engagement builds business legitimacy, making the intergenerational transfer of leadership smoother and more acceptable to local stakeholders.
  • Indirect Impact of Social Responsibility on Sustainability: Corporate social responsibility does not exert a direct significant effect on business sustainability ($p\text{-value} = 0.347$), as business owners prioritize daily operational efficiency over formal social initiatives.
  • Unrealized Succession Potential: Succession planning currently shows no significant direct impact on family business sustainability ($p\text{-value} = 0.341$). This occurs because founder generations often fail to provide adequate business preparation and skill transfer to incoming successors.
  • Geographic Distribution: West Payakumbuh District holds the highest concentration of family businesses in Payakumbuh City, accounting for 59 percent (362 enterprises) of the total business population.

Real-World Impact and Practical Implications

The findings offer practical guidelines for small enterprise owners, business consultants, and local government officials. For family business owners, the research emphasizes that long-term viability requires shifting focus away from short-term daily profits toward comprehensive strategic planning. Founders must proactively prepare and train the younger generation early to prevent business collapse during leadership transitions.

For the Payakumbuh City Government and the Department of Cooperatives and SMEs, the study highlights the necessity of tailored business assistance programs. Municipal initiatives should focus on training business owners in strategic management, digital marketing, and structured succession frameworks to safeguard local employment and economic growth.

As noted by Nora Susanti and her co-authors from Universitas PGRI Sumatera Barat, sustainable family business management depends on developing adaptive strategic plans and establishing early succession frameworks to ensure enterprises remain resilient against market shifts and economic crises.

Author Profiles

  1. Nora Susanti, S.Pd., M.Pd. is a lecturer and researcher at the Accounting Education Department, Universitas PGRI Sumatera Barat, specializing in accounting education and family business management.
  2. Agung Sudjatmoko is a researcher and academic in the Management Program at BINUS Business School, Bina Nusantara University, focusing on organizational strategy and business development.
  3. Hikmil Kumala is a researcher at the Department of Economic Education, Padang State University, with expertise in economic education and entrepreneurship.
  4. Dr. Yulhendri, M.Si. is a senior lecturer and researcher at the Department of Economic Education, Padang State University, specializing in economics education and small business development.
  5. Rika Verawati, M.Pd. is an academic at the Department of Economics Education, Universitas PGRI Sumatera Barat, focusing her research on microeconomics and regional enterprise growth.
  6. Alfattory Rheza Syahrul, S.E., M.M. is a lecturer at the Department of Entrepreneurship, Universitas PGRI Sumatera Barat, specializing in entrepreneurial strategy and SME innovation.

Source Information

Ardianta

Diposting oleh Ardianta

Posting Komentar

0 Komentar