Psychological Contract and Succession Planning Among Small and Medium Family-Owned Businesses in Uganda

Purpose: The study looked into the connection between psychological contract and succession planning among small and medium family-owned businesses in Uganda. Methodology: The research employed a cross-sectional survey along with descriptive research design with a quantitative approach. Data were collected using a close-ended questionnaire from 176 small and medium family-owned businesses. The data were analyzed using SMART PLS version 23. Findings: The study established that the three antecedents of psychological contract (behavioral responses, perceived expectations, and perceived obligations) are significantly and positively related to succession planning. Further, the study established no relationship between promises and succession planning among small and medium-sized family businesses in Uganda. Limitations and implications of the research: The research utilized a cross-sectional survey; however, given the evolving nature of psychological contracts, a longitudinal study is recommended for future research. Practical implications: Family business founders need to build psychological contract by engaging all family business owners early in the operations and management to understand their expectations and commitments to be able to take over family-owned businesses when the founder retires or dies. Originality and value: Building psychological contracts with all family members is most likely to mitigate future family conflicts and align all family members towards supporting succession planning to reduce the family owned business failure rate in Uganda using Goal Setting Theory.