Leadership Transition Failure in Small to Medium-Size Enterprises

Expanding companies may inevitably encounter leadership transition situations that involve challenges for employees, leaders, and founders. Small and medium-sized enterprise (SME) members have experienced leadership transition complications, sometimes due to the loss of tribal and predecessor-specific knowledge, resulting in compromised firm functionality and the long-term viability of businesses. This study adds to the existing body of knowledge on leadership transition failure, including an examination of mechanisms that influence the success and failure of leadership transitions. To address identified knowledge gaps, a flexible design, single-case study was conducted using a constructivist paradigm. Data were collected from a diverse selection of interviewees, reinforced by a focus group and secondary data. Transformational leadership theory and social identity theory were foundational to exploring key areas, including knowledge transfer, organizational culture, leadership alignment, and development and mentorship practices. As a result of reading this study, senior leaders and business founders will equip themselves with actionable insights derived from the study to confidently navigate leadership transitions, sustaining organizational momentum during periods of change.