Family Background and Business Succession in Family-Owned Coffee Businesses: The Mediating Role of Knowledge Transfer

Purpose: This study aims to analyze the influence of family background on business succession and to examine the mediating role of knowledge transfer within family-owned coffee beverage businesses. Research Methodology: This quantitative, cross-sectional survey study was conducted in Gresik Regency, Indonesia. The unit of analysis is the individual successor's perception of succession readiness. Primary data were collected from 120 second-generation (and beyond) members of family-owned coffe businesses in Gresik Regency, Indonesian, using purposive sampling. Data analysis was performed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with bootstrapping set to 5,000 subsamples. Results: The findings reveal that family background has a significant positive effect on knowledge transfer (β = 0.635, T = 7.298, p < 0.001) and business succession (β = 0.548, T = 5.245, p < 0.001). Knowledge transfer also significantly influences business succession (β = 0.357, T = 3.021, p < 0.01). Crucially, bootstrapping analysis confirms that knowledge transfer significantly mediates the relationship between family background and business succession (indirect effect = 0.226, T = 2.451, p = 0.014). Family background explains 67.6% of the variance in knowledge transfer, and the model explains 40.3% of the variance in business succession. Conclusions: A supportive family background plays a crucial role in facilitating intergenerational knowledge transfer, which in turn equips successors with the necessary understanding, skills, and readiness to ensure successful business succession. Limitations: The study is limited by its cross-sectional design, reliance on self-reported perceptions, purposive sampling, and specific geographic and industry context. Contributions: This study advances the Knowledge-Based View (KBV) in family business literature by empirically testing knowledge transfer as a mediating mechanism, offering specific practical insights for intergenerational transition strategies.