India ranks third (next to China and USA) on the list of countries with the highest number of family-owned business, according to a research report – The Credit Suisse Family 1000. The report was based on a study of more than 1000 companies of £250 million in market capitalisation. India is expected to be a £5 trillion nation by 2025 and family-owned and family-controlled companies, it is felt, can make major contribution towards this target. Family businesses are not something new to the country, which is witnessing them right from Ramayana and Mahabharata eras.
The topic ‘Growing Family-Owned Businesses in India’ was discussed in Chennai recently at a conclave conducted by Madras Management Association, Great Lakes Institute of Management and Konrad Adenauer Stiftung. The sessions of the conclave dealt with Shifting in mind–set of family owned enterprises, Financing India’s nascent family enterprises and Ensuring family legacy: Multiple family offices. Speakers at the event differentiated between family business and business for family.
In the first type, family members will be given key positions irrespective of competencies. When the organisation grows, the individuals may not grow. Due to ego clashes, business suffers. Decisions good for the family need not be good for business. The second type is good for business. And, of course, eventually, family members also benefit. They pointed out that 84 per cent of total combined assets of the top 20 Indian business groups are controlled by family business. ‘Fifteen of the top 20 Indian business groups are family-owned,’ they said, and highlighted the threats faced by such businesses. The biggest threat is changes in family relationships. When it comes to business, family should take a backseat and professional interests should be given top priority. This is not just good for the company, but also the country.