Sustaining Family Businesses in India: An Appreciative Inquiry Approach to Traditional Businesses

Background

Family-run businesses (FRBs) are different from other businesses due to the fact that such businesses have members of the same family working for the business. The Stockholm School of Economics has defined family businesses as the business that has at least one of the following characteristics: (i) three or more family members all active in the business or (ii) two or more generations of family control or (iii) current family owners intend to pass on control to another generation of family. According to estimates, family-run businesses outperform non-family firms with higher average return on investment. Worldwide, family businesses account for two thirds of businesses, employ 60% of the work force and contribute over 70% to global GDP. The richest legacy in family businesses lies with Japan and European countries.

There is a long history of family businesses in the world with European continent representing some of the oldest and the highest number of family-run businesses across the globe. Lombard Odier, with seventh generation in business, has 220 years of experience in asset management and wealth preservation. Beretta, an Italian firearms manufacturing company, is nearly 500 years old with fifteen generations into business. Similarly, Merck, Wendel and Soares Dos Santos represent some of the oldest families into the businesses of Germany, Paris and Portugal respectively. In the US, the history of successful family businesses is relatively of recent times starting only in early 1900s., with Mars, Carlson or Waltons of Walmart to name a few. In Asia, family firms in Japan are known to account for the highest number of ‘over two-hundred years old’ family businesses in the world, with one of the businesses being forty-six generations old. China and Hong Kong are less known in family business legacy and leadership. India is witnessing a growing number of successful family businesses with history of their existence since mid-eighteenth century.