Family businesses have been instrumental in shaping global economies, often evident in several international companies such as Warren Buffett's conglomerate Berkshire Hathaway Inc., BMW, Ford, L'Oréal, and Walmart, among numerous others. This also applies to India, where family businesses have played an important role in shaping its economy, impacting 75 per cent of the country's Gross Domestic Product (GDP). In the last 10-15 years, family businesses in the country have been outperforming their non-family counterparts, showcasing their resilience and adaptability. Large conglomerates such as Tata Consultancy Services (belonging to the Tata family), Tech Mahindra (founded by the Mahindra brothers), and Wipro (established by the Premji family), among others, show how family businesses in India account for a significant proportion of both the economy and wealth generation. However, in India, the role of family businesses extends beyond mere wealth creation, as these enterprises are deeply connected to cultural values and family traditions, which are instrumental in building the foundation of a successful business venture.
The dual role of business owner and family patriarch is a tricky terrain, with responsibilities ranging from ensuring profitability and wealth creation in the business to preserving the family legacy to facilitating growth and investment. Significantly, several nuances of family businesses, including the high-performing traits such as frugality, self-imposed limits on investment, low debt, and organic growth through acquisitions, are seen to be missing in non-family enterprises. In addition, legacy is central to family businesses, as it shapes their identity and inspires their progress. These characteristics of a family business, therefore, also necessitate effective leadership in running it.
In family businesses, the founders or their successors often retain substantial ownership stakes, reflecting the family's active involvement in the business. Issues such as succession, conflict resolution, and governance within the family are also important considerations in running family businesses and ensuring their long-term success.
The issue of succession is often complicated by the possibility of multiple successors in the family, with the choice of merit versus inheritance adding to the dilemma. In this context, succession in a family business should be seen as a gradual process rather than an isolated event wherein family members could be encouraged to gain experience outside the business too before assuming leadership roles within it. A family business owner must be adept at establishing a systematic structure, managing leadership transition to the next generation, and building capability among family members. This is echoed in the words of Farhad Forbes, Chairman of Forbes Marshall, who said, "Tradition is not the worship of the ashes, but the passing on of the fire," stressing the need for striking a balance between traditional family values and innovation.
Other underlying issues that play out in family businesses are those of of trust and the perception of both customers and employees that a family business often does not keep pace with current market developments. It is thus imperative for family businesses to ensure effective communication, transparency, and a prudent attitude towards critical social issues to build stakeholder trust. Simultaneously, the company should always try to be innovative and growth-oriented.
In an effort to deconstruct the role that family businesses play in India's economy and culture, the Confederation of Indian Industry (CII) Family Business Network (FBN) launched the Family Business Club in its first institutional collaboration with Ahmedabad University. The launch was marked by a keynote address by Shobha Das, Professor and Dean of the Amrut Mody School of Management at Ahmedabad University, on the importance of family businesses, in the presence of Farhad Forbes, Chairman of the CII-FBN India Chapter, and Kulin Lalbhai, Chairman of the CII Gujarat State Council, who is also the Vice Chairman of the illustrious Lalbhai family-run enterprise, Arvind Ltd.
India's unique social landscape makes the literature around family businesses and entrepreneurship even more intricate and exciting, reinforcing the need for a programme specially tailored for Indian family businesses and entrepreneurship. Ahmedabad University's Family Business and Entrepreneurship Programme integrates all these concepts, offering its students a carefully curated curriculum that addresses the challenges and nuances of family businesses, blending classroom learning with practical experience.