India and its Family Business Norm

Family businesses are said to contribute to 60-70 percent of GDP of most developed and developing countries and India is no exception. India has an abundance of family businesses, from small scale businesses to big conglomerates, Indians are known to operate businesses within the family. Most entrepreneurs pass down their businesses to their children; the siblings then handle the business hand in hand and diversify accordingly. Studies also show that family businesses are more resilient to the ups and downs of business cycles, and hence making family businesses the best way to ensure success.

India and its Big Business Names

In India, we can find that 92% of family businesses involve family members in the functioning of the business. Spouses/partners are allowed to own shares as well as work in the business. About three-fourths own shares while two-thirds work with the business. When it comes to participation of Women in business, India is seen to rank low. While globally women average 21% on the board and 24% in management teams, in Indian family businesses only 15% of women are on the board and 13% on management teams. It is worth noting that 73% of family businesses in India have the next generation working with them, the figure globally being just 65%. 60% of Indian family businesses are also seen to pass the management or ownership to the next generation. (Ref. PwC India family business survey 2019)

The preference of businessmen to keep their business within their family is evident in these statistics. Most of India’s big corporate houses are controlled by families like the Tatas, Birlas, Ambanis, Godrej etc. These are big names in India’s business sector and have been in business for quite some while. Family businesses remain the norm in a large sector of the country and this culture of business ownership and management is not bound to fade away soon. There are many disadvantages to family members running a business together, the primary problem being inter-family disputes and poor management and participation by family members, most times the business is split among the siblings which could either lead to success or the whole business to collapse or fail.

Family Businesses in Kerala

There are many family businesses in Kerala, from big jewelers to small restaurant chains, businesses are kept within the families. The Kalyan Group is an excellent example of an age old family business which has diversified from textiles to jewelers while making its way down generations. It was in 2000 that the sons of Alukkas Varghese, founder of Alukkas Jewellery, split their family’s gold business and went their different ways. The five sons Jos, Paul, Francis, Joy and Anto helped scale their father’s business to great heights. Joy, Jos, Francis and Paul continue in the jewellery business. Seematti is yet another family business, the Kochi branch now being run by Beena Kannan, the grand-daughter of S. Veeriah Reddiar, the founder of Textile revolution Seematti. It is not only in the jewelry and textile industry one can find family-run businesses, the famous Paragon Group is now managed by the third generation of the family.

The Kalyan Family
The Kalyan Family

V-guard is another family business which is renowned in Kerala. The business was founded in 1977 by Kochouseph Chittilappilly. The business has diversified into different industries and is managed by family members. Sheela Kochouseph Chittilappilly, wife of Kochouseph Chittilappilly runs V-Star while their sons are the Managing Director at V-Guard and Wonderla.

Kochouseph Chittilappilly and Family
Kochouseph Chittilappilly and Family

Difficulties of running Family Business

It is important to keep business and family relationships separate, most times the clash of opinions and family disputes disrupt the proper functioning of the business. Into the third generation of a family business, it gets difficult to navigate between everyone’s business goals and way of managing the affairs of the company. Most businesses are seen to be split and divided at this stage.

The need to innovate is the biggest challenge in family businesses today, especially since new products and services are continuously released into the market thanks to technological advancements. It therefore becomes very important that the right skills and capabilities are attracted into the business. This is difficult because most professionals fear that they will lack independence in decision making in family businesses, there is also no clear path to the top. (Ref. PwC India family business survey 2019).

The need to employ creative and talented minds is very important to businesses as the business is fast accelerating when it comes to innovation and progress.

Philanthropy by Family Businesses

This graph published by PwC India Family Business Survey makes it clear the businesses in India makes philanthropy a huge part of its functioning.

The philanthropic activities of family businesses primarily focus on the upliftment of local villages, giving health and sanitation services to local community, women empowerment, founding schools and educational institutions etc. The family foundation is an important tool which allows them to do so. In India, statistically 70% of family business leaders set up a foundation individually or with other families. (ref. PwC India Family Business Survey 2019)

Family businesses continue to be the norm in India and Kerala, with most entrepreneurs and businessmen passing down their businesses to the next generation.

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