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By Our Special Correspondent
CHENNAI, OCT. 16. Family-owned and family-controlled businesses have many advantages in the current economic climate, says John L.Ward, Clinical Professor and Co-Director, Centre for Family Enterprises, Kellogg School of Management, U.S. Considering that in the present environment of unbridled competition, where neither size of businesses nor national boundaries was material, differentiation — of product or service — is a crucial element for success, for which family owned businesses are the most suited because "they can dare to do things differently", Prof. Ward said. Speaking on "Survival in the 21st century — challenges facing family businesses" under the auspices of the MMA (Madras Management Association) Centre for Family Business on Friday, Prof. Ward also pointed out other clinchers that family business possessed — core value systems, trust among owners, tendency to take a long-term view of things in preference to shot-term objectives, capacity to conclude deals and partnerships "with a mere handshake" in contrast to elaborate contracts and negotiations and identification of business with the reputation and image of the family, which encouraged an approach of integrity and efficiency in managing business.
Flexibility and stability
Prof. Ward said family businesses could combine flexibility and stability and adapt themselves to the current external values even while being inspired by the core values and vision of their founders. He cited several studies which showed not only the large role that family-owned/controlled businesses played even in large and organised businesses, including international operations, but also their outperforming the stock market index. Values that guided non-family businesses — like team work, equality, innovation and customer focus — were functional but impersonal, while values guiding family businesses, such as dignity, reputation, trust and integrity were personal and "truly touched other people", Prof. Ward said. Of course, there were challenges and pitfalls that family businesses faced. Among them were reluctance of the elder generation to "let go" or hand over control to the younger generation and rivalry and misunderstanding between brothers and sisters in the younger generation. In many developed countries, the first of these was a major problem, while in India, it was the second that was a bigger issue, he said. Jayshree Venkatraman, Chairperson of the MMA Centre for Family Business (and Director, TAFE Access Ltd), said the centre aimed at sharing of experiences by focussing on four themes, namely, "The Outsider's View", "Vision, Constraints and Governance", "Dispute Resolution" and "Success Planning".
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