Catalyst Role of Professional Leadership in Indian Family Businesses

By: Acharya, Satya
Contributor(s): Pandit, Nirali
Material type: TextTextPublisher: Tamilnadu, India IAEME Publication 2020Description: 609-617pSubject(s): business culture | business growth | business systems | family business | professional leadership | Indian Family BusinessesOnline resources: Click here to access online Summary: In India the majority of businesses are in the dominant control of the families. It is estimated that 90% of the business in India is controlled by families (Gupta 2018). Most of the big corporate business houses like Tatas, Ambanis, Birlas, Godrej, Wadias, Munjals, Mahindra, Thapars, Mittals, Shaparji Paollonji, Jindals, Adanis, Anil Aggarwal – Vedanta, Bajaj, Ruias, Ranbaxy, Times of India and many more are all controlled by families. The role of family and the family patriarch is quite important in India. As business transits from being entrepreneurial to being professional, professionalization of top management leadership family business assumes great significance. However, the success of professionalization depends on, to what extent the business culture (values, norms, goals, relations) remain intact with introduction of professionally managed systems (human resource systems), thus affecting the financial condition (profitability, market share, product lines) of the business to remain on the growth trajectory. The main problem with the dominant view on professional management is the way it downplays social and cultural contextual particularities especially in those family businesses where family relations, norms, and values are crucial to the workings and development of the business. Therefore, it becomes important to assess whether introducing non-family professional expertise in top management leadership while retaining minimum share of ownership with family members helps the family business or not. With this objective, the current paper strives to investigate whether the decision of family members to share the control and systems to non-family appointed top management helps the family business in the long run.
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In India the majority of businesses are in the dominant control of the families. It is estimated that 90% of the business in India is controlled by families (Gupta 2018). Most of the big corporate business houses like Tatas, Ambanis, Birlas, Godrej, Wadias, Munjals, Mahindra, Thapars, Mittals, Shaparji Paollonji, Jindals, Adanis, Anil Aggarwal – Vedanta, Bajaj, Ruias, Ranbaxy, Times of India and many more are all controlled by families. The role of family and the family patriarch is quite important in India. As business transits from being entrepreneurial to being professional, professionalization of top management leadership family business assumes great significance. However, the success of professionalization depends on, to what extent the business culture (values, norms, goals, relations) remain intact with introduction of professionally managed systems (human resource systems), thus affecting the financial condition (profitability, market share, product lines) of the business to remain on the growth trajectory. The main problem with the dominant view on professional management is the way it downplays social and cultural contextual particularities especially in those family businesses where family relations, norms, and values are crucial to the workings and development of the business. Therefore, it becomes important to assess whether introducing non-family professional expertise in top management leadership while retaining minimum share of ownership with family members helps the family business or not. With this objective, the current paper strives to investigate whether the decision of family members to share the control and systems to non-family appointed top management helps the family business in the long run.

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