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Home > Business > Special

For Indian businessmen, family is the first choice

Bhupesh Bhandari in New Delhi | February 21, 2003

Businessmen the world over may be handing over the reins to professionals, but for Indian entrepreneurs, retaining control over the business and passing it on to the next generation is still the driving passion.

This is a key finding of a new global study on family businesses by consultancy firm Grant Thornton.

The study says that as many as 46 per cent of Indian businessmen feel that their successor should come from within the family. In comparison, only 22 per cent of North Americans and 24 per cent of Europeans subscribe to this view.

As many as 57 per cent of the 185 Indian businessmen covered in the study thought that the shares in a company should be transferred only to family members.

In contrast, a majority of respondents in countries like Singapore, Malaysia, Thailand, Japan and Hong Kong said that the transfer of shares should not be restricted to family members.

Further, 51 per cent of the Indian respondents said that family members are entitled to differential pay arrangements over other employees.

This is substantially higher than the Asian average of 31 per cent.

"It is clearly evident from the research results that Indian family businesses are not ready for the crucial and well- respected distinction between family, ownership and management," said Vishesh Chandiok, country director of advisory services to family businesses at Grant Thornton India.

The India survey was conducted in collaboration with Professor K Ramachandran of the Indian Institute of Management Ahmedabad.

What is more, only six per cent of the Indian businessmen in the study said that they had worked outside before joining the family business, compared with 78 per cent of the businessmen in the United Kingdom, 74 per cent in Japan and 50 per cent in Thailand.

Indian businessmen are little better when it comes to preparing the next generation for business.

Amongst all the countries surveyed for the study, India has the highest proportion of businessmen who said that their children should not start at the bottom of the organisation going through the various functions of the company.

As many as 50 per cent felt that children should receive some shares when they join the business.

As much as 29 per cent of Indians want their children to join the business as against 11 per cent globally and 24 per cent in Asia (11 per cent in Japan).

With family occupying centrestage, it is only to be expected that the biggest nightmare for an Indian businessman is a divorce.

As much as 52 per cent of owner-managers in India are worried about it, the study says. Businessmen in most other countries in the survey have listed preserving their wealth as their number one nightmare.

No surprise, the study says that Indians are less worried than their Asian counterparts about the possibility of their business doing better.

Also, while 36 per cent worry about selling, only 15 per cent are concerned about the value of their enterprise.

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Number of User Comments: 4

Sub: Re: ''Family, first choice for India biz''

Until now, I thought politicans were sick. Now it looks like businessmen are equally sick. Infact, it looks like they are no better than the ...

Posted by Madhu

Sub: Wake Up Call

to investors when buying share. The first thing to look in a company is the family owning majority, amount and then, assess the management skills ...

Posted by Vikas

Sub: Family, the first choice for Bharatiya businessmen

I fully endorsed my sentiments in favour of the article but the chief of the biz should not encourage his kins to join the readymade ...

Posted by Chandrashekhar Anerao

Sub: family business

all along we knew that for indian businessman all business is family business & investors be damned.they can not let profesoinals in place of their ...

Posted by nikhil awasthy



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