Most family businesses in India have no planned succession: Survey


Hyderabad: Founders of most of the family businesses in India find themselves at the brink of retirement with no planned succession, according to a survey.

As per the findings of a study by Indian School of Business (ISB)’s Thomas Schmidheiny Centre for Family Enterprise, which surveyed 53 family businesses in India, the challenges of retirement and succession are not limited to India.

Globally 48 universities conducted a survey across 33 countries, covering over 1,800 family businesses, under the umbrella of STEP (Successful Transgenerational Entrepreneurship Practices) Project, to reflect upon the changing demographics and how they impact the family business governance, succession, entrepreneurial orientation and performance, a release from ISB said here on Wednesday.

The report “The impact of changing demographics on family business succession planning and governance” finds that more than half of global family CEOs do not have a formal retirement plan and 70 per cent of global family businesses do not have a formal succession plan.

However, millennial CEOs are ready to take over, it said.

Thomas Schmidheiny Centre for Family Enterprise here being the only member from India conducted the survey in the country, the release said.

“Many of the Indian family businesses were incorporated in the late 1980s and early 1990s when economic reforms were introduced. Most of these business founders find themselves at the brink of retirement with no planned succession,” said Nupur Pavan Bang, Associate Director, Thomas Schmidheiny Centre for Family Enterprise, ISB.

“The STEP 2019 Global Family Business Survey shows that family businesses in different parts of the world are also exposed to these challenges,” she added.

“The findings of the global survey are very relevant for all family businesses in India too. The changing demographics, differences in generational outlook and other societal changes are rendering the traditional methods of retirement, succession and governance redundant,” she said.

She further said proactively planning to tackle the challenges of succession, retirement and governance, while keeping the changing society and generational outlook in mind, will go a long way in perpetuating family businesses.


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