The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/2040-8749.htm
NBRI
13,1
34
Received 7 May 2021
Revised 2 July 2021
Accepted 2 July 2021
Nankai Business Review
International
Vol. 13 No. 1, 2022
pp. 34-57
© Emerald Publishing Limited
2040-8749
DOI 10.1108/NBRI-05-2021-0033
Institutional complexity and
family business development: a
case study of the Charoen
Pokphand group
Bo Wang
Business School, Sun Yat-sen University, Guangzhou, China
Qiang Liang and Lihong Song
Business School, Shantou University, Shantou, China, and
Erming Xu
Business School, Renmin University of China, Beijing, China
Abstract
Purpose – With features of both “family” and “business,” family businesses must seek a balance between
the emotional aspect of “family” and the economic aspect of “business” in its organizational and decision-
making processes to ensure the sustainability of the family’s entrepreneurship. This study aims to focus on
how internal institutional complexity combined evolves alongside the growth of the family business.
Design/methodology/approach – The research looks, from the perspective of institutional logic, into
the Charoen Pokphand Group, which is an epitome of overseas Chinese family businesses and proceeds to
build a model of family business growth in the context of institutional complexity.
Findings – The research finds that as a family business grows, institutional complexity inside the
organization would change from aligned period to sustaining period and then to dominant period. Then
further elucidates the process of proactive response in different stages of the development of a family
business. Attaching equal importance to the cultivation of entrepreneurship and to the continuation of family
values and culture is the crucial mechanism by which Chinese family businesses seek a balance between
family logic and business logic.
Originality/value – This paper unveils the change of institutional complexity in the evolution of family
businesses and the process of action of its agency as an organization, and simultaneously partly reveals the
features of entrepreneurship that overseas Chinese family businesses have as they grew, which is of positive
significance for exploring and building a path of growth unique to Chinese family businesses.
Keywords Family business, Case study, Institutional logic, Charoen Pokphand group, Family logic
Paper type Research paper
1. Introduction
Academic research on family businesses currently focuses largely on “family” organization
(involvement of and inheritance by family members) and its special socio-psychological
features (e.g. altruism, inheritance, stewardship, social emotions, etc.), looking into such
strategic issues to family businesses as governance, innovation and internationalization. In
this sense, a family business is a business imbued with “familial” elements. Though existing
The research is supported by National Natural Science Foundation of China (Project No.71972119;
No.71872193).
literature has offered a deeper understanding of how family elements influence business, we Family
still have to delve deeper into the interplay – in the course of a family business’ development – business
between the affective attachment of the family and the economic rationality of the business.
The latest views of institutional logics propose that the relationship of fusion between “family”
development
and “business” forms actually the complexity of logic behind organizational decision-making,
and that it is actually in the co-evolution of dual logic that a family business achieves family
inheritance and business growth (Zellweger et al., 2016).
While traditional neo-institutional theory places emphasis on the influence of institutions 35
on the convergence of organizational behavior (Powell and DiMaggio, 2008), the institutional
logic theory sees the social system as an inter-institutional system with potential
contradictions, which explains organizational changes and diversity in consequence of
multiple conflicting institutional logics (Thornton and Ocasio, 2008). In recent years, the
impact of multiple institutional logics on individual organizations has interested more and
more scholars (Greenwood et al., 2011; Besharov and Smith, 2014). The involvement of the
family system subjects the family business “intrinsically” to the dual impact of family and
business logics and the correlation between the two kinds of logic also has an effect on the
continued growth of the family business (Miller et al., 2011). In traditional theories, the
family logic that focuses on non-economically-oriented family welfare and the business logic
that hinges on an economic orientation, are usually seen as contradictory and incompatible.
This also explains why many family businesses would have the strategic decision-making
behavior of “de-familization” step by step in the course of development. Nevertheless,
excessive and ill-timed emphasis on “de-familization” often causes conflicts inside the
family, inflicts a loss to the strategic resources unique to the family business (Zhu et al.,
2012) and leads to the collapse of the family business system, culminating in the family
business falling into the logic trap and repeating the history of remaining small in scale and
family break-up (Redding, 1993). So far, as a family business is concerned, therefore, it is
particularly important to correctly understand, respond to and make the most of the
institutional complexities inside the organization as a result of the involvement of family
elements. How does the space of the family business’ strategic response change as the dual
family-business system evolves? What should a family business, as an actor, do on its own
initiative given the institutional complexities specific to it, so as to avoid the logic trap and
proceed to morph into a modern international business from a family workshop?
Unfortunately, the academic community still knows little about these for the present
(Aparicio et al., 2017; Ramus et al., 2017).
Therefore, this paper intends to discern, with the institutional logic theory as a point of
departure, the organizational character of the dual logic that is formed in the evolution of a
family business by family logic and business logic and the course of the dynamic evolution of
the family business in the context of institutional complexity. The study focuses on how
internal institutional complexity brought about by a family logic and a business logic
combined evolves alongside the growth of a family business. Attention is also paid to the space
of strategic decision-making by a family business as an organization in the context of
institutional complexity and to how it brings into play its initiative to become an active rather
than reactive player to institutions. Through a single-case study of the Charoen Pokphand
Group, a typical overseas Chinese family business, this paper creates a model of growth for
family businesses in the context of institutional complexities and expects to provide, from a
new theoretical perspective, a theoretical reference for the continuity and sustained growth of
Chinese family businesses and explore and build a path of development unique to Chinese
family businesses, thus deepening to a certain extent the academic understanding of the agency
of family businesses as actors in the context of institutional complexity.
NBRI 2. Literature review
13,1 2.1 Theory of institutional logic and institutional complexity
The theory of institutional logic is derived from the criticism of long-standing neglect of
social factors in the field of social sciences. It holds that the influence of social context was
overlooked, whether in economics based on the rational-choice assumption or in power-
oriented organizational theory. Friedland and Alford (1991) argued that only in a specific
36 social context could behaviors of individuals and organizations be accurately understood, as
a society is an inter-institutional system that was built on multiple institutional logics and
has potential contradictions. A mature social theory must at the same time examine
individuals who compete and negotiate with one another, organizations, which conflict and
harmonize with one another and systems, which are both contradictory and interdependent.
This viewpoint was later supported by many researchers of organization theory, who
criticized neo-institutionalism for lacking attention to self-interest seeking individuals with
agency and for being unable to explain the heterogeneity of organizations under the
pressure of homogeneity (He, 2014). The concept of institutional logic, therefore, stemmed
from and is different from the traditional institutional theory of organizational analysis.
Early research studies on institutional logics focused on “dominant logics” and the
implications of their change at the industry level and in organizational fields (Lounsbury,
2007). Thornton et al. examined, for example, the process of change in the higher education
publishing industry in the USA in the late twentieth century from “professional logics” to
“market logics” (Thornton and Ocasio, 1999; Thornton, 2004), and the impact of this process
on organizational structures and decision-making. These pieces of research contributed
considerably to the theoretical development of institutional logics and attracted the attention
of a large number of researchers. Some researchers, nevertheless, began pondering if an
overemphasis on “dominant logics” had to a certain extent departed from the original
purpose of Friedland and Alford (1991) when they founded the theory of institutional logic.
In recent years, researchers have paid more and more attention to the topic of multiple
institutional logics, and emphasized the diverse requirements brought about by the
long-standing interactions between multiple institutional logics inside and outside an
organization, and the impact of their complexity on organizational behavior, namely, what
Greenwood et al. call “institutional complexity” (Greenwood et al., 2010; Greenwood et al.,
2011). This shift in focus is remarkably reflected in studies by Reay et al. on health care
organizations in Alberta: their first paper holds that the health care organization in the
region underwent the shift in dominant logics from “professional logics” to “market logics”
and gives prominent to the process of “new” logics superseding the “old” logics (Reay and
Hinings, 2005); their second paper stresses that the two competing logics, professional and
business, co-exist within a health care organization on a long-term basis and through
coordination and cooperation, the organization may manage to reach a balance between the
two (Reay and Hinings, 2009).
With research progresses, the academic community has had a deeper and deeper
understanding of institutional complexity. Friedland and Alford (1991) regard institutional
contradiction as an important concept, and researchers after them pay attention also
to analyze the impact of multiple institutional logics of competition, conflict and
incompatibility on organizational strategies and structures. Pache and Santos (2010)
interpret such incompatibility as differential meanings and goals contained in different
institutional logics. However, just as research studies by Reay and Hinings (2009) suggest,
between multiple institutional logics are not just conflicting and incompatible relations but
also relations of co-existence. A study by Battilana and Dorado (2010) of Bolivian
microfinance organizations shows that though there exist two different institutional logics,
those organizations may, by means of employment, socialization and other policies, create a Family
shared identity to merge the two institutional logics. Research by Smets et al. (2015) business
suggests that organizations may seek, in a “conflicting yet complementary” institutional
background, a balance to benefit from; that is to say, the multiple institutional logics are to a
development
certain extent compatible with and support one another (Venkataraman et al., 2016).

2.2 Family logic, business logic and family business

Institutional logic theorists have devoted themselves to research into the impact of
37
institutional complexity in social and economic fields on organizational behavior, with
substantial research focused on market logics, professional logics and business logics,
giving inadequate attention to non-market logics (Greenwood et al., 2010). With the
academic community becoming more and more aware of the multiplicity of institutional
backgrounds in which organizations operate, some researchers began to realize that some
institutional logics rooted in culture also could have effects on the strategic decision-making
behavior of economic organizations. Family, religious, community and other non-market
logics, to which academic attention actually occurred in synchronization with research into
institutional multiplicity, also have become the focus of theoretical research for the present.
In the field of family business research, moreover, family logic have attracted more attention
from researchers (Reay et al., 2015; Jaskiewicz et al., 2016).
Friedland and Alford (1991) define the institutional logics of the family as “community
and the motivation of human activity by unconditional loyalty to its members and their
reproductive needs.” The “family” here has no fixed boundary and can be a nuclear family in
the traditional sense, a clan, a caste or even a state, with stress placed on the inter-
generational succession and loyalty inside the family (Miller et al., 2011). The social
influence of family logic appears particularly important. Bhappu (2000) observes, for
instance, that family logics constitutes the social capital of the Japanese and has profound
effects on both relational networks and the management practice of Japanese businesses
(including non-family businesses). Fairclough and Micelotta (2013) drew a similar
conclusion from research into the legal profession of Italy that inroads that family logics as a
social culture makes into economic life are not confined to family businesses; they also affect
large numbers of non-family businesses.
However, the institutional logic theory can not only be used to explain the influence of
multiple institutional scenarios outside of organizations, but they also can be used to
interpret the impact of the co-existence of multiple competing logics inside an organization
(Besharov and Smith, 2014; Greenwood et al., 2010). The most obvious effects that family
logics have on economic life are manifested in family businesses. Unlike other forms of
organizations, a family business is a combination of the family system and the business
system (Swartz, 1989) and the involvement of family elements subjects it “intrinsically” to
family logic (Zellweger et al., 2016; Miller et al., 2011; Aparicio et al., 2017). The corporate
growth of a family, therefore, is also a process of interaction between family logic and
business logics. On the one hand, the business as an economic organization follows the
principle of profit maximization in business logics to seek maximal economic benefit and
competitive advantage; and on the other hand, the founder of the family business aims also
at improving personal and family welfare and the influence of the family on the business
makes the latter strongly subject to family values and beliefs, which are part of the family
logic (Mitchell et al., 2011). Therefore, the central matter of a family business is how to deal
with the relationship between family logics and business logics, which is embodied not just
in business management but also in inter-generational succession of the family business
(Zellweger et al., 2016).
NBRI Ownership affects the self-identity of a business and its employees, as well as the logics
13,1 they follow, so family ownership forms the family logics of the business that a family owns.
First of all, ownership affects the cognitive framework of the business’ employees (Burke
and Reitzes, 1981). In the initial stages of a family business, the boundary between the
family and the business is vague and loyalty to the family is a shared understanding of
the organization. Second, ownership affects the organization’s internal code of conduct. The
38 behavior of the family business is generally seen as an altruist and this altruism obliges the
business owner to be responsible for the well-being and career development of other family
members (Simon, 1993). Besides, the business must, out of strategic considerations, serve
key resources on which it relies (Miller et al., 2011). When a particular family owns and
provides key resources necessary for the development of the business, the business must
meet the requirements of the owner of the resources (Pfeffer and Salancik, 1978), making it
unavoidably subject to family logics.
Because there is the need to satisfy the emotional needs of a family, which is not
economic (Gomez-Mejia et al., 2007), family logics are generally seen as a hindrance to
organizational development. Greenwood et al. (2010) believe that family businesses pursue
values different from those pursued by non-family businesses and that a paternalistic
management style derived from these values enables family businesses to offer their
employees a sense of career security, resulting in an inability to carry out market responses
(e.g. job cuts) effectively and in good timing. They also have an inclination to be
conservative. Miller et al. (2011) conducted empirical research on Fortune 1000 companies
and found that family logics brought about by the involvement of family members made
companies more inclined to take a conservative strategy. Are family logics and business
logics contradictory and incompatible? Existing research studies ignored the long-standing
interactions in the development of family businesses between family logics and business
logics and the change of institutional complexity attending this interaction, on the one hand,
and the value created by family involvement in terms of relational networks, capital and
cultural inheritance (Zhu et al., 2012; Chu, 2003). In effect, accepting and making good use of
the institutional complexity in the family is more conducive to the development and
continuation of the family business (Aparicio et al., 2017; Ramus et al., 2017).
The relationship between a family business and its internal institutional complexity is
complex, diverse and dynamic and strategic decision-making and the practice of the family
business as an organization need to consider both family logics and business logics
(Table 1). As a cultural belief and normative cognition, family logics, through the
involvement of family members, build the cognition of the organization and the individuals
that constitute it and shape their behavior. In a family business, the purpose of family logics
is to provide family members with career security, improve their quality of life and ensure
the long-term success of the family business. The family business meets the requirements of
family logics by, among other things, granting equity shares to family members, providing

Categories Family logics Business logics

Goal as an organization Family harmony and long-term success Profit maximization

Source of legitimacy Unconditional loyalty/love Market position of firm
Source of authority Patriarchy Powers of management and control
Table 1. Source of identity Family reputation Bureaucratic roles
Family logics versus Basis of strategy Provision of security for family Building a competitive position as a
business logics members; altruism business
them with top management positions, setting up a family foundation and strengthening risk Family
management. Some researchers, therefore, argue that a family system is for the most part an business
affective system (Swartz, 1989) and the cognition and behavior of family members are
influenced by its affective inclinations and family logics are dominated by affective logics.
development
While the involvement of family and pan-family members provides the business with
crucial social capital, disharmony within the family impacts the governance efficiency of the
business (He et al., 2010). This also requires a family business, in seeking competitive
advantages, to consider demands as a result of family logics. It is worth noting that as an 39
economic organization, the primary goal of a family business is to pursue economic profits;
that is to say, business logics always exists as the dominant logics of the business.
Therefore, the internal institutional complexity of a family business depends on the
influence of family logics and their relations to business logics. However, in the context of
institutional complexity, to use the space of strategic decision-making that a family business
has and use its initiative as an actor to weaken the conflict between family logics and
business logics and even transform these logics into strategic resources for business
development is the key to the development of a family business and also a central subject
that this paper investigates with a case study.

3. Methodology
3.1 Case selection and data collection
Compared with other research approaches, a case study, which helps the researcher focus on
the dynamic process of a particular scenario, is an effective method that is more suitable to
develop and test a pioneering theory (Eisenhardt, 1989), helping answer “why” and “how”
questions (Yin, 2010). This study takes the case of a Chinese family business and looks –
from the perspective of institutional logics – into family-business practice and the evolution
of institutional complexity inside of an organization under specific circumstances. Some
researchers have already recognized that the wisdom that Chinese family businesses have
regarding properly dealing with relations between family logics and business logics in
seeking long-term business success is in effect derived from the traditional Chinese culture
(Fan, 2014). According to the principle of theoretical sampling, therefore, this paper selects
Charoen Pokphand Group, a representative company of considerable influence and
reputation in China and overseas, as the subject of its case study.
In nearly 100 years, Charoen Pokphand Group, originally a store in Bangkok’s
Chinatown, Thailand, has morphed into a colossal commercial empire after business
operations in the hands of 4 men in 2 generations of the Chearavanont family. Compared
with family businesses in the Chinese mainland, which appeared after China launched its
economic reform, overseas Chinese family businesses are more deeply influenced by
traditional Chinese thoughts, especially Confucianism and familialism (Redding, 1993). As
an epitome of continuous business development, Charoen Pokphand Group may present to
researchers a historical course of change in institutional complexity and business practice,
which makes it easier for us to look into the potential influence that traditional Chinese
culture has on the development of family businesses. Also, a vertical investigation into a
single case provides an opportunity to have an all-round view of how things have evolved
over time, and helps avoid the dilemma of “failing to see the wood for the trees” in
consequence of focusing simply on isolated business behaviors (Pache and Santos, 2013).
Data collected for the case study is largely second-hand because it is not easy to have an
in-depth interview with core family members leading Charoen Pokphand Group. Sources of
data include My Memoirs, written by Chia Ek Chor, the founder of Charoen Pokphand
Group and My Resume, an autobiography series that Dhanin Chearavanont (known in
NBRI Chinese as Chia Kok Min), current Senior Chairman of Charoen Pokphand Group, published
13,1 on the Chinese website of Nikkei; substantial in-depth interviews made by Zhang Yigong,
honorary chair of Henan Writers Association, during his 50-day visit in the late 1990s to the
Charoen Pokphand headquarters in Thailand, including more than 70 recorded interviews
with the Chia brothers and over 10 other senior executives of the group. In addition, we also
gathered videos of Chia Kok Min’s interviews and in particular, Chaozhou Merchants
40 Worldwide, a documentary series about overseas Chinese family businesses. These provided
data by for us to build a full picture of the entrepreneurial history of Charoen Pokphand
Group, internal changes of the family and strategic considerations of the leaders of the
group. Moreover, because the data mentioned above are all derived from personal accounts,
verbal or written, by the core family members of Charoen Pokphand Group, none of which
was processed by any third party, the data used for the case study is better described as
“quasi-first-hand data” than as second-hand data (Yin, 2010).
To make the case study more reliable and credible, the research team also gathered data
from other sources for cross-checking, including a host of news reports on Charoen
Pokphand Group, newsletters and leadership activities published on its Chinese official
website and two research papers that two overseas researchers published about the group’s
development strategies and overseas investment activities. In particular, given that the
Chearavanont family, as a preeminent representative of overseas Teochew (Chaoshan)
people, has long been a subject of attention from researchers of the Teochew culture, the
research team also collected many related articles from local Chaoshan publications such as
Teochew People Worldwide and Shantou Culture and History, for the purpose of auxiliary
analysis. Finally, we also sent the draft of this paper to and had multiple interviews with the
top management of Charoen Pokphand Group, and the research team traveled to its
headquarters and college in Thailand, where exchanges were made about case description
and theory building to ensure the integrity of the logic chain. Table 2 below shows the
sources of data used for the case study.

3.2 Data analysis method

This paper is a longitudinal single-case study. As the company in the case has close to 100
years of history, complex family involvement and business decision-making make it
difficult to the presentation of the case. In response to this, the researchers remained
sensitive all the way to information and, especially when different information sources
produced inconsistencies in specific practices, particulars and time points and examined
data afresh according to statements by strategy decision-makers, so as to maximally reduce
the retrospective bias of research. By consulting Pettigrew’s longitudinal research method
(Pettigrew, 1990), this paper’s analysis strategy consists of the following components: First,
we outlined the 100-year history of Charoen Pokphand Group based on the afore-mentioned
data and had a clear view of family involvement, corporate strategic decisions and their

Type Quantitative description

Written personal accounts by Chearavanont family leaders 32,000 characters

Videos of interviews with Chia Kok Min 2h
Transcripts of interviews by Mr Zhang Yigong 96,000 characters
Charoen Pokphand newsletters 30,000 characters
Table 2. Academic research studies at home and abroad 60,000 characters
Data description Interviews and exchanges with Charoen Pokphand management Multiple visits
points in time, especially milestones in terms of business transformation and inter- Family
generational succession, building up a chronology for in-depth analysis. Second, we broke business
down the timeline into three stages according to theory, corporate development and
succession practice, identify and sort out corporate data relevant to the study, including
development
milestones, business practices, organizational structure and specific circumstances in each
of the stages. Finally, we conducted a theoretical analysis of the practices and literature
concerning the case against the existing institutional logic framework, with emphasis placed
on the changes in the nature of its institutional complexity in each stage of development and
41
on this basis, examined the nature of institutional logics and corporate responses and
explored how the family business broke through the logic trap of family-business logic
conflict (Table 4).

3.3 Case description

Southeast Asia is a gathering place of overseas Chinese family businesses. It was when
large numbers of Teochew people emigrated to Thailand, where they would make huge
contributions to local social and economic development, that Charoen Pokphand
embarked on its long journey of business prosperity. Charoen Pokphand Group is
known in the Chinese mainland as the Chia Tai Group. After nearly a century of
business development, as Mr Chia Ek Chor started the seed store Chia Tai Chueng in
Bangkok, Thailand, Charoen Pokphand Group has now become the largest private
company in Thailand. In 2015, it had more than 300,000 employees and reported a sales
revenue of US$4.5bn, exporting products to over 100 countries worldwide. For a long
time, the Chearavanont family, headed by the founder Chia Ek Chor and his younger
brother Chia Seow Hui, has owned and controlled Charoen Pokphand Group. Table 3
above shows the family and corporate roles and main experiences of core family
members involved in the business. The table above gives a list of milestones in the
history of the group over nearly 100 years.

Member Role in family Role in company Personal milestone

Chia Ek Chor Head of the Founder Found a seed store named Chia Tai Chueng in
Chearavanont 1921
family
Chia Seow Hui Third younger Second successor Joined Chia Tai Chueng in 1924;
brother of Chia Served as General Manager of Chai Tai Chueng
Ek Chor in 1948
Jaran Eldest son of Third successor Co-founded Charoen Pokphand Animal Feed
Chiaravanont Chia Ek Chor permanent Company in 1953, serving as Chairman
honorary chairman
Montri Second son of Permanent Co-founded Charoen Pokphand Animal Feed
Chiaravanont Chia Ek Chor honorary chairman Company in 1953, serving as General
Manager; Founded CP Pokphand Co. Ltd in
Hong Kong in 1973
Sumet Third son of Permanent Founded an animal feed company and a
Chiaravanont Chia Ek Chor honorary chairman fishery company in Indonesia in 1959
Dhanin Fourth son of Fourth successor Served as Manager of the Thailand Poultry
Chearavanont Chia Ek Chor and Eggs Cooperative in 1959; served as Table 3.
(known in General Manager of Charoen Pokphand Core family members
Chinese as Chia Group in 1963; serviced as President of of Charoen Pokphand
Kok Min) Charoen Pokphand Group in 1969 group
NBRI Year Milestone
13,1
1921 Chia Ek Chor started a seed store, Chia Tai Chueng, in the Thai capital of Bangkok
1948 Chia Ek Chor handed Chia Tai Chueng over to Chia Seow Hui when he returned to China
1953 Jaran Chiaravanont and Montri Chiaravanont founded Charoen Pokphand to operate in the animal
feed industry
1959 Dhanin Chearavanont served as Manager of the Thailand Poultry and Eggs Cooperative, a joint
42 venture between Charoen Pokphand and the Thai Government
1963 The Thai Government dissolved the aforesaid cooperative and Dhanin Chearavanont began serving
as Manager of Charoen Pokphand Group
1969 Dhanin Chearavanont served as President of Charoen Pokphand Group
1971 Cooperated with the largest American poultry farming companyArbor Acres, brought in foreign
investment and hired foreign nutrition experts
1973 Charoen Pokphand began exporting chicken to Japan and would later be hailed as “the company
that changes Japanese dining tables”
1974 Founded CP Pokphand Co. Ltd in Hong Kong
1980 Obtained the first business license as a foreign-invested enterprise in Shenzhen, Zhuhai and
Shantou, respectively
1989 Cooperated with a Belgian company on manufacturing of polyvinylchloride and with an American
Table 4. company to enter the Thai telecommunications industry
A brief history of 1997 Corporate restructuring, its non-core business units sold
Charoen Pokphand 2003 Dhanin Chearavanont was made on the Fortune Magazine’s list of the World’s 50 Most Influential
group Business Leaders

4. Case analysis
Different from earlier researchers who stressed the rivalry and conflict between multiple
logics inside of an organization, researchers in recent years have become aware that
different institutional logics are compatible and the institutional complexity in which
organizations operate can be of a different nature. Besharov and Smith (2014) argue that the
nature of institutional complexity inside of an organization depends on how multiple logics
inside of the organization manifest themselves, and they classify the nature of multiple
logics according to two dimensions – compatibility and centrality (Figure 1): when multiple
logics inside of an organization points to roughly consistent behavior, the compatibility
between them is relatively high and conflict inside of the organization weak; conversely,
when the multiple logics have stronger impacts on the core functions of the organization,
centrality among logics is relatively high. A high centrality level leads to vague dominant
logics inside of the organization, adding and proceeding to give rise to confused functions
and relatively strong conflicts inside of the organization. Simply put, according to them, an

Contested Aligned
Degree of centrality

High
Extensive conflict Minimal conflict

Estranged Dominant
Low
Moderate conflict No conflict
Figure 1.
Types of logic
Low High
multiplicity within
organization Degree of compatibility
organization’s decision-making space and consequent results are closely linked to the nature Family
of the institutional complexity inside of it. Unfortunately, as a review article, Besharov and business
Smith (2014) took simply a static rather than a dynamic point of view, ignoring the changes
of internal institutional complexity in the course of the development of an organization on
development
the one hand (Greenwood et al., 2011) and on the other hand, overlooking the regulating role
of the organization’s characteristics (e.g. competition status, structure, ownership and self-
identity) in its responses to institutional complexity (Greenwood et al., 2011; Kraatz and
Block, 2008; Luo et al., 2016). 43
The involvement of family elements makes a family business full of uncertainty and
complexity and determines that its inter-generational succession is usually attended by the
occurrence of a corporate change (Barnes and Hershon, 1976), which is also a process of
restructuring the relations between family logics and business logics (Ramus et al., 2017;
Lansberg, 1988). This paper draws on the methods of Reay et al. (2015) and Thornton et al.
(2005) to summarize and generalize from case data and divides the development of Charoen
Pokphand Group into three stages in light of its developmental and transmission practice.
Based on the frameworks of Greenwood et al. (2011) and Besharov and Smith (2014), it
proceeds to analyze the institutional complexity, milestones, corporate practice,
organizational characteristics (structure, ownership and management, employment, core
business, etc.) in each stage of the group, trying to present a complete picture of the process
of institutional complexity changes and organizational responses.
1. The first stage: First-generational entrepreneurship (1921–1953) – the aligned period.
The nature in this period of institutional complexity presented itself as high compatibility
and high centrality. In other words, family logics and business logics simultaneously
exerted an important influence on business management and though, at the cognitive level,
different institutions might cause confusion among employees, the organization could, at the
practical level, satisfy requirements of the two types of logic at the same time by means of
specific strategies.
Most Chinese family businesses in Southeast Asia started as family-owned stores. In the
early days of Charoen Pokphand Group, there was no boundary between the family and the
corporate system – “on the first floor were the office and storeroom, on the second and third
floors were living rooms and bedrooms and the rooftop was used to dry seeds in the sun.”
On the one hand, family involvement addressed the problems of key social networks, human
capital and financial capital needed in the early development stage of Charoen Pokphand
Group, which subjected its business management as a startup naturally to family logics and
business logics. In 1921, Chia Ek Chor, an immigrant from Shantou, Guangdong, opened the
seed store, Chia Tai Chueng, with the help of his clansmen, selling to local Chinese people
quality vegetable seeds brought from the Chinese mainland. To meet the needs of business
development, in 1924, Chia Ek Chor engaged Xie Qinglin, a clansman he called uncle, as
manager of the store and appointed his third younger brother Chia Seow Hui as a financial
manager. In the same year, he and Xie Qinglin’s younger brother, Xie Ruilin, traveled
throughout Thailand to inquire about vegetable seed demand and sales. Chia Tai Chueng
also established demonstration farms in various parts of Thailand, cooperating with
clansmen on breeding high-quality seeds. After various endeavors, by 1941, Chia Tai
Chueng had become the largest seed selling business in Thailand. On the other hand, as the
main sources of the employee for a startup, the involvement of the core family members,
clansmen and pan-clan members not only reduced effectively the governance costs of Chia
Tai Chueng and met the needs of its business logics in pursuit of profit maximization, but it
also provided family members with corporate positions, boosted family welfare and
satisfied the needs of family logics. This also imbued Chia Tai Chueng’s management and
NBRI operation with strong clan and family notions and values typical among Teochew people.
13,1 The more mutually dependent and the closer the employment relationship, the more
motivated and cohesive the behavior as a group, thus reducing conflicts between logics
inside of the organization (Mcpherson and Sauder, 2013).
After the seed store operated stably, Chia Ek Chor unexpectedly entrusted management
powers to Chia Seow Hui and he instead “went to the field,” determined to become “a breeder
44 of the best seeds” so as to meet the demand of his business. In this stage, on the whole, a “one
shop, one mill” organizational structure and strenuous cooperation among brothers and
clansmen not only satisfied the needs of corporate development but also boosted family
welfare. As specific practices that satisfied different logic requirements were compatible, the
two types of logics were in a state of “aligned” and conflict inside of the organization was not
evident, allowing the business to quickly achieve primitive accumulation.
2. The second stage: Second-generational entrepreneurial endeavor (1953-1963) – the
sustaining period. Though the dual logic rivalry inside of the business intensified step by
step alongside a reproduction of the family system and the business system, potential logic
incompatibility was mitigated through, among other things, the second generation’s
“additional entrepreneurial endeavor” and the state of dual logic “aligned” was sustained, i.e.
the logics presented themselves as having high compatibility and high centrality.
In the hands of Chia Seow Hui, Chia Tai Chueng morphed into the largest seed store in
Thailand. However, as the family system continued to expand along with the growth of the
second generation, Chia Tai Chueng could hardly keep providing shelter to several dozen
descendants of the family. By 1953, Chia Ek Chor had had four sons and six daughters and
there were nine second-generation descendants in Chia Seow Hui’s line. When the business
could hardly continue to meet the requirements that the family logics had of providing
family members with corporate positions, and when the degree of intimacy in relations
among employees decreased as the corporate grew in size, compatibility between family
logics and business logics was declining. On the other hand, Chia Seow Hui had overseen the
business for quite a long time when Chia Ek Chor’s eldest son Jaran Chiaravanont and
second son Montri Chiaravanont joined Chia Tai Chueng and though the uncle and his
nephews were in concord with one another, unhappy things would happen as well, just as
Dhanin Chearavanont says – “however, harmonious a relationship there is between
brothers, so long as they get married, there would be a squabble over trivialities about wives
and children.” The alignment between family logics and business logics could hardly be
sustained in this stage, it seems.
How to lower the potential logic conflict? The Chearavanont family increased logic
compatibility quite desirably through the second generation’s “additional entrepreneurial
endeavor.” In 1953, Jaran and Montri Chearavanont founded, near Chia Tai Chueng, a feed
selling company – Charoen Pokphand Group, which, with the support of the seed store, rapidly
grew into the first Thai company that not only processed but also sold animal feed. This
strategic decision not only provided the second generation of the Chearavanont family with a
field to test their talent and avoided potential family conflicts, but it also helped fulfill the need
for business expansion and boost the group’s market status. This process effectively sustained
compatibility between logics without undermining centrality. That is to say, the impact of
family logics on the business was not weakened. Conversely, apart from relying on the
manpower and financial resources of the family, the establishment of Charoen Pokphand
Group was deeply influenced by the family’s values and social networks.
“It is an interest” and “we have no blood in us going against morality,” said the
Chearavanont brothers when asked why they chose the animal feed industry. As children of
a peasant, they have a natural affinity with peasants, which comes from their father Chia Ek
Chor teaching them by precept and example – “you must act as a close relative to peasants. Family
They allow you to make money, they are your close relatives. Toward close relatives, you business
must be honest and sincere, the same you must do for peasants.” It is just the values “that
development
benefit the country, the people and the business” that have guided Charoen Pokphand
Group to the position of the “most respected company in Thailand.” On the other hand, the
first half of the twentieth century marked a nationalist period in Thailand, with
the government preaching “Thailand being Thailand of the Thais” and pushing for state 45
monopoly on capital with strong anti-Chinese sentiments. So, the core members of the
Chearavanont family served also as a major mediator between Chinese businesses and the
state. The founding of Charoen Pokphand Animal Feed Company was backed by a Thai
general, who was the foster father of Jaran Chiaravanont’s wife; and in 1959, with the Thai
Government pushing a new policy on poultry and egg export administration, Charoen
Pokphand established Thailand Poultry and Eggs Cooperative, a joint venture with the Thai
Government, and appointed Chia Ek Chor’s fourth son Dhanin Chearavanont, only 20 years
of age then, as the cooperative’s manager in charge of Thailand’s largest business of poultry
and egg export to Malaysia, Singapore and Hong Kong. Not only did this improve the
relations between the company and the military government, but it also allowed Dhanin
Chearavanont to acquire considerable experience in business management and international
trade through his position of authority over the country’s poultry and egg exports.
In terms of organizational structure, the second generation of the Chearavanont family
followed the “one shop, one mill” model as was originally adopted. The first thing that Jaran
Chearavanont did after founding Charoen Pokphand Group was to entrust the store’s
management powers to his younger brother Montri Chearavanont and Jaran instead went to
take care of machines in the mill. The second-generation’s entrepreneurial endeavor
mitigated potential logic incompatibility, and at the same time, the business’ strategic
decision-making and acquisition of key resources remained dependent on the family system,
implying the sustained state of “aligned” between the two sets of logics. It was this very
sustaining of the “aligned period” that supported Chia Tai Chueng and Charoen Pokphand
Group maximally in drawing on family resources and quickly riving in a short time. From
then on, the seed store Chia Tai Chueng started by the first-generation brothers of the
Chearavanont family, and Charoen Pokphand Group established by the family’s second-
generation brothers, progressed steadily as they supported one another. By the mid-1960s,
Charoen Pokphand Group had established itself as the leading player in Thailand’s feed
market, making far more profits than the seed store.
3. The third stage: Transfer of power among the Chearavanont brothers (from 1963
onwards) – the dominant period. The nature of dual logics in this stage presented itself as
low centrality and high compatibility, that is, weakening the intrinsic conflict between non-
economically-oriented family logics and the economically-oriented business logics by
divesting family logics of their permeation in core business management and operations and
simultaneously strengthening the family’s control over the business.
By the 1960s, Charoen Pokphand Group already had well over 200 employees as the
largest animal feed company in Thailand, with Jaran Chiaravanont as its chairman and
Montri Chiaravanont as its general manager. In 1963, the Thai Government dissolved the
cooperative. While Montri Chiaravanont devoted himself to promoting the export of
Charoen Pokphand Group, Dhanin Chearavanont, only 24-year-old then but with rich
experience in business management, took up the post of manager of the group. In the early
days after he took over the position, Dhanin Chearavanont initiated bold corporate reforms
to push for a transformation “from a family property to a corporation.”
NBRI On the one hand, the logic centrality was lowered – by persuading family members to
13,1 withdraw from business management and instead of engaging professionals to reduce the
impact of family logics on business management. When different logics have strong effects
on the core functions of an organization, the centrality of the logics is high. Weakening the
impact of family logics on business management and strategic decision-making can
effectively reduce conflict inside the organization and promote transformation. Dhanin
46 Chearavanont told his sisters who were involved in the family business, “I give you much
better treatment than your current positions offer you, you go and enjoy your life.” It was
also in this stage that Charoen Pokphand Group established its employment strategy that
“able brains all over the world are able brains of Charoen Pokphand Group.” In 1964, Dhanin
hired Lin Zhenchang, who later would successfully develop the first scientific formula in the
history of the Thai feed industry, and thus, promoted the “technological revolution” of the
group’s business. In 1971, with the help of Chase Manhattan Bank, Charoen Pokphand
Group, through a joint venture that it started in partnership with the largest American
poultry farming company Arbor Acres, introduced to Thailand Arbor Acres chickens and
the longitudinal integrated business model of the USA. This decision boosted, in effect, the
group’s transformation from a workshop-like firm to a modern company.
On the other hand, logic compatibility was improved – by strengthening the family’s
control over the business and arranging for family members rationally outside of the
business’ core functions to tap the family’s advantageous resources. Hiring professionals
undoubtedly posed a threat to the family’s control over the business, and may give rise to
xenophobia among family members and consequently conflict inside the family, affecting
the business’ decision-making quality (Morck et al., 2005). How to boost concurrent
consideration of family logics in the process of rapid development became the “sword of
Damocles” hanging over the heads of the Chearavanont family leaders. In this process, the
Chearavanont family opted not to weaken its control over Charoen Pokphand Group, but,
while seeking diversification, maintained it through cross-ownership of shares (Su and
Zhong, 2004; Figure 2 below). Moreover, family elements still had a strong influence on the
culture and strategic development of the business and family members still played crucial
roles in various fields that the business was engaged in. Obviously, the weakening of family
logics permeation that Dhanin Chearavanont pushed for was simply limited, in effect, to the
aspect of business logics conflict, namely, business management.

CP Marketing Company 3%

99%
5%
CP Northeast 57% CP Agricultural &
CP Feed Company
Company Industrial Products
60%
2% 33% Company
9%
CP Group and family 5%
members CP International Trade
5%
Figure 2. 29% 51%
5% 4%
Cross ownership of Bangkok Production &
shares by Charoen Telecom-Asia
Marketing Company
Pokphand group 1%
It was in this dual-logic evolution and corresponding corporate dynamics that Charoen Family
Pokphand Group morphed into a large multinational company today from a family-run business
store. In 1978, with Dhanin Chearavanont at the helm, Charoen Pokphand Group became the
first foreign company to invest in China when the latter opened up to the outside world. It
development
teamed up with the American company Continental Grain to establish in Shenzhen, with an
investment of US$15m, what was the largest modern animal feed company in China at that
time – Chia Tai Conti, to which the Shenzhen Government issued a business license
numbered “0001,” meaning that it was the first foreign-owned company in China. Since then,
47
Charoen Pokphand Group has been known in China as Chia Tai.

5. Family business growth in the context of institutional complexity

5.1 Breaking the trap of logic: Institutional complexity and business growth
A small scale and a simple structure are often seen as the most striking features of overseas
Chinese family businesses (Redding, 1993; Weidenbaum, 1996). A hostile political and
cultural environment reinforces overseas Chinese people’s reliance on traditional Chinese
culture, especially the family-centered Confucianism, which is still deeply rooted in the
hearts of most overseas Chinese people. Management beliefs derived from traditional
Chinese culture, especially Confucianism, such as defense, patriarchy and favoritism, render
Chinese family businesses in Southeast Asia an efficient economic instrument in a particular
context (Redding, 1993). These overseas Chinese family businesses benefit from, among
other things that family logics bring about, cultural identity, organizational commitment,
efficient decision-making and flexibility and simultaneously are constrained by family
logics. Such constraints are manifested in two respects, namely, patriarchal management
permeated in various aspects of a business and the range of low trust. These pose a
multitude of difficulties when the business begins its modern management revolution. With
the business growing, the goal of profit maximization that follows business logics is often
superseded by the interest of the family clique and when contradiction inside of the family
impacts business management, division of the family is but unavoidable. The consequence
can only be the forming of several miniature versions of the original framework, forcing
overseas Chinese family businesses into a “logic trap” that keeps them small in scale, with
miniaturization becoming a shared feature of all Chinese family businesses (Redding, 1993).
Just as most economic research studies on overseas Chinese people, nevertheless,
overseas Chinese family businesses control the huge wealth of Southeast Asia and they
represent a force that cannot be ignored in the world economy. This credit, however, has not
been earned by small Chinese family businesses scattered in corners, but by those overseas
Chinese syndicates that exert a huge influence on the economic lifeblood of Southeast Asian
countries. Take Thailand where of the top 10 on the 2016 Forbes list of the world’s
billionaires, at least eight are of Chinese descent. It is worth nothing that those eight
billionaires all have their ancestral home in the region of Chaoshan, Guangdong.
Unfortunately, Redding et al. did not explain how Chinese family businesses escape the
logic trap of small scale. The success of those large Chinese businesses was instead seen as
few extreme cases and attributed to particular entrepreneurs’ “magnanimity of trust in
others” (Redding, 1993). This paper holds that when overseas Chinese family syndicates as a
whole became an economic phenomenon, inside it there must some wisdom that has not yet
come to light. Those businesses, in particular, enjoy far higher a family reputation than their
corporate brands and this means also that their family cultures have for certain a far-
reaching influence and can deal with family logics and business logics with great wisdom.
This study attempts to summarize this wisdom of management and transmission.
NBRI On the basis of case analysis, therefore, this study creates a model of institutional
13,1 complexity and organizational response in the course of family business growth (Figure 3),
namely, the nature of institutional complexity determines an organization’s strategic
decision-making space; proper organizational response causes growth of the family-
business dual system; and growth of the family business objectively leads to changes in the
nature of institutional complexity inside of the organization. Unlike Besharov and Smith
48 (2014), who stressed the one-way implications of the nature of multiple logics for
organizational practice, this study takes a dynamic approach (Figure 4).
As the case analysis indicates, in the initial stage of a family business, family logics and
business logics are in aligned. On the one hand, logic centrality is subject to business
strategy and resource reliance (Besharov and Smith, 2014). Family involvement addresses
the problems of key social networks, human capital and financial capital needed in the early
development of the family business, which subjects its business management as a startup
naturally to both family logics and business logics. On the other hand, the degree of logic
compatibility depends on whether the “goals” of different logics match the “ways” of
achieving these goals (Pache and Santos, 2010), and an institutional environment where
such goals are highly consistent is strongly compatible. At the same time, the specific form
of expression in the organization of institutional logics is subject to the organization’s
initiative as an actor (Thornton et al., 2012). When goals are inconsistent, the actor may
increase internal compatibility through creative practical activity (e.g. employment and

Figure 3.
Institutional
complexity and
Institutional complexity ཰ Organizational response ཱ Family business development
family business
growth
ི

Low ------------------------------------------- Corporate size ------------------------------------------- High

Institutional complexity

Aligned period Sustaining period Dominant period

High compatibility Potential conflict of High compatibility
High centrality compatibility Low centrality
High centrality
Corporate response

One shop, one mill Separate entrepreneurship Diversification and cross

Family capital One shop, one mill Ownership of shares
Figure 4.
Institutional Family members and Family capital External capital
complexity and pan-family members Family members and Specialization
organizational pan-family members Professional manager
response in family
business growth Low -------------------------------------------- Family size -------------------------------------------- High
socialization) (Besharov and Smith, 2014). Though goals are different, by capitalizing on Family
social capital that the family brings about and properly placing family members in the business
business, the business owner (also the family head) can not only satisfy the requirements of
family logics but also meet the business’s need for profit maximization.
development
Proper organizational responses can not only boost the reproduction of the family
system, i.e. an increase in family members but also promote the reproduction of the business
system, namely, the expansion of the business. Above all, because of the increase in family
members and especially when the second generation begins to enter the business while the 49
first generation is still in the full vigor of life, limited business resources – which now can
hardly meet the diverse needs of increasing family members – and potential family
contradictions could add to the incompatibility between family logics and business logics.
At this point, the business supporting the second generation’s separate entrepreneurial
endeavor is an effective way to reduce potential logic conflict and sustain the aligned
between the family and business systems.
The contradiction between family involvement as a consequence of the expansion of the
business in scale irrevocably leads logics toward competition of high conflict and
the intrinsic contradiction between family logics and business logics as a result of the
inconsistency in inherent values gradually presents itself. First, as family logics require the
business to serve the family’s interest and, in business decision-making, to give priority to
long-term goals and stress family members’ control over the business (Morck et al., 2005),
the business subjected to family logics would generally adopt quite a conservative business
strategy. Conversely, a business that follows business logics is more likely to adopt an
innovation strategy in pursuit of maximal profit (Miller et al., 2011). Second, the family’s
social capital, human capital and financial capital, which are crucial in the early
development of a family business, would hinder the business from further acquiring social
capital owing to the growing of the business scale in this stage (Chu, 2003). As dual logic
compatibility inside of the organization is low and centrality is high, when it is once again
impossible to simultaneously meet requirements of different logics, the organization would
unavoidably suffer from chaos in terms of goals, values, strategic decisions and specific
practices (Besharov and Smith, 2014). At this point, the family can weaken intrinsic logic
conflict by withdrawing family members from core business management and hiring
professionals, and at the same time give prominence to a combination of family control and
business diversification so as to meet the demand of family logics and enhance logic
compatibility, thus orienting the potentially conflicting nature of institutional complexity
toward a conflict-free state of high compatibility and low centrality, namely, the
“dominating period.”
This study suggests that the nature of institutional complexity inside of a business is not
fixed and that the interaction between family logics and business logics, while exerting an
influence on the business’s organizational structure and strategic decision-making, changes with
business scale and family life cycle. On this basis, this paper makes the following propositions:

P1. In the initial stage of a family business, i.e. in the logic aligned period, the family
business may, by hiring family members to make the best use of the family’s social
networks and other resources that those networks can offer, satisfy at the practical
level the requirements of both family logics and business logics.
P2. In the course of the family business’ development, the nature of institutional
complexity inside of the organization changes with the business system (e.g.
expanding business scale) and the family system (e.g. growing family size).
NBRI P3. When the size of the family expands to the extent that it causes a lowered
13,1 compatibility between family logics and business logics, the family business may,
through the second generation’s separate entrepreneurial endeavor, reduce potential
logic conflict.
P4. When the scale of the family business expands to the extent that it causes an
intensified conflict between family logics and business logics, the family business
50 may weaken potential logic conflict by reducing the family involvement in
management, hiring professionals and combining family control and business
diversification.

5.2 Logic level: development wisdom of Chinese family businesses

Many textbooks and case studies on family businesses have showed that it is a common
strategy to withdraw family members from business management for further business
development and that with the second generation of the families growing up, “second-
generation entrepreneurship” appears more and more. As to exactly how Charoen Pokphand
Group avoided the logic trap and morphed from a small store into a commercial giant today,
the above analysis definitely has not revealed all the secrets. Or to put it in another way, the
preceding part of this paper has presented the changes over nearly a century in the nature of
institutional complexity at Charoen Pokphand Group and its process of organizational
practice, but we still do not understand everything about what has underlay its success in
avoiding the logic trap and balancing family logics and business logics. Just as Zellweger
et al. (2016) noted, logic conflict appears particularly remarkable in the sensitive period of an
organization. It is necessary, therefore, to conduct a further analysis about the inter-
generational succession and crisis response of Charoen Pokphand Group.
Rationally allocating family members is key to reducing the conflict between the logics
and enhancing compatibility, and the placement of family members requires consideration
of not only the harmonious co-existence among them but also their respective merits, so as
to allow each of them to fully play their roles and train them to be leaders. The
Chearavanont family encouraged the personal independence of the family members rather
than hobbling it via Charoen Pokphand Group. In the early 1980s, Dhanin Chearavanont
suddenly announced that no children of the Chearavanont family would be allowed to
hereditarily join the group and only those with outstanding contributions made outside of
the group could join it with approval from the board of directors. On the one hand, by
reducing the permeation of the family into business management, the sense of belonging to
the group among employees outside of the family was enhanced, which means a lowered
conflict of centrality; on the other, so far as the third generation of the Chearavanont family
is concerned, not only could they avoid being confined to working at the group, but they
could draw on the family’s status and resources to do what they were good at, initiating
their own undertakings and building new networks. This resulted in enhanced compatibility
between logics.
Cultivating the family’s younger generations’ ability to develop independently, and
putting in place a matching mechanism – breaking the family line of hereditary succession,
were beneficial to the family, the business and the individuals concerned. First of all, placing
dozens of people from the younger generation in the family all in the business, without
doubt, would result in “infighting,” jeopardizing healthy and sustainable business
development. Second, while an airdrop to the family business’s leading positions of its
second-generation members might pose a threat to the vested interests within the business,
a break with the family line of hereditary succession divested those outsiders who had
followed the founder of the Chearavanont family business of potential misgivings, thus Family
boosting the cohesion within the business. Third, the second-generation using family business
resources for additional entrepreneurial endeavors also helped the business widen its
existing networks, which was a practical way for the Chearavanont family business to
development
achieve rapid expansion. Dhanin Chearavanont called it multiplication for the business:
“this is not subtraction, but addition and even multiplication.” Finally, a successful family
business is very likely to become a source of pressure for younger family members,
imperceptibly setting a ceiling against their career development. “I do not want to go back to 51
the family business because as your daughter I face too huge a pressure,” Montri
Chiaravanont’s daughter once said to him. The Chearavanont descendants, who initiated
their own businesses without pressure from the family business, have all proved their
strength with their own endeavors in different fields such as real estate, media, supermarket
chains and telecommunications. In the inter-generational succession of a family business,
the successor is often confronted with the situation of “finding it hard to convince others”
owing to a lack of legitimate authority. Charoen Pokphand Group’s entrepreneurial
activities outside of the family business on the personal initiative is doubtlessly a good
example by which the second-generation successors of overseas Chinese family businesses
establish their legitimate authority, not only cultivating their spirit of entrepreneurship but
also laying a solid foundation for the smooth transfer of power in family businesses.
Stress must also be laid on the continuation of family values and beliefs while cultivating
the second generation’s spirit of entrepreneurship. This not only matches the strategy of
diversification as a result of the second generation’s entrepreneurship, but it is also a
cultural choice for maintaining long-term family stability and guaranteeing long-standing
success of a family business. Charoen Pokphand Group’s first- and second-generation
entrepreneurs all chose to do business in agriculture-related industries and with Dhanin
Chearavanont at the helm, the group is no longer simply an agricultural business, as its
telecommunications and retail operations are also making huge profits. However, the
successors of Charoen Pokphand Group always take seeds and feed businesses as its
foundation: “that is our root and no matter how many more businesses we open up, we will
continue to run the seed and fertilizer store well.”
From the two crises that Charoen Pokphand Group experienced, we can see more clearly
that the importance of family values and beliefs in sustaining a business. By the mid-1960s,
Charoen Pokphand founded by Jaran and Montri Chiaravanont had been far more profitable
than Chia Tai Chueng, which their uncle Chia Seow Hui had been in charge of. Chia Seow
Hui, while rejoicing over the development of Charoen Pokphand, felt deeply that his 12
children ought not to become beneficiaries: “Charoen Pokphand was created by you four
brothers and should separate from Chia Tai Chueng. I dare not say this in the past, fearing
that you would mistake me as wanting to break up the family. However, I have thought it
over and we would better be separate.” Fraternal duty to the family now became a powerful
force to keep the business cohesive. This suggestion was firmly rejected by Chia Ek Chor,
who spoke to the Chiaravanont brothers: “your uncle has many children, but none of them
know peasants. Chia Tai Chueng serves agriculture, which they probably cannot do well; if
the family were broken up, Chia Tai Chueng could not stand steadily and your cousins
would suffer. Not only can you agree to breaking up the family, you must also help take Chia
Tai Chueng to greater successes.” The seed and fertilizer companies derived from Chia Tai
Chueng have already become an indispensable part of Charoen Pokphand Group.
This fraternal duty is also embodied in what Dhanin Chearavanont did. In the late 1990s,
facing a huge debt crisis as a result of the Asian financial crisis, Dhanin made an irrational
yet affectionate strategic choice: I said to my brothers, “you go and have fun and do not
NBRI worry. If the situation gets bad, I have a 7-11, which is very valuable and I will sell it off. If
13,1 the situation gets worse, I also have a telecommunications company, which is more valuable
and which I founded and I will sell it first, to protect the food and feed companies you two
founded.”
It is obvious that overseas Chinese family businesses stress the continuation of family
values and beliefs while placing emphasis on cultivating personal ability and
52 entrepreneurship. The cultivation of the personal ability of younger generations, which is
conducive to the more entrepreneurial pursuit of a family business, thus forming a business
family and to the building of authority in the second-generation successor of the business, is
an important underpinning point to enhance the compatibility between family logics and
business logics. The continuity of family values and beliefs guarantees cohesion inside of
the family, reinforces the cultural foundation of the business family and prevents the family
business, in its process of diversification, from family division and falling into what Redding
(1993) calls a “logic trap” that keeps it small in scale. The cultivation of entrepreneurship is
as important as the continuity of family values and beliefs, supporting separate
entrepreneurial endeavors without having to break up the family and without – in the case
of the family withdrawing from business operations – weakening its influence on business
strategies, effectively strengthening the evolution of the family business’ dual institutional
logics and business responses thereto and avoiding the splitting of the family business or its
development stagnation and even disappearance owing to a particular business chain being
broken in the course of its development (Figure 5). On this basis, this paper makes the
following proposition:

P5. Giving equal importance to the cultivation of entrepreneurship and to the

continuation of family values and beliefs is the means by which Chinese family
businesses can achieve a sound balance between family logics and business
logics.

Low ------------------------------------------- Corporate size ------------------------------------------- High

Institutional complexity

Aligned period Sustaining period Dominant period

High compatibility Potential conflict of High compatibility
High centrality compatibility Low centrality
High centrality

Entrepreneurship Family values and beliefs

Corporate response

One shop, one mill Separate entrepreneurship Diversification and cross

Family capital One shop, one mill Ownership of shares
Figure 5.
Model of family Family members and Family capital External capital
business growth in pan-family members Family members and Specialization
the context of pan-family members Professional manager
institutional
complexity Low -------------------------------------------- Family size -------------------------------------------- High
6. Conclusion and discussion Family
This paper looks, from the perspective of institutional logics, into Charoen Pokphand Group, business
which is an epitome of overseas Chinese family businesses, seeing the growth of a family
business as a dynamic process of change in family logics, business logics and corporate
development
practices and proceeds to build a model of family business growth in the context of
institutional complexity. The study casts light on the process of evolution – in the course of
development of a family business – from an aligned period to a sustaining period to a
dominating period in terms of the nature of the dual logics inside of the organization, and 53
further examines what a family business, as an actor, should do on its own initiative given
the institutional complexity specific to it, so as to avoid the logic trap and morph into a
modern international business family from a family workshop. It is particularly important
that giving equal importance to the cultivation of entrepreneurship and the continuation of
family values and beliefs is a crucial means by which Chinese family businesses can strike a
balance between family logics and business logics.

6.1 Theoretical contribution and practical significance

6.1.1 This study introduces a dynamic perspective to discussions about the nature of
institutional complexity. While discussions about the nature of multiple institutional logics
have gone increasingly deep, and such views made about it as competition, mixture and
mutual benefit have increased our understanding of organizational responses to different
institutional complexities. Existing literature overlooks the dynamic change of
organizations in the course of their development, restricting to a certain extent our
comprehension of the differences within groups of organizations studied. This study unveils
the process of evolution of institutional complexity from an aligned period to a sustaining
period to a dominating period of the family business at issue, an observation that justifiably
fills the gap in the current theory of institutional logics, helping advance academic
discussions on the microcosmic essentials of institutional change and refining the theoretical
interpretation of dynamics with respect to institutional logics.
6.1.2 Though the theory of institutional logics places increasing emphasis on non-market
logics (e.g. religion, community, family, etc.), disputes remain over the compatibility
between non-market logics and market logics and its impact on economic life (Fairclough
and Micelotta, 2013). The findings of this study, which is a response to the disputes,
indicates that though non-market logics and market logics are essentially incompatible in
terms of goals (values), owing to their differences in institutional demand, an organization in
the context of institutional complexity may, by consciously satisfying different logic
demand at various practical levels, lower the conflict between different logics and enhance
their intrinsic compatibility, making them strategic resources in support of business
development.
6.1.3 This study provides a new theoretical point of view for research into the
development and succession path of family businesses, suggesting that the development of
entrepreneurship and succession of family businesses is in essence a process of their
business practice and dynamic evolution of family logics and business logics. On the one
hand, existing family business theories over-emphasize family dimensions and overlooks
the roles of the economic rationality of organizations. The institutional logic theory also
stresses the interactions between the affective attachment within the family and the
economic rationality of the business, which helps researchers investigate more objectively
and deeply into the strategic behavior of a family business. Discerning and analyzing
institutional complexity inside of a family business is the foundation on which the
institutional logic theory and family business research are correlated. On the other hand,
NBRI existing family business research based on the institutional logic theory often takes a
13,1 particular time span as a point of observation (e.g. a succeeding period) and overlooks the
dynamic development of a family business, which doubtlessly leads to biased conclusions.
These research efforts have made it clear that not only is there conflict and competition
between family logics and business logics, but they can coexist and promote each other; and
that to properly make use of such an institutional environment will help family businesses
54 grow. However, little is yet known about how a family business should use this condition to
become an enabler under institutional complexity. This study is original in that it indicates,
given the multiple stages of evolution of a single-family business, that institutional
complexity in the family business partakes of a different nature in different periods; and it
stresses the importance of the initiative to respond on the part of the family business and
clarifies the mechanism by which the dual institutional environment affects the family
business.
This study also is of certain practical significance. The paper presents a vivid story of
how a Chinese family business – Charoen Pokphand Group – escaped the trap of logic and
morphed from a small firm into an international company, exploring the secret of growth for
large Chinese family businesses. On the one hand, it reminds Chinese family businesses to
properly handle the relationship between family and business in the process of development,
so as to avoid family conflict while maximally using family resources. On the other, though
the Confucian notion of family has been prevalent in Chinese history, many Chinese family
businesses at present overlook the cultivation and continuation of family values and beliefs
in the process of rapid financial growth. The continuation of family values and beliefs,
which this study accentuates, is not just a crucial matter to the development of family
businesses in a fast-changing institutional environment but also what is needed to build a
theory on Chinese family businesses and help Chinese family businesses find out the code of
succession contained in traditional Chinese culture.

6.2 Research limitations and future prospect

First of all, as this paper is a single-case study, whether it can apply universally to other
family businesses needs to be further examined. Though the study unveils the path of
change in institutional complexity inside of the family business at issue, it remains
unknown whether there exist other paths of evolution. In particular, the interaction between
institutional complexity and the actor may change with time and environments
(Raaijmakers et al., 2015). We still cannot determine whether there are other key factors that
have effects on the process of institutional complexity and organizational responses of a
family business. Also, while building a theory, we are committed to presenting a vivid story
about the development of a Chinese family business. Therefore, it is necessary next for us to
study multiple cases under diverse backgrounds for the purpose of verifying and further
building up this paper’s research framework. Second, consideration should be given to
combining the institutional logic theory with quantitative research in further analysis of the
specific influencing paths of family logics in the Chinese context toward the economic
behavior of businesses. Third, just as Greenwood et al. (2011), Friedland and Alford (1991)
and Thornton et al. (2012) commented on the multiplicity of institutional logics,
organizations operate essentially in diverse, complex institutional environments. Moreover,
a basic viewpoint on an organization’s strategic decision-making is that the organization is
not only limited and enabled by internal resources but also restricted by external forces.
Limited by data availability and text length, this paper focused solely on the dual logics
inside of a family business. In fact, had we created a sound internal institutions framework
against which to examine the institutional order in which the career, government and
community may have important effects on a business in a particular period, the result could Family
have been more interpretative and universal. Dual logic analysis remains the mainstream of business
theoretical exploration at present and in the future researchers may gradually delve into a
more diverse theoretical framework concerning institutional logics. Finally, as a hot topic at
development
present in the field of organization and management, the institutional logic theory is still
rarely applied in China. This paper holds that the theoretical framework of institutional
multiplicity is of strong interpretation as to “traditional Chinese culture and modern
economic and social development” and related subjects and such topics as regional culture,
55
Confucian culture and religious culture also offer broad possibilities for the exploration and
application of this theory.

References
Aparicio, G., Basco, R., Iturralde, T. and Maseda, A. (2017), “An exploratory study of firm goals in the
context of family firms: an institutional logics perspective”, Journal of Family Business Strategy,
Vol. 8 No. 3, pp. 157-169.
Barnes, L.B. and Hershon, S.A. (1976), “Transferring power in the family business”, Family Business
Review, c
Battilana, J. and Dorado, S. (2010), “Building sustainable hybrid organizations: the case of commercial
microfinance organizations”, Academy of Management Journal, Vol. 53 No. 6, pp. 1419-1440.
Besharov, M.L. and Smith, W.K. (2014), “Multiple institutional logics in organizations: explaining their
varied nature and implications”, Academy of Management Review, Vol. 39 No. 3, pp. 364-381.
Bhappu, A.D. (2000), “The Japanese family: an institutional logic for Japanese corporate networks and
Japanese management”, Academy of Management Review, Vol. 25 No. 2, pp. 409-415.
Burke, P.J. and Reitzes, D.C. (1981), “The link between identity and role performance”, Social Psychology
Quarterly, Vol. 44 No. 2, pp. 83-92.
Chu, X. (2003), “Social capital and the entrepreneurship and development of Chinese family
businesses”, Nankai Business Review, Vol. 6 No. 6, pp. 8-12.
Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of Management
Review, Vol. 14 No. 4, pp. 532-550.
Fairclough, S. and Micelotta, E.R. (2013), “Beyond the family firm: reasserting the influence of the
family institutional logic across organizations”, Sociology of Organizations, Emerald Group
Publishing Limited, 39B, pp. 375-410.
Fan, J.P.H. (2014), The Weight of Trust: Joseph P. H. Fan on the Succession of Family Business01,
Oriental Publishing House.
Friedland, R. and Alford, R.R. (1991), “Bringing society back in: symbols, practices, and institutional
contradictions”, The New Institutionalism in Organizational Analysis, Chicago, University of
Chicago Press.
Gomez-Mejia, L.R., Haynes, K.T., Nunez-Nickel, M., Jacobson, K.J.L. and Moyano-Fuentes, J. (2007),
“Socioemotional wealth and business risks in family-controlled firms: evidence from Spanish
olive oil mills”, Administrative Science Quarterly, Vol. 52 No. 1, pp. 106-137.
Greenwood, R., Diaz, A.M., Li, S., Lorente, X. and Spedes, J. (2010), “The multiplicity of institutional logics and
the heterogeneity of organizational responses”, Organization Science, Vol. 21 No. 2, pp. 521-539.
Greenwood, R., Raynard, M., Kodeih, F., Micelotta, E.R. and Lounsbury, M. (2011), “Institutional complexity
and organizational responses”, Academy of Management Annals, Vol. 5 No. 1, pp. 317-371.
He, X., Jing, L. and Lei, C. (2010), “Family members blending and corporate governance efficiency: empirical
research based on family public companies”, Nankai Business Review, Vol. 13 No. 6, pp. 149-160.
He, L. (2014), Institutional Analysis Theory and Controversy, China Renmin University Press.
NBRI Jaskiewicz, P., Heinrichs, K., Rau, S.B. and Reay, T. (2016), “To be or not to be: how family firms
manage family and commercial logics in succession”, Entrepreneurship Theory and Practice,
13,1 Vol. 40 No. 4, pp. 781-813.
Kraatz, M.S. and Block, E.S. (2008), “Organizational implications of institutional pluralism”, Journal of
Pharmacy and Nutrition Sciences, Vol. 5 No. 1, pp. 5-13.
Lansberg, I. (1988), “The succession conspiracy”, Family Business Review, Vol. 1 No. 2, pp. 119-143.
56 Lounsbury, M. (2007), “A tale of two cities: competing logics and practice variation in the
professionalizing of mutual funds”, Academy of Management Journal, Vol. 50 No. 2, pp. 289-307.
Luo, X., Wang, D. and Zhang, J. (2016), “Whose call to answer: institutional complexity and firms’ CSR
reporting”, Academy of Management Journal, Vol. 60 No. 1, pp. 321-344.
Mcpherson, C.M. and Sauder, M. (2013), “Logics in action: managing institutional complexity in a drug
court”, Administrative Science Quarterly, Vol. 58 No. 2, pp. 165-196.
Miller, D., Le Breton-Miller, I. and Lester, R.H. (2011), “Family and lone founder ownership and strategic
behaviour: social context, identity, and institutional logics”, Journal of Management Studies,
Vol. 48 No. 1, pp. 1-25.
Mitchell, R.K., Agle, B.R., Chrisman, J.J. and Spence, L.J. (2011), “Toward a theory of stakeholder
salience in family firms”, Business Ethics Quarterly, Vol. 21 No. 2, pp. 235-255.
Morck, R.K., Wolfenzon, D. and Yeung, B. (2005), “Corporate governance, economic entrenchment, and
growth”, Journal of Economic Literature, Vol. 43 No. 3, pp. 655-720.
Pache, A.C. and Santos, F. (2010), “When worlds collide: the internal dynamics of organizational
responses to conflicting institutional demands”, Academy of Management Review, Vol. 35 No. 3,
pp. 455-476.
Pache, A.C. and Santos, F. (2013), “Inside the hybrid organization: selective coupling as a response to
competing institutional logics”, Academy of Management Journal, Vol. 56 No. 4, pp. 972-1001.
Pettigrew, A.M. (1990), “Longitudinal field research on change: theory and practice”, Organization
Science, Vol. 1 No. 3, pp. 267-292.
Pfeffer, J. and Salancik, G.R. (1978), “The external control of organizations: a resource dependence
perspective”, Social Science Electronic Publishing, Vol. 23 No. 2, pp. 123-133.
Powell, W.W. and DiMaggio, P.J. (2008), The New Institutionalism in Organizational Analysis, in Wei, Y.
(Ed.), Shanghai People’s Press.
Raaijmakers, A., Vermeulen, P., Meeus, M. and Zietsma, C. (2015), “I need time! Exploring pathways to
compliance under institutional complexity”, Academy of Management Journal, Vol. 58 No. 1,
pp. 85-110.
Ramus, T., Vaccaro, A. and Brusoni, S. (2017), “Institutional complexity in turbulent times:
formalization, collaboration, and the emergence of blended logics”, Academy of Management
Journal, Vol. 60 No. 4, pp. 1253-1284.
Reay, T. and Hinings, C.R. (2005), “The re-composition of an organizational field: health care in
Alberta”, Organization Studies, Vol. 26 No. 3, pp. 351-384.
Reay, T. and Hinings, C.R. (2009), “Managing the rivalry of competing institutional logics”,
Organization Studies, Vol. 30 No. 6, pp. 629-652.
Reay, T., Jaskiewicz, P. and Hinings, C.R. (2015), “How family, business, and community logics shape
family firm behavior and ‘rules of the game’ in an organizational field”, Family Business Review,
Vol. 28 No. 4, pp. 292-311.
Redding, S.G. (1993), The Spirit of Chinese Capitalism, in Zunjing, Z. et al. (Eds), SDX Joint Publishing Company.
Simon, H.A. (1993), “Altruism and economics”, American Economic Review, Vol. 83 No. 2, pp. 156-161.
Smets, M., Jarzabkowski, P., Burke, G.T. and Spee, P. (2015), “Reinsurance trading in lloyd’s of London:
balancing conflicting-yet-complementary logics in practice”, Academy of Management Journal,
Vol. 58 No. 3, pp. 932-970.
Su, Q. and Zhong, N. (2004), “Organizational management and distributional character of overseas Family
family businesses”, Foreign Economics and Management, Vol. 6 No. 9, pp. 13-20.
business
Swartz, S. (1989), “The challenges of multidisciplinary consulting to family-owned businesses”, Family
Business Review, Vol. 2 No. 4, pp. 329-331. development
Thornton, P.H. (2004), Markets from Culture: Institutional Logics and Organizational Decisions in
Higher Education Publishing, Stanford University Press.
Thornton, P.H., Jones, C. and Kenneth, K. (2005), “Institutional logics and institutional change in
organizations: transformation in accounting, architecture”, Research in the Sociology of Organizations,
57
Vol. 23, pp. 125-170.
Thornton, P.H. and Ocasio, W. (1999), “Institutional logics and the historical contingency of power in
organizations: executive succession in the higher education publishing industry, 1958-1990”,
American Journal of Sociology, Vol. 105 No. 3, pp. 801-843.
Thornton, P.H. and Ocasio, W. (2008), “Institutional logics”, In the SAGE Handbook of Organizational
Institutionalism, Sage Publications Ltd.
Thornton, P.H., Ocasio, W. and Lounsbury, M. (2012), The Institutional Logics Perspective, Oxford
University Press.
Venkataraman, H., Vermeulen, P., Raaijmakers, A. and Mair, J. (2016), “Market meets community:
institutional logics as strategic resources for development work”, Organization Studies, Vol. 37
No. 5, pp. 709-733.
Weidenbaum, M. (1996), “The chinese family business enterprise”, California Management Review,
Vol. 38 No. 4, pp. 141-156.
Yin, R.K. (2010), Case Study Research: Design and Methods, Chongqing University Press.
Zellweger, T., Richards, M., Sieger, P. and Patel, P. (2016), “How much am i expected to pay for my
parents’ firm? An institutional logics perspective on family discounts”, Entrepreneurship
Theory and Practice, Vol. 40 No. 5, pp. 1041-1069.
Zhu, H., Wei, Z., He, X. and Lin, W. (2012), “Family, marketization, and the transaction costs of guanxi
networks”, Nankai Business Review, Vol. 15 No. 5, pp. 152-160.

Further reading
Amans, P., Mazars-Chapelon, A. and Villeseque-Dubus, F. (2015), “Budgeting in institutional
complexity: the case of performing arts organizations”, Management Accounting Research,
Vol. 27, pp. 47-66.
Yŏn-Sŏp, H. (2014), Institutional Analysis: Theory and Controversy, 2nd ed., in: Xiufeng, Li. and
Baoyong, C. (Eds), China Renmin University Press.

Corresponding author
Bo Wang can be contacted at: bwang1993@outlook.com

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com