Family Business: Governance &

Sustainability
OSL-MBA-505

Assignment
Submitted to
Professor Dr. Muhammad Shariat Ullah

Submitted by
Mohammad Raian Khan
Serial 09
Organization Strategy & Leadership
University of Dhaka
Typical strength of the family firms
SL Strength
1 Fewer conflicts of interest between
owners and managers
2 Efficient leadership
3 Resource advantages
4 Long-term orientation and continuity
5 Culture of commitment and support
6 Identity and reputation
Measurement indicators
 Owners and managers are the same
persons
 Owners occupy the top management
positions
 Unchanged management for so many
years
 Next generation has ideas about business
from childhood
 Has long term investment from family
members
 Low turnover and experienced employees
(Human Assets)
 Long term trust based network formed by
family members help retain employees
 Peruse assets maximization over profit
maximization
 Consistent strategy (lower change in
system and operation)
 Owners and top management possess the
same cultural beliefs.
 Fewer misunderstandings and better
communication
 Owners are well-known to the society
 Owners are engaged and committed to
the business and wish to promote the
business personally
Typical weakness of the Family Firms
Weakness
1 Dependence on family
2 Agency costs because of altruism
3 Succession challenges
4 Resource constraints
5 Declining entrepreneurial orientation
6 Role ambiguity
Measurable indicators
 Amount of decision input from Family
 Uneducated unskilled family member
who became owner-manager
 Intuition driven decision derived from
family emotion
 Employees are reluctant about career
progress as top management is always
family members.
 Parents oppose children
 Children take advantage of reputation
built by their predecessors.
 Multiple eligible successors
 Successors are force to join the
company
 Absence of younger eligible family
members
 Trust issue with non-family CEOs or
MDs
 Lack of openness to outside
investment and technology
 Non family members do not feel free
to give decision input (Knowledge
Recourse)
 Firm is fairly complacent
 Later generation do not like to take risk
in the fair of destroying well-build
reputation
 Employees take directions from
multiple managers