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Entrepreneurship & Family Business Management Practices

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 International Journal of Research and Development, Vol I ,Issue II, ISSN (Online) - 2279-073X

Entrepreneurship & Family Business Management Practices

Ms.Richa A. Modiyani Dr. R.H.Gupta

Research Scholar & A.P- MBA Department Principal
SSBT’s COET, Bambhori, Sant Muktabai College of Arts & Commerce College
Jalgaon (M.H) Muktainagar
richamodi22@gmail.com rajkishorhgupta@gmail.com

major economic reforms in the year of 1991

Abstract:- brought by then Finance Minister in the way
of opening up the economy. Due to
The role of business in the society has
Liberalization, Privatization and
witnessed a dramatic change in the recent
times. Yesterday, it was the business as family.
Globalization the entrepreneurs who manage

Today, it is the family as business. And the family owned business got very

tomorrow, it will be the business of the family apprehensive of their future business and

to ensure that there is a future for both the craft out the strategy to face the increasingly
business and the family. While radical strategy, competitive business world.
operations, and financial transformation is An entrepreneur and manager need to fully
given for any corporation that hopes to survive understand "business", "management" and
the trauma of competing in the post- "entrepreneurship", in order to successfully
liberalization market-place, India’s business step into today's business world. An
houses have yet another agenda for change: understanding of dynamism of these aspects
rewriting the role of the family. would be incomplete if they’re not studied in
the context of family or group of family
Thus, this paper focuses on entrepreneurship running business enterprises.
& family business management practices – a
comparative study on prominent business 2. OBJECTIVES OF STUDY:-
communities of India.
To study the family business
management practices.
1. INTRODUCTION:-
Indian Family owned business has undergone
a paradigm change due to the unanticipated
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To study the background to the of families has invested a major share of

development of family based
enterprises in India.
To study the family ownership &
control in family businesses.
To indentify characteristics, trengths
and weaknesses of family based business.
capital". This definition has been found
satisfactory as it did not clearly brought out
the aspects like ownership, control and
management of a firm.
The basic characteristics of family business
are:
a. A group of people belonging to one or

To do a comparison between various more families in one enterprise.

prominent business communities in b. Family exercises the influence on the

India. firm's policy direction in the mutual interest

of family and business.
3. RESEARCH METHODOLOGY & c. Family control can be seen in the form of
DATA COLLECTION:- ownership or in the form of management, the
For the present study the major source of firm where family members are employed on
secondary data was Newspapers, key positions.
Magazines, Journals, Reports, and d. The succession of family business goes to
Newsletters of businesses, Internet, the next generation.
Websites & Research Journals & In essence, family business is one which is
publications. substantially controlled and / or managed by
members of family and is succeeded by the
FAMILY BUSINESS IN INDIA:- next generation.
Monopolies Enquiry Commission, 75 largest
SWOT ANALYSIS:-
business houses in India controlled 1536
companies accounting for 47% of paid up THE STRENGHTS...
capital of all non-government and non- Financial sacrifices that family
banking companies. This indicates that members make for the good of the
family business has come to occupy a firm
significant place in Indian industry.
Strength of family relationships
Traditionally, a family business was defined
during challenging periods of
as "an enterprise in which a family or a group
business change

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Operation as a family business and management of the firm. In the corporate

distinguishes the firm from its sector, forms and means of control are
competitors variedly applied by families. Three types of
Capability to plan and prepare for the control are possible. In the corporate sector,
long haul these are: ownership, operation and
Emphasis on quality and value management.

WEAKNESSES…
FAMILY MANAGEMENT
Unpreparedness for change,
PRACTICES:-
Owner becomes larger than the
To get aquatinted with the family business, it
organization,
is necessary to learn some of the commonly
Decision-making is centralized,
employed management practices in family
There are proxy sons in power
business. An attempt is made to describe to
position who erode structural
be choices of management control that are
authority and hierarchy,
available to the founder, internal work
Tolerance for mediocrity,
environment, organizational structure and
Tentativeness to formalize and
delegation.
professionalize
Overall lack of strategic perspective. PROMINENT BUSINESS
COMMUNITIES IN INDIA:-
OPPORTUNITIES…
Good hold on business
No conflict.

THREATS…
Competition
MNC

FAMILY OWNERSHIP & CONTROL:-

The Sindhi entrepreneur community:-
In the case of proprietorship and partnership,
family control is exercised by the direct The stories about

participation of family members in ownership Sindhis being successful in their life and

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 International Journal of Research and Development, Vol I ,Issue II, ISSN (Online) - 2279-073X

profession are many. Wherever Sindhis have professions successfully. They have even
gone they have shown others how to achieve entered the armed forces of the country and
their goal and prove to be successful in have proved that they are warriors as well.
whatever profession they have entered. The Marwari entrepreneur community:-
Though Sindhis were labeled as non-martial
race by Britishers, they always fought Marwaris comprise of a
courageously with numerous invaders and community of entrepreneurs who originally
came out successful from all adverse belonged to the state of Rajasthan in India. In
situations. Earlier Sindhis were recognized the last 100 years, Marwaris migrated from
as successful businessmen only, but Sindhis Rajasthan to various parts of Indian sub-
of today have excelled in all walks of life – continent. Known for their business acumen,
industry, medicine, cinema, learning and they founded several businesses, trading
letters, technology, computers, journalism, houses and manufacturing units in various
finance and banking – in short in every parts of Indian subcontinent including
conceivable vocation. Myanmar, Nepal and Bangladesh. Examples
of a few billion dollar business houses started
Sindhis have ventured far and by Marwaris include the Birla Group (Aditya
wide. Establishing successfully in far off Birla Group, Zuari Agro, Hindalco, etc.),
lands is proof enough of their enterprising Mittals (Arecleo Mittal, Bharti-Airtel),
spirit. The perseverance always enables them Bajajs (Bajaj Auto, Bajaj Allianz),
achieve their goal. Because of their Singhanias (JK Group, Raymond), Ruias
enterprising nature they are present in every (Essar, Hutch Telecom, SK Group),
nook and corner of the world as successful Piramals (Crossroad Mall, Nicholas
businessmen. The younger generation has Piramal) etc.
acquired control over other occupations as GD Birla, the legendary
well. Mainly for trading they enter in SSI. industrialist and the patriarch of the Birla
There businesses are consumer oriented. Empire, is a well known Marwari. He was a
Besides trade they have excelled in close associate of Mahatma Gandhi and was
technology, industry, journalism, finance, a major campaign contributor to Indian
etc. With their knowledge and intelligence National Congress during the pre and post
they have established themselves in their new independence days.

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Marwaris have created a large number mid to MBA, PGDBM, etc. Only time will tell
small size businesses all over India, with high whether the new generation of Marwaris will
concentrations in Kolkata, Siliguri, Chennai, go back to their ancestral entrepreneur roots
and Hyderabad. Marwari businesses have or chart a new territory.
been run by families with newer generation
succeeding and taking over the reins at an
early stage and expanding it further. A large
The Gujarati entrepreneur community
majority of first and second generation
Marwaris have limited the education for "A Gujarati is smart with their money, they
themselves to high school or less and got try and stay out of litigations, their policy is
involved with the family business early-on. to include others in their growth story. And
The Marwari business style has basically they are very practical with the
been Hands-on, Know-the-Business-Basics decisions that they take, which helps them in
style, which can also be compared to the turning everything that they touch into Gold,"
value investing style of Patels, as treatised in
Apart from the fact that companies like the
Mohnish Pabrai’s The Dhandho Investor.
Reliance Industries, the Tata Group,
Marwaris have always been considered
WIPRO, Sun Pharma as well as wind
conservatives, however, with rapid
energy major Suzlon are all successful names
urbanization of India, the Gen X and Gen Y
with high market capitalisation, the other
Marwaris from the traditional entrepreneur
common thing is that they were all founded
families have been venturing into politics,
by Gujarati’s. One may wonder
policy management (e.g. Bimal Jalan,
what really is it that makes a Gujarati
former RBI Governor of India), operations,
successful or what makes money to multiply
etc. A large number of Gen X and Gen Y
in the hands of a Gujarati’s? The fact that the
Marwaris are also breaking away from
stock markets in India became popular is
traditional businesses and taking up positions
only after Dirubhai Ambani made his reliable
in local and international corporations in
presence felt on the bourses.
India and abroad. They are coming up with
new areas of business with innovative "The Mafatlals, the Lalbhai

practices. They have also opened up their Group, the Morarjee Group, the Ammems of

boundaries to higher education by doing Gujarat, the Denabank Founder as well as the

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 International Journal of Research and Development, Vol I ,Issue II, ISSN (Online) - 2279-073X
Bank of Baroda – there are many groups like
these that can be termed more as "creators" of
wealth,” While the top Gujarati promoters
include the Ambanis, Premji, Tanti,
Sanghavi, Kotak and others, the Parsi
Gujarati promoters include the Tatas,
Godrejs as well as the Qadias to mention a
few.
As each of these companies grows
larger on the world radar, one thing that
others in the same community could do is to
shed their conservatism and learn from their
peers who have grown big. So, to be a
successful businessman or woman, its worth
to get some tips from the Gujarati's as they
are enterprising and full of business acumen.
The Banias entrepreneur community:-
Banias are a large and
influential community in India, United States,
United Kingdom and Canada. Traditionally,
Banias have been a trading community in
northern India, though in modern times they
follow other professions as well. People from
the bania community are very successful
entrepreneurs and said to control a large
portion of India's private sector and have
heavy influence on Indian economy. Being a
trader community traditionally, the bania
community has produced many of the most
successful entrepreneurs in India. The texts
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and legends of the Baniya community trace
the origin of Agarwals to the legendary
Kshatriya king Agrasena of the Sun Dynasty
who adopted Vanika dharma for the benefit
of his people. The majority of Banias belong
to the Vaishnavite sect of Hinduism while the
remaining 14% of them practice Jainism.
The Agrawals entrepreneur community:-
The Agrawals, who belong
to the large Vaishya community, are found in
almost every part of the country. They are
also known as Banias because of their
occupation. The term `Vaishya` is very
comprehensive and covers several business
communities such as the Agrawal,
Maheshwari, Khandelwal, Oswal, Jaiswal,
Poswal, Dasse and Mahajan. Of these, the
Agrawal is by far the largest community. By
and large being businessmen and traders, the
Agrawals enjoy a fair share of representation
in several other professions as well. If the
community has produced numerous
renowned businessmen and industrialists like
the Dalmias, Modis, Singhanias, Srirams
and Bajajs, it has also produced a number of
distinguished jurists, educationists, scientists,
engineers, politicians, doctors, philosophers,
poets and scholars.
The Maheshwari entrepreneur community:-
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The Maheshwaris number "The younger generation is joining the family

about three million and have played a notable businesses and increasingly taking up
role in the economic and industrial progress leadership roles". The successful
of the country. They are predominantly a performance of family business can be
business and mercantile community. The attributed to its natural resources like
Maheshwaris are a very enterprising commitment, dedication, loyalty, initiative,
community. The Birlas and Shivkissen spirit of Entrepreneurship, financial strength
Bhatter were the first Maheshwaris who, in etc. However, family business does suffer
1918, ventured to start a jute mill. They faced from certain weaknesses like nepotism,
great difficulties created by the British but favoritism, rigidity, conservatism etc. These
through sheer perseverance they succeeded. weaknesses can be overcome by adopting
Up to 1939 their mills were not allowed to be certain policies and strategies. Strategically,
represented on the Indian Jute Mills the founders may eliminate some amount of
Association`s Committee. Similarly after family participation to strengthen the
independence, the Maheshwaris have started leadership of those family members who are
industries in different sectors of the economy. in business. They should adopt policies to
avoid recruitment of family members on the
5. CONCLUSION:-
basis of competence; the personnel policies
Today, family business represents the largest of family business should be equally
segment in Indian industry and makes applicable to relative and non- relative
significant contribution to the economic employees. Still the role of family business
development of the country. Unlike in the has changed a lot after LPG policy. The
past, family hierarchy is not the only criterion family businesses are becoming well
for assigning business responsibilities; organized & are trying to come up with new
personal capabilities and skills are playing an areas of business by developing products.
increasingly important role in determining
assignments. The role of family business 6. REFERENCES:-
leadership appears to be progressively
evolving from authoritarian control to an o The Dynamics of Entrepreneurial
Development & Management,
inclusive leadership.
Vasant Desai, Himalaya Publishing
House, Fifth Edition

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 International Journal of Research and Development, Vol I ,Issue II, ISSN (Online) - 2279-073X

o Entrepreneurship Development o http://myarticleworld.blogspot.com/200

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8/08/sindhis-after-partition-of-india.html
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Denise Kenyon-Rouvinez, John
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Business: Parallel Planning to Unite

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