The Hindu Business Line : Five virtues and vices of family businesses

What is common to Wal-Mart, Fiat, Cargill, Ford, and Samsung? These are companies with a predominance of family ownership, point out Michael and Robert Allio in Practical Strategy for Family Business, from Tata McGraw-Hill (www.tatamcgrawhill.com). Five meta strengths, or virtues, of family businesses, according to the authors, are loyalty, focus, speed, deep pockets for growth, and follow through.

On the flip side are five vices, viz., blind loyalty, impulsiveness, tunnel vision, good $ after bad, and tactics. The authors' prescription is contained in five guidelines as follows: Formulate explicit strategy, communicate strategy and performance metrics, focus on implementation, commit to management development and succession planning, and balance inside/outside perspectives. The last is the tough one, say the authors, and offer four recommendations for balancing perspectives: Engage a diverse board, benchmark at the business level, convert outsiders into insiders, and deploy qualified outside resources. "Family businesses are capable of extraordinary feats, and staggering disappointments," conclude the authors. "The stakes are high, but following a strategic path can help." Recommended `family' read.

Bribery and breakage

Here is a `problem' on bribery and corruption, from Volume II of, Collected Papers in Theoretical Economics, by Kaushik Basu, from Oxford University Press (www.oup.com): "A person, Z, is considering committing a crime or an act of corruption, like evading income tax or accepting a bribe. Let the benefit to him from this act be B units, the probability of getting caught be p, and the penalty be f." So, what is Z likely to do? He'd calculate the expected cost associated with the corrupt act (i.e. pf) and then `commit the crime if it is less than the booty (B). But this standard model gets complicated when Z, after being caught by policeman 1 pays a penalty of f that goes to the government, tries also to bribe the cop! In a different chapter, you'd meet two travellers returning home from a remote island, where they bought identical antiques. The airline has managed to smash these, and the helpful manager assures the two travellers of adequate compensation. Since he doesn't know the cost of the antiques, he asks each of the two travellers to write down on a piece of paper the cost... Entertaining economics!

On the nuclear road

To catch up with the nuke news, read first Arpit Rajain's, Nuclear Deterrence in Southern Asia, from Sage (www.indiasage.com). The region has a unique strategic triangle with `three declared nuclear weapons states' that are involved in `limited conflict', notes the intro, about India, China, and Pakistan. Worryingly, the three countries are `within 10 minutes of missile flight time from each other' and `share long borders, which at many places are contested'. The author cautions that attempts to enhance a nation's security by treading the nuclear road can threaten the security perceptions of other states, and reduce security all round. The book, baked by an elaborate bibliography, concludes with the imperative that the three countries need to determine whether nuclear weapons are military or diplomatic in nature. "If indeed the region has to go down the nuclear road, then a number of transparency measures aimed at instilling confidence, increasing credibility, avoiding miscommunication" are needed. However, Rajain cautions that it may not be correct to import `Western constructs' — that is, "patterns of proliferation and modes of deterrence that have been used in the geo-strategic dyadic Cold War setting."

Labour laws

Labour legislation speaks of remedies and reliefs that go beyond the contemplation of civil law. Thus writes E. M. Rao in, Industrial Jurisprudence, from LexisNexis Butterworths (www.lexisnexis.co.in), as part of `student series'. The book has chapters on employment relationship, rights, powers and immunities, duties and liabilities, canons of construction, definitions, words and phrases, and hundreds of case citations. You can read, for instance, about: The Dalmianagar Mazdoor Seva Sangh case in which the Patna High Court upheld the right of an unrecognised union to raise a dispute; the Bhiwani Art Handicrafts case in which the Rajasthan High Court "placed a strange interpretation on the expression `office bearer'"; and the Govindaraju case about a conductor who was terminated. Index and review questions can add value to learners.

Tailpiece

"Some books are for talking about... "

"Even without reading them?"

ReadingRoom@TheHindu.co.in

D. Murali