Family businesses: Most have no succession plan, finds ISB study

Our Bureau Hyderabad | Updated on November 06, 2019

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Most family businesses have no succession plan even as their founders are nearing retirement, according to a study conducted by Indian School of Business (ISB).

The study was conducted by ISB’s Thomas Schmidheiny Centre for Family Enterprise. It surveyed 53 family businesses in India.

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

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

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

India is, however, not alone in this. According to the STEP 2019 Global Family Business Survey, family businesses in different parts of the world are also exposed to these challenges.

Proactively planning the challenges of succession, retirement and governance, while keeping the changing society and generational outlook in mind is the need of the hour for family businesses, it added.

Published on November 06, 2019

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