Around the world, family-owned businesses form the backbone of a country’s economy, driving growth and contributing to development. Family businesses in India have a rich history with multi-generational such businesses surviving through the ages to become an indispensable part of India’s economic landscape.
Since independence, entrepreneurial zeal and ambition led to the emergence of many new-generation family businesses driven by the values of the promoters and owners. The turn of the century saw a meteoric rise in startups, but family businesses have continued to flourish, accounting for 79% of the national GDP annually. This is in line with global trends with over two-thirds of all worldwide businesses owned and maintained by families.
Advantage – family business
Family businesses have proven to be resilient and even in periods of economic uncertainty, they have not only managed to survive but thrive. A study last year showed 86% of family businesses around the world optimistic about growth in 2022 even as they recover from the impact of the pandemic. A recent global study shows Indian family businesses to be more resilient than their global counterparts.
Family businesses – which can refer to large conglomerates, mom-and-pop stores, and everything in between – are rooted in values and tradition. Values such as trust, risk-taking ability, centralized decision making and cost consciousness differentiate them from other businesses. Intuition and relationships play an essential role in the growth and expansion of family businesses.
What differentiates family businesses in India from those in the rest of the world is the place ‘family’ as an institution holds in Indian culture with family being the fundamental cornerstone of Indian society. Family businesses prioritize long-term stability over short-term gains and focus on building an organisation that will last for future generations, thus building and maintaining trust and goodwill amongst consumers.
The spirit of Make in India
The conversation around ‘Make in India’ may have begun gaining momentum a few years ago with the launch of the government initiative in September 2014 to increase investments, promote innovation, and transform India into a global design and manufacturing hub. However, family businesses have embodied the spirit of Make in India long before the initiative was launched.
The history of Indian family businesses goes back to pre-Independence India. After independence, they grew despite the challenges of a controlled economy till the 1990s brought the era of liberalization. They have played a critical part in import substitution with a significant contribution to the economy. Today, with foreign direct investment (FDI), private equity and venture capital, the family businesses are holding their own and evolving dynamically in line with the rapidly growing Indian economy.
Leading the way
Today, about 85% of all incorporated businesses in India are family businesses. They continue to have a massive impact on India’s economic growth – including contributing to the national GDP, creating jobs, and assisting in the nation-building process. Some of the largest and most profitable companies to come out of India are family-run enterprises. Some of these which have existed for over a hundred years have evolved into global business conglomerates and they have put Indian business on the world map.
As resilient as they may be, family businesses are not immune to setbacks. In this age of rapid digitalization and an evolving global business scenario, family businesses must transition by reinventing themselves from promoter-driven to being professionally managed. While staying true to the core values and honouring the legacy, family businesses must adapt and evolve, staying agile and adaptable to take family businesses into the new age of Industry 4.0.
It is only then that family businesses will continue to lead the way in supporting the Make in India movement!
Discover the original article here.