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A Family Business

Family as an institution is dying in the west, which may be one reason why family business are disappearing there. But it is still going strong in India--even in politics and Bollywood.

Rahul Bajaj is the latest in the list of tycoons who are moving from the higher reaches of business to the greener pastures of politics. He has said that he wants to be nominated to the Parliament when he retires from his company. However, he has not said when he is going to retire. It is obvious that the company will now be managed by his two sons whom he has been training to take over from him. This is what most, if not all, Indian businessmen do. Their sons or nephews take over from them and the business remains in the family.

Why Indians, this is what happens elsewhere too, including America. Ford Motors, which is now almost a hundred-year-old corporation, is still run by the Ford family, though there were times when it had gone into other hands. Wal-Mart is still managed by a member of the Walton family, but it is a young company, which has only just passed into the hands of the second generation. But when companies grow big, things are often different.

In India, though, things are not different, even when companies grow big. Even after a century, the Tata group is still headed by a Tata, though the Tata family as such may not be in the picture, as there are so few Tatas. The Birla companies are, of course, headed by Birla sons and grandsons, of whom there are enough to go round. Each Birla company has a Birla at the top, who actually runs it and is not a figurehead.

In fact, every Indian family business has a member at the top who actually runs it. For instance, Mahindra & Mahindra is still run by a Mahindra, the grandson of one of the founders. Escorts is currently headed by H.P. Nanda's son Rajan Nanda, whose only son, Nikhil, the grandson of the founder and Amitabh Bachan's son-in-law, may eventually take over.

There is a Sri Ram heading every one of the old Sri Ram group firms, and doing very well in the bargain. This is also true of Bajaj, Goenka, Piramal and other groups, as also of Ranbaxy, a pharma group, which will soon be run by Parvinder Singh's sons.

Is this a good thing or bad? I personally think that it is a good thing and which is one reason why Indian business groups have lasted as long as they have.

Tatas are more than a century old and still going strong. Birlas will complete their century as a manufacturing group in ten years time and they are as strong as ever.

One reason is that the families are constantly re-inventing themselves. Their children are exceptionally well-educated men --and women--many with business school qualifications and are therefore as well qualified to run their companies as the so-called professionals. Moreover, they know their business inside out, and what is important, they are themselves part of the culture that surrounds the business.

They know how the business was established, why it has clicked, why their father and grandfather went into a particular business, and fell directly responsible for its health. The companies become extended families with strong emotional bonds to keep them going.

The family as an institution is dying in the west, which may be one reason why family business are disappearing there. But it is still going strong in India--even in politics and Bollywood.