Working Papers

Working PapersBasak, Deepal., Zhen Zhou. "Diffusing Coordination Risk"Read Abstract >Close >Agents face strategic uncertainty in a coordination problem that is akin to debt rollover or currency attacks. We model this as a global game of regime change. A principal wants her preferred regime (PPR) to succeed. She faces the coordination risk that a viable PPR may fail due to the strategic uncertainty. The principal diffuses this coordination risk by making a finite partition of the mass of agents. She abandons her preferred regime if it is no longer viable. We show that with a sufficiently diffused policy, the risk that agents may attack the PPR unravels from the end.

Working PapersBang, Nupur Pavan., Ramachandran, Kavil. "DODLA’S DILEMMA"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >D. Sunil Reddy established Dodla Dairy in the year 1995 at Nellore district of Andhra Pradesh, as a greenfield company. An industrial engineer from Mangalore University, Sunil started Dodla Dairy at the age of 27, with the seed money given by his father. He would often wonder if the brand ‘Dodla’ and the Company sustain beyond ‘Sunil Dodla’. While Sunil continues to put in efforts to increase capacity, expand and capture more market share, he keeps asking himself, “What next”, “How do I build a legacy?” If the company had to move to the next orbit, both in term of size (revenues, assets, market share) as well as professionalization, certain organizational changes were necessary. “What were these changes and who would do it?” How could Sunil better prepare himself and the company for the future? How would the company move from being a family owned enterprise to a professionally run, sustainable organization? Would one of his daughters bring about that freshness by joining the company and yet provide continuity in terms of the family values? Would it be an outsider? “Who after me?” thought Sunil. After two decades, a certain degree of fatigue was beginning to set in and he had been contemplating his own role in the company. The days when he was under pressure or had a bad day, he would think of selling off the company, take the money and live peacefully ever after. On the other days, he would think of building a sustainable organization and leaving a legacy!

Working PapersChaudhuri, Bikramjit Ray.,Ray, Sougata., Ramachandran, Kavil. "Effect of Business Group Affiliation on Corporate Environmental and Social Sustainability Strategy"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >In spite of an overwhelming importance of business groups (BGs) in economic value creation, how they approach and contribute to sustainable development and social value creation, and whether they differ from other firms in executing corporate sustainability strategy, has hardly been systematically researched. Using a proprietary dataset built from a questionnaire survey and secondary data of 163 Indian publicly listed firms, we theorize that BG affiliation makes firms more inclined to execute corporate sustainability strategy. We also hypothesize the effect of the stock of fungible resources with these strategies, and the negative moderating effects of BG affiliation in these relationships, drawing from BG and resource-based view literature. Our research indicates that BGs make as significant a contribution to sustainable development as in the economic development

Working PapersBhatnagar, Navneet., Ramachandran, Kavil. "Emami’s Mission to the Next Orbit"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >This case is about the challenges of professionalisation and succession faced by an Indian, family controlled, personal-care products company, Emami Limited. Emami was setup in 1974 at Kolkata by two childhood friends, Radhe Shyam Agarwal (RSA) and Radhe Shyam Goenka (RSG). They started with a small capital of INR 20,000 and had grown the business to INR 1.8 bn in sales by financial year 2013-14. Emami had earned a reputation for being innovative in development of products based on keen consumer insights. Ever since Emami tasted initial success in business (i.e. within 3-4 years of its inception), the company adopted an inorganic strategy for growth and made several strategic business acquisitions. As the business grew, it implemented organizational changes, brought in functional experts from outside and professionalised its operations. During the first four decades since it was founded, Emami grew its product portfolio to include ayurvedic formulations and nutraceuticals. Besides, the group diversified in other businesses such as paper, real estate and construction. However, Emami Limited, the personal care company continued to be the group’s flagship that generated most of its wealth. Business growth increased the complexities of Emami’s operations. In order to manage those complexities Emami made efforts to professionalise their systems and processes. However, as the founders grew older, they had realized the need for succession planning to pass on the leadership to the next generation. They were also cognizant of the need to establish family governance mechanisms and structures to ensure Emami’s sustainability across generations. Another key challenge they faced was how and whom to select as their successor because their children had been brought up together, had similar educational qualifications, business experience and performance record. It was quite hard for them to pick one member over the other.

Working PapersMondal, Arindam., Ramachandran, Kavil., Gadepalli, Sarada. "How Managerial Discretion Influences Internationalization of Indian Family Managed Firms "Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >We investigate the impact of family ownership and CEO attributes on internationalization strategy of family managed firms. Empirical results based on a unique panel dataset of large Indian firms for the period 2007 to 2013 indicate that while concentrated family owners create impediments in internationalization efforts, firms with either a first generation founder CEO or a family CEO with international exposure at the helm, are able to internationalize more effectively. We also theorize the moderating influence of different family CEOs on the relationship between family ownership and internationalization. Our results suggest that differential objectives of the CEOs derived from their idiosyncratic ownership and behavioural traits are responsible for heterogeneous risk behaviour of family managed firms. Our study has several implications for the theory of family firm internationalization.

Working PapersRamachandran, Kavil. "Krishna's Dilemma"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >The case presents a typical decision situation faced by managers. The context is the students'convocation of an academic institute. The organisers have to decide the most appropriate venue that can accommodate the institute's growing class of students and their parents. The case discusses several available alternatives and explains their merits and demerits to help the readers arrive at an appropriate solution.

Working PapersBhatnagar, Navneet., Ramachandran, Kavil., Ray, Sougata. "Preparing the Next Generation Battle Ready: Learnings from Indian Family Firms"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close > Weak next generation leadership is a key reason for the failure of family firms (Miller, 2015). Hence, it is critical to develop effective next generation leadership to ensure long-term sustenance of family business. Continuity of family legacy and control over the family business depends on successful leadership transition across generations. Next generation leadership development involves a systematic process spread over time and acts. However, inspite of its significance the leadership development process has not been adequately studied, particularly in an emerging economy like India. Following case method this paper examines case studies of next generation leadership development process of 15 Indian family firms and identifies the pathways adopted by the senior and next generation leaders. The study finds that there are two distinct phases of leadership development that involve acquisition of multiple capabilities in several stages. The first phase involves stages that contribute to building next generation leader’s intrapersonal capabilities. The second phase involves stages in which the leader builds interpersonal capabilities in the family business context. Some of the stages in both the phases were found to be essential for successful leadership development. Family businesses in which these key stages in leadership development were absent failed to achieve an effective leadership transition. We present a conceptual framework for next generation leadership development process, mapping all the capability development stages observed. We conclude the paper with implications and suggestions for future research.

Working PapersRamachandran, Kavil., Bhatnagar, Navneet. "Touchdown Footwear on Slippery Slope"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >This case is based on the professionalization and governance challenges faced by Touchdown Footwear Limited (TFL) – an Indian mid-sized footwear manufacturing family business. It was setup in1965 by three brothers, Ramnath, Krishna and Ganesh Pai who had inherited their father’s rubber trading business. Initially, TFL made flip flop slippers and catered to the local market. Over the years, TFL had a larger product portfolio, and by 2013, they had a pan-India presence with some exports to African markets. In the early years, the three brothers managed all functions. As the next generation grew up, they started joining the firm and took up different roles often based on business exigencies. By 2013, TFL had a turnover of 6.23 INR, but lacked a clear strategy and professional management. In the absence of appropriate structure, systems and processes, decision-making was ad-hoc. Inefficiencies and wastages were evident all across, and working capital was under severe strain. The firm suffered from governance deficit at both family and business levels. Lack of clear policies and processes delayed many crucial decisions. Earlier attempts to professionalize the business failed to achieve the desired results as family members neither had clear policies nor could change their mindset. Besides, there were questions about the level of commitment and discipline of the next generation. Vivek, the case protagonist, who managed TFL’s finances, realized the need for a transitional change on multiple fronts to sustain the business but was unclear about roadmap.

Working PapersBhatnagar, Navneet., Ramachandran, Kavil., Ray, Sougata. "Bridging the Leadership Gap: How Indian Family Firms are Developing the Next Generation Members"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >Effective leadership transition across generations is important for continuity of family legacy and control over the family business. Weak next generation leadership is a major reason attributed for the failure of family firms (Miller, 2015). The next generation members are key constituents of the family human capital (Sirmon & Hitt, 2003) and critical links in transfer of tacit knowledge (Royer et al., 2008) who require careful nurturing (Sharma, 2008). The ability to develop committed and competent leaders in younger generations is critical to family business performance and survival (Ward, 2011; Sharma & Irving, 2005; Brockhaus, 2004; Foster, 1995; Handler, 1994). Next generation leadership development is a long and significant process but it has not been studied in –depth, particularly in an emerging economy like India. Following case methodology, in this paper, we examine case studies of next generation leadership development process of 15 Indian family firms and identify the pathways adopted by the senior and next generation leaders. The key questions we asked to understand the phenomenon were: (1) How Indian family businesses developed their next generation leaders?, (2) what processes did the firms follow that were successful in developing next generation leaders?, and (3) what specific roles did the senior and next generation leaders play at various stages of the leadership development process. Based on the common patterns that emerged from the cases, we developed a conceptual framework for next generation leadership development process, mapping all the capability development stages observed. We observe two broad phases of leadership development that involve acquisition of multiple capabilities. Phase I involves intrapersonal and Phase II interpersonal capabilities in the family business context. Leaders who adhere to the building up of core capabilities tend to be more successful. For family businesses that failed to achieve such leadership transition, we observed absence of certain keys stages. We conclude the paper with practical implications.

Working PapersBang, Nupur Pavan., Ramachandran, Kavil. "THE UNFINISHED AGENDA: DR. REDDY’S LABORATORIES LTD"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close > Dr. Anji Reddy founded Dr. Reddy’s Laboratories Ltd (DRL) in 1984. Since then, the company has grown to become one of the largest pharmaceutical companies in India. The company professionalized early on and the family members defined and refined their roles for the efficient running of the company. Dr. Reddy passed away on March 15, 2013. Within a fortnight of his demise, the Board of the company instated G.V. Prasad, the son in law of Dr. Reddy as the Chairman and Chief Executive Officer (CEO) and K. Satish Reddy, the only son of Dr. Reddy, as the “Vice-Chairman” in addition to his role of Managing Director and Chief Operating Officer (COO). The appointments triggered a barrage of media and analysts comparing Prasad with Dr. Reddy and raising doubts about the continuity of Dr. Reddy’s principles within the company and the relationship between Satish and Prasad. While Prasad had been with DRL for more than 25 years by then, Dr. Reddy’s shoes were rather big to fil in. He acknowledged that a lot needed to be done to fulfil the dreams of Dr. Reddy.

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