Working PapersBang, Nupur Pavan.,Vishwanathan, Anierudh.,Ray, Sougata., Ramachandran, Kavil. "Does Family Ownership Impact Firm Performance?- Evidence from India "Read Abstract >Close >Concentrated ownership of a firm in the hands of a family presents unique opportunities and challenges that may have an impact on the performance of the firm. A unique proprietary database of scientifically classified listed family and non-family firms covering 4,186 firms in India from 1990 to 2016 has been used to study the impact of family ownership on firm performance, thus advancing the debate that has so far been skewed towards studies from the developed markets and larger firms. Family ownership classification used in this considers ownership concentration in the hands of the family, the management control with the family and ownership continuity within the family. Accounting and market measures of firm performance have been used to conduct a time-series cross-sectional comparison of family and non-family firms. Results show that family ownership and control per se are a significant impediment to firm performance for the listed firms in India.

Working PapersBang, Nupur Pavan.,Vishwanathan, Anierudh., Ramachandran, Kavil. "How Family Ownership Impacts Firm Performance- A Study of Listed Firms in India "Read Abstract >Close >Ownership of firms and their impact on firm performance has been a topic of interest for long. Concentrated ownership of a firm in the hands of a family presents unique opportunities and challenges that may have an impact on the performance of the firm. Multiple studies have arrived at differing conclusions with regards to performance of family firms. Using a unique proprietary database of scientifically classified listed family and non-family firms covering 4,186 firms in India from 1990 to 2016, this paper studies the impact of family ownership on firm performance, thus advancing the debate that has so far been skewed towards studies from the developed markets and larger firms. Our treatment of family ownership takes into account ownership concentration in the hands of the family, the management control with the family and ownership continuity within the family. We have subjected the data to many sub-sample and post hoc analyses with several robustness checks to ensure that our findings and conclusions are reliable and valid. Using accounting and market measures of firm performance, we conduct a time-series cross-sectional comparison of family and non-family firms. Our analyses consistently reveal that family firms performed poorly in comparison to non-family firms in India. We observe that family ownership in general has made negative contributions to firm performance. We, therefore, conclude that family ownership and control per se are a significant impediment to firm performance for the listed firms in India. To the best of our knowledge, this is the first large sample study to examine the relationship between family holdings and performance of firms listed in major stock exchanges of India.

Working PapersBhatnagar, Navneet., Ramachandran, Kavil. "How Family Politics Influences New Venture Creation in Family Business"Read Abstract >Close >Family firms comprise significant part of economies around the globe. Creation of new ventures (NV) is vital for their long-term survival. One of the critical success factors of a NV is the process of setting up of the venture. Yet our understanding of the ‘process’ of NV creation in family enterprise context remains limited (Vogel, 2017; Marion et al., 2015; Steier, 2009). Family as a system has its unique dynamics of socio-political pulls and pushes among its members. These forces constantly influence the functioning of the business system as well since family members are different personalities in several ways. They also exhibit varying degrees of influence on the dominant coalition. These lead to variations in the way each member is perceived and dealt with, by the top decision-makers in the family. We posit that NV creation process in family business context is influenced by socio-political forces within the family. This paper examines those socio-political forces and their influence on the NV creation process in family business. In a survey study of 120 Indian family businesses we found that familial socio-political forces significantly influence the NV creation process. Using factor analysis, we identify seven dimensions of familial socio-political influence such as Political/ Social clout and In-group/ Out-Group effects. Family embeddedness of the NV proposer was found to enhance the family’s support for the NV proposal. We conclude with the implications of the study for family firms and offer suggestions for objective assessments of NV proposals.

Working PapersMondal, Arindam., Ramachandran, Kavil., Ray, Sougata. "Multinationalization of Family Firms from India: The Role of Socioemotional Wealth"Read Abstract >Close >We investigate the multinationalization strategy of family businesses from an important emerging market, India. Based on insights from international business, emerging market multinationals and socioemotional wealth literature, we assess how familial heterogeneity may impact various dimensions of their multinationality, namely the scale, scope and direction of it. The hypotheses are tested on 278 family owned Indian firms listed on the S&P BSE 500 index covering a six-year period from 2007-08 to 2012-13. We find that differences in family involvement alter the perceptions of potential gains and losses to socioemotional and financial wealth; thus impacts different dimensions of multinationality differently.

Working PapersBhatnagar, Navneet., Ramachandran, Kavil. "Ready, Steady, Go!’: Influence of Family Politics on New Venture Creation in Family Business"Read Abstract >Close >Family firms comprise significant part of economies around the globe. Creation of new ventures (NV) is vital for their long-term survival. One of the critical success factors of a NV is the process of setting up of the venture. Yet our understanding of the ‘process’ of NV creation in family enterprise context remains limited (Vogel, 2017; Marion et al., 2015; Steier, 2009). Family as a system has its unique dynamics of socio-political pulls and pushes among its members. These forces constantly influence the functioning of the business system as well since family members are different personalities in several ways. They also exhibit varying degrees of influence on the dominant coalition. These lead to variations in the way each member is perceived and dealt with, by the top decision-makers in the family. We posit that NV creation process in family business context is influenced by socio-political forces within the family. This paper examines those socio-political forces and their influence on the NV creation process in family business. In a survey study of 120 Indian family businesses we found that familial socio-political forces significantly influence the NV creation process. Using factor analysis, we identify seven dimensions of familial socio-political influence such as Political/ Social clout and In-group/ Out-Group effects. Family embeddedness of the NV proposer was found to enhance the family’s support for the NV proposal. We conclude with the implications of the study for family firms and offer suggestions for objective assessments of NV proposals.

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