Bridging the Leadership Gap: How Indian Family Firms are Developing the Next Generation Members

Working Papers
Bhatnagar, Navneet., Ramachandran, Kavil., Ray, Sougata. "Bridging the Leadership Gap: How Indian Family Firms are Developing the Next Generation Members", Hyderabad, Telangana, India
Abstract:
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.