Working Papers

Working PapersSubramanian, Krishnamurthy. "The Optimal Locus of Innovation"Read Abstract >Close >I develop a unified theory to study five different organizational modes for developing an idea: corporate research alliance, venture capital financing, angel financing, intrapreneurship, and spinoff. I model these choices as a combination of access as defined by Rajan and Zingales (1998) and ownership of the idea as defined by the property rights theory. The optimal choice encourages the entrepreneur and the collaborator---venture capitalist, corporation or angel investor---to invest in developing the idea while discouraging them from investing to extract rents. This effect manifests because ownership has an asymmetric effect on the collaborator's and entrepreneur's incentives while access has a symmetric effect. The theory explains some empirical regularities and generates several new predictions.

Working PapersMangipudi, Chandrasekhar., Subramanian, Krishnamurthy., Vasu, Rajkamal. "Valuation of Private, Innovative Targets: Evidence from Cisco’s Acquisitions"Centre for Leadership, Innovation, and ChangeRead Abstract >Close >We study how the value paid for private, innovative targets is affected by its knowledge-related intangible assets. We use unique data from Google Patents for the targets acquired by serial acquirer Cisco. We minimize bias in estimates of the value paid by comparing across deals undertaken within the same year by an acquirer that represents the “gold standard for M&A practices.” We find that acquirers pay for the target’s (i) intellectual property rights, (ii) expertise/technology especially that overlapping with the acquirer’s, and (iii) employees’ human capital. Ours is the first study to examine the value paid for knowledge-related intangible assets in mergers and acquisitions.

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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 PapersZerrillo, Philip. "Cross Functional Innovation: Avoiding Profit Fault Zones"Read Abstract >Close >
Working PapersBhatnagar, Navneet.,Ray, Sougata., Ramachandran, Kavil. "Building Next Generation Leadership: A Strategic Framework for Family Firms"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >Developing next generation leadership is critical to sustain organisations, even more so for family controlled businesses because they are prone to failure on this count. The interplay of family and business sub-systems uniquely influences next generation leadership development strategy in family firms. Though leadership development strategy and process have been examined in extant literature, these have not been adequately researched in the family business context, particularly in an emerging economy like India. Therefore, following case methodology, we examine the next generation leadership development strategy of 15 Indian family firms and identify the pathways adopted by the incumbent and next generation leaders. We found that early strategic focus on building key capabilities and phased development process, were instrumental in a successful next generation leadership development strategy.

Working PapersBhatnagar, Navneet.,Ray, Sougata., Ramachandran, Kavil. "Decoding Family Togetherness : How Familial Bonds Shape the Family Business"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >Sustaining the family business has been a core concern of family business scholars (Le Breton-Miller & Miller, 2016). Long-term survival of business is possible only when the owner family sustains as a cohesive unit. For this, strong family bonding is critical. Family ties have been probed in literature but in a fragmented manner. Moreover, the theories of family cohesion or socioemotional wealth consider family ties purely as a phenomenon of the family sub-system and examine their effect on business outcomes. We assimilate the disparate literature on familiality and conceptualize a coherent whole, termed, ‘Family Togetherness.’ We define family togetherness as the capability of the owner family to operate as a cohesive unit across both the family and business contexts. It is a ‘supra-entity’ determined by the constituent dimensions from the complex whole of the family and business sub-systems. These dimensions are rooted in the operational and governance practices followed in both the sub-systems. Using confirmatory factor analysis based on 279 survey responses from family business leaders in India, this study identifies six dimensions of family togetherness: i.e., Professionalism, Commitment, Mutual Respect, Complexity, Shared Vision, and Nurturance. The paper also discusses the implications and concludes with suggestions for future research.

Working PapersBhatnagar, Navneet., Ramachandran, Kavil. "The Influence of Familial Socio-Political Forces on New Venture Creation Strategy in Family Business"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >New venture (NV) creation is critical to growth and long-term survival of business groups. In family business (FB) context, the socio-political dynamics of family sub-system influences decision-making in business sub-system. However, the effect of this phenomenon on NV creation strategy and process in family business has not been adequately examined. This paper triangulates observations from the literature and 25 in-depth interviews of FB leaders with insights from two FB practitioners, and employs abductive reasoning to theorize the influence of familial socio-political forces on NV creation strategy of family businesses. The results show that in addition to the economic rationale, the proposer’s socio-political clout in the family and the leadership's predisposition to the NV proposer are critical influences on the NV creation strategy of family businesses.

Working PapersBang, Nupur Pavan.,Vishwanthan, Anierudh., Ramachandran, Kavil. "Evidence on Family Firm Performance and Relevance of Context in an Emerging Economy"Thomas Schmidheiny Centre for Family EnterpriseRead 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 this paper studies the impact of family ownership, control and management on firm performance through the lens of external and internal context. It thus advances the debate that has so far been skewed towards studies from the developed markets, larger firms and micro analysis. 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 also find that the impact of family does not weaken over time and that family management results in poorer performance. We, therefore, conclude that family ownership, control and management per se are a significant impediment to firm performance in emerging markets contexts like India.

Working PapersBhatnagar, Navneet.,Sharma, Pramodita., Ramachandran, Kavil. "Spirituality and Corporate Philanthropy in Indian Family Firms "Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >Family firms are known to help local community through philanthropy. Scholars have examined the nature, process, and outcomes of family firm philanthropy. However, the study of heterogeneity in their philanthropy motives across cultural contexts has received inadequate attention. Based on 16 cases of Indian family firms, this paper examines the influence of spirituality on family firm philanthropy. The paper presents a typology of family firm philanthropy by juxtaposing two dimensions: (i) ‘Dharma’ - i.e., the firm’s sense of duty towards society, and (ii) ‘Karma’ - i.e., the degree of family involvement in philanthropy. Four distinct philanthropic engagement profiles are identified.

Working PapersBhatnagar, Navneet., Ramachandran, Kavil., Ray, Sougata. "Strategic Agility and Familiness: Family Firms’ Rudders to Navigate the VUCA World"Thomas Schmidheiny Centre for Family EnterpriseRead Abstract >Close >We live in unpredictable times characterized by high volatility, uncertainty, complexity and ambiguity (VUCA) in the macroenvironment, which renders strategic planning ineffective (Mack et el., 2015). However, VUCA also offers opportunities, provided that businesses develop better sense-making ability and make appropriate strategic decisions (Bennett & Lemoine, 2014). Family controlled firms, the dominant form of business organization across the world (Ward, 2011), operate with long-term orientation. On account of the owner family’s network and other unique resources, and their keen interest in preserving financial and emotional wealth, family firms are likely to respond to environmental changes in a manner that is distinct from non-family firms. However, firm-level antecedents that shape family firms’ strategic decisions in an uncertain environment have not been adequately examined. Employing multiple-case method, this paper attempts to address that crucial gap and extend strategy and family business literature. Based on in-depth case studies of 15 publicly traded Indian family firms, the study also aims at examining how heterogeneity in family firm’s - (1) strategic agility, and (2) familiness resources and capabilities basket - influence its strategic decision-making in volatile and uncertain times. On the basis of the common patterns that emerge from the preliminary study of these cases a strategic framework has been conceptualized that identifies four distinct strategic decision-making profiles of family firms. These four family-firm types are tentatively labeled drawing an analogy from the animal world. As we develop this research, we aim to validate the framework by juxtaposing it with similar assessment of non-family firms (i.e., their strategic agility and resources and capabilities). The paper promises to have significant implications for strategic management of family firms and aims to contribute to our understanding of strategic decision-making under uncertainty in family business context.

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