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Family businesses are the lifeline of India's economy. Indian Family Businesses date back to the latter half of the 19th century which also marks the beginning of business in India. Family Businesses contribute 60-70% of GDP of most developed and developing countries. India is no exception. Since 1991, India is emerging as a key destination for marketers from across the globe. Almost 90% of Indian businesses are family-owned which makes the rest of the business community largely dependent on them. Be it as their vendors, transporters, contractors or distributors; non-family corporations collaborate with family firms on various levels.
Although family businesses are vital to the Indian economy, little attention is paid on how they are managed and hence they have come under criticism. They are often accused of a lack of professionalism, of nepotism, infightings and mismanagement. There is a famous cliché, which is quoted frequently and seems to have been accepted as a universal truth: The first generation builds, the second generation consolidates and the third generation destroys the family business. When accusing family businesses of such a short life span it is often conveniently forgotten that longevity is an objective difficult to achieve for any business. There are many reasons for short life cycles in businesses; yet, family ownership is often particularly mentioned. In reality, however, the contrary is frequently the case.
The majority of Indian family businesses are quite young. India faced wars in 1962, 1965 and 1971 ; it was only after 1980 that the economic environment became more business friendly. As a result the period from 1980 to 1995 was one in which a large number of family businesses were established and prospered. Many of those family businesses split up over the last few years due to family differences. There are some families with large business operations but the majority is SMEs. Family businesses have a culture that is often at the same time entrepreneurial, flexible, paternalistic, agile and frugal. Since the family's name is at stake, they stand for values, long-term commitment, relationship orientation and dependability. Indian family firms are also highly efficient. They often have to work with limited resources and make...