B-schools sharpen focus on family businesses3 min read . Updated: 14 Dec 2012, 01:33 AM IST
The segment is emerging as a specialized field of learning in leading B-schools
New Delhi: With family businesses comprising more than 70% of the top 500 firms in country, the segment is emerging as a specialized field of learning in leading Indian business schools.
While some target medium and high net-worth firms, others are trying to cater to the lower medium category firms with a revenue size of less than ₹ 300 crore.
While academicians and industry experts says such courses can equip family-managed business (FMB) owners to handle succession planning and bring in professionalism, the other benefit could be getting high net-worth students that will help schools build brand without bothering about placements.
“Family businesses are the backbone of the Indian economy and they are the growth drivers for the country. It’s natural, especially to see this niche segment emerging as a specialized field of learning," says Shrinivas Gondhalekar, dean (operations) at Wellingkar Institute of Management Development and Research, Mumbai.
Gondhalekar, also the professor in charge of the course, says the business school has revised a two-year, full-time course on family-managed businesses last year. “Earlier, it was more of a regular MBA, and now it’s a dedicated course aimed at FMBs," he says.
At Welingkar, there are two target groups—first-generation, middle-level family business owners in the 30-40 years age group, and the 20-something youngsters from established second- or third-generation business houses.
Wellingkar is not the only leading B-school in the country to start such a course. the SP Jain Institute of Management and Research, the Narsee Monjee Institute of Management Studies (both in Mumbai), the Indian School of Business (Hyderabad and Mohali) and the International Management Institute (IMI) in Delhi are others who have either started or announced to start the programme in the next academic session.
According to a research conducted by ISB, at least 73% of the top 500 firms listed on the BSE and half of the Nifty 50 companies of the National Stock Exchange are run by families.
Kavil Ramachandran, professor in charge of family businesses at ISB, says research shows that succession and governance are major challenges. “One major thing is families are not aware of the better practices. Through education, research and training, we are trying to create more awareness," Ramachandran says.
ISB launched masters-level programmes for family businesses targeting the young generation of such legacy businesses. The course will commence next year in collaboration with US-based Kellogg School of Management.
Adi Godrej, chairman of the Godrej Group, a fourth-generation family business, says the Indian economy is undergoing a tremendous transformation. “Large business firms in India are family-controlled, and this will continue for sometime. So there is an opportunity for formal management programmes for members of business families. (It) will be a turning point in terms of management of family businesses in our country."
He says “exposure to a high quality both family business processes as well as management studies" will be extremely useful for Indian family businesses going forward.
Pritam Singh, director general of IMI, says family businesses, especially in the lower medium category with a revenue size between ₹ 100 crore and ₹ 300 crore, need such courses the most. “This is where we require proper guidance in succession planning, developing next-generation leaders, and the acumen to manage competition. Instead of following an America model, we can have our own business families to solve relevant issues," says Singh, who was a former director of IIM-Lucknow. Like ISB, IMI, too, will start the course in 2013.
B-schools say that as India has a huge legacy of family businesses, it would not be a problem to drive case studies in any of the field. There are families who have turned their ventures into global firms; there are examples of severe conflict and of smooth transition as well.
S.D. Puranik, executive director of CII Naoroji Godrej Centre of Excellence, says that at times, young scions of business families don’t make it to the top schools as the competition is very tough, or sometimes because of a genuine lack of time. “But in a globalized world, having full knowledge of several fields is essential to run a business and here family business course are of great help."
Puranik, also, agrees that high net worth individuals do add brand value to schools and they don’t need placement as well.