Business & Management Studies

Abstract

Research in family businesses is relatively recent, and most often knowledge creation in this area is limited to western countries. Although some scholars have provided empirical assessments of family business practices in emerging economies, no comprehensive picture is available on most aspects of family business. It is in this context that this research is undertaken.

Family business succession is widely studied. This paper addresses the topic by comparing the issue for India and the United States. Our approach is unique in that we study business failures between the countries, which avoids the resulting problems in the measurement of financial performance. A business failure is rather unambiguous, no matter how you measure the failure. We will compare the succession of Indian family businesses and that of the U.S.A.  We will also draw the distinction of family business failures and “break-ups,” especially with regard to India’s family groups and in America, where capital markets more seamlessly accomplish stealth break-ups and provide family diversification.  Finally, this paper will address an interesting market anomaly, namely that family businesses are alleged to outperform purely public firms, but foreign capital invested in India prefers firms with the least amount of family influence.