Family owned businesses and the third generation curse

Posted by Mitali Bose

In some parts of the world, their focus on their family capital has ensured that they outperform their corporate peers and survive till their 8th or 9th generation. But, in a sharp contrast here in India, ironically a country where the family structure is so deeply embedded- they struggle as they grapple against the third generation curse.

Now, I’m not declaring that family owned businesses in India are a big failure. All that I am trying to analyze is despite a strong legacy and foundation to depend on, why are they unable to keep things together? If I was to state facts, I would point to Hay Group’s research which shows that while family business owners would like to transfer their companies to their next generation, it is estimated that 70% will not survive into the second generation and 90% will not make it to the third generation. But, not everything is limited to facts. Without using too many statistics, here is my effort to analyze what’s going wrong for t ...

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