Family Business Briefs Issue 62 / October 2020 Welcome! I am delighted to share with you the latest issue of our newsletter, 'Family Business Briefs.' This issue contains some interesting facts and information about family businesses that you may find useful. The briefs have been organized into the following sections: • Summaries of research articles with practical implications on Next Generation’s External Venturing Practices, Role Transitions in Multiplex Relationships, and Corporate Political Activity of Family Firms • Summary of a family business case on Annapurna Studios • Inspirations from the life of Khwaja Abdul Hamied • Interesting insights on Malaxmi Group • Infographic on Women in Family Business: Towards Gender Parity We hope that you will find these insightful and invigorating. I encourage you to send your feedback and share suggestions about something interesting and relevant, which you may want us to include in future. Best regards Ram Kavil Ramachandran, PhD Professor & Executive Director Thomas Schmidheiny Centre for Family Enterprise Indian School of Business ARTICLE SUMMARY Next Generation External Venturing Practices in Family Owned Businesses - Marcela Ramírez-Pasillas, Hans Lundberg, and Mattias Nordqvist Family businesses create new ventures to family and obtaining their agreement. develop a business portfolio and promote 2. Bypassing Family: Diverting family transgenerational entrepreneurship. However, attention and using / misusing family trust. there is little understanding of how the next 3. Family Venture Mimicking: Relating with generation members managing a venture that the family’s venture model and copying its is distant from the family's core business, venture creation activities. interact with other family members to advance their venture. This study examined the 4. Jockeying in Family: Emulating family entrepreneurial journeys of two Mexican family elders’ entrepreneurial actions while and owned businesses for over two decades generating elements of newness, (1980s to early 2010s) during which their next 5. Jockeying around Family: Carving out generation members launched ten ventures. separate space for the venture by The authors identified distinct patterns of their broadening expertise while transferring external venturing practices. This summary generic competencies from core business. briefly describes the study and its implications. External Venturing Routes Followed External Venturing in Combining those practices, next-gen members Family Owned Businesses followed one of these external venturing routes: External venturing comprises entrepreneurial • Imitating the Family Business by obtaining activities of owner family members, leading to family approval and mimicking family venture. a new venture outside the existing business. It expands the boundary of family business • Surpassing the Family Business by activities. External venturing promotes trans- jockeying in the family, in addition to imitating. generational entrepreneurship, and helps next • Splitting the Family Business by bypassing generation members achieve their career and jockeying around the family. growth ambitions. It also addresses the next generation’s need to innovate and drive Practical Implications change. Therefore, it is crucial for next • In external venturing, next generation generation members to promote and grow members may adopt a ‘play it safe’ approach their external ventures. and copy the family’s venture and practices. Venturing Practices Adopted by • Others may create distinct ventures that are Next Generation Members ‘thoughtfully deviating’ or ‘strongly rebelling.’ The authors observed that next generation • Business families must support next members engaged in five distinct practices generation members in balancing their that helped their external venture achieve struggles and venture opportunities. This will interconnectedness with or autonomy from the minimize friction during external venturing. core business. These practices are as follows: Journal of Management Studies 1. Obtaining Family Approval: Discussing Source: (2020), DOI: 10.1111/joms.12566. and aligning the venture idea with the 2 ARTICLE SUMMARY The Uniplex Third: Enabling Single-domain Role Transitions in Multiplex Relationships - Jian Bai Li and Henning Piezunka Human relationships that span across multiple successor dyadic relationship experienced social and economic settings, are complex in stress because the father and son struggled to nature. The relation between two family figure out how to simultaneously treat each members who are also business partners, is other as superior in one domain and an example of such a multiplex relationship. ‘subordinate’ in the other domain. While some scholars find multiplex relation- ships more stable and productive, others find The Uniplex Third: Enabling Single-domain those, change-resistant and disruption-prone. Role Transitions The authors observed that the outgoing One aspect of multiplex relationships that business leader was anxious to lose respect in remains inadequately examined is, how a the family, while the successor was anxious of relationship evolves when individuals undergo not being able to come into his own as a full- a change in role-hierarchy in a single-domain fledged business leader. Mothers were found while the hierarchy remains the same in the to play a crucial facilitatory role in business other domain (as it happens during leadership succession. They calmed those intergenerational leadership succession in a anxieties and insecurities by being a trust- family business). This research analyzes worthy third party to both the father and son case studies of intergenerational leadership in the family, while remaining non-partisan in successions in seven Chinese family firms business dis-agreements. However, she was and examines how the transition unfolds in found to be effective only when she was not leader-successor multiplex relationships. actively involved in the business and was seen Role Transitions in as an objective third party. Thus, a uniplex third party can facilitate role change in one Multiplex Relationships domain while maintaining stability in the other. Multiplex relationships are dyads wherein interactions among the same individuals occur Practical Implications in multiple domains. Role-hierarchies to which The study has important implications for individuals get accustomed to, within one business families: domain, are naturally transposed to another domain. For instance, in a family business the • Women in the family can provide emotional father is a leader and the son a ‘subordinate’ stability to family members involved in role- in both the family and business. This multiplex hierarchy transitions during succession. relationship between father and son remains • Avoiding partisan positions in business stable till the role-hierarchy remains the same disagreements helps women preserve trust. in both the family and business domains. • Families need to value that a uniplex third However, leadership succession in business party (like, mother), could create positive changes this role-hierarchy in the business synergies between the family and business. domain, while the roles remain the same in the family context. Source: Administrative Science Quarterly, The authors found that the leader– (2020). Vol. 65, No. 2, pp. 314–358. 3 ARTICLE SUMMARY Corporate Political Activity and Sensitivity to Social Attacks: The Case of Family-Managed Firms - James G. Combs, Richard J. Gentry, Sean Lux, Peter Jaskiewicz, and T. Russell Crook Majority of businesses around the world are authors suggest that family firms which invest in family-controlled. Due to the owner family’s substantive CSR activities are even less likely desire to control the business and protect to engage in corporate political activities. socioemotional wealth family firms are known to be managed differently, compared to their Large Family Firms and CPA non-family peers. However, corporate political Large firms are often viewed as strategic activity of family firms (which includes targets for social attacks. The larger the firm, campaign contributions and lobbying) has not the easier it is for the attackers to attract public been probed adequately. This study examines attention, which maximizes their chances of data from 288 US family firms included in S&P success. When firms engage in CPA, they build 500, to understand whether family firms differ relationships with political entities through from non-family firms in their corporate lobbying, campaigning etc. These relationships political activities (CPA) and if so, why do act as an insurance mechanism for the firm family firms differ? This summary presents the against social attacks. As reputation study, its findings and practical implications. management (for fear of social attacks) drives CPA investments in family firms, large family Family Firms and CPA firms are likely to engage in CPA. Businesses and governments are dependent on each other. Therefore firms engage in CPA Key Findings such as, advocacy advertising, lobbying, and The results of the statistical data analysis reveal constituency building. However, firms that that family managers spend less on corporate engage in CPA are also prone to social political activities, especially when they are attacks, which are usually inflicted through engaged in substantive CSR activities. boycotts, protests and social media However, they engage in CPA considerably, if campaigns. Social attacks affect reputation