A Study of Conflict Typology and Causative Factors Leading to Splits in Multigenerational Family Owned and Managed Businesses in India

Abstract

Family businesses are the backbone of all the free economies of the world. Statistical newlineestimates acknowledge that family owned businesses represent 60 to 70 percent of the newlineGDP in all free markets economies. Indian industry is largely dominated by family owned newlineand managed businesses and account for a significant contribution in socio-economicpolitical newlinespheres of the country. newlineFamily businesses have unique characteristics and competitive advantages. Entrepreneurial newlinespirit of the founder(s) and involvement of family members promote long-term newlinecommitment, loyalty, stability, and passion toward creating enterprise value. However, newlinetime and again, family businesses get overshadowed by internal squabbles and lack of newlinedynamism leading to sensational failures. Research estimates that only 30 percent of newlinefamily businesses survive beyond first generation and only 4 percent survive beyond third newlinegeneration. newlineA family business is a complex, dual system consisting of the family and the business. newlineEach system is has distinct, incompatible characteristics and its own rules, roles, and newlineresponsibilities. When these systems overlap, conflict occurs and intense conflict threatens newlinethe survival of the family business. Scholarly research on family businesses is a recently newlineevolved discipline and is still fragmented in its focus and findings. Conflict is a prominent newlinecharacteristic of family businesses. However, very little is known about how the conflict is newlinemanaged and what is its impact on the business and on the family. As organizational newlineconflict is an extensively researched subject, it provides insights and theoretical newlineunderpinnings for family business conflict. newlinexix newlineThis study aims to contribute to the research on conflict and its impact on family newlinebusinesses. It reviews and analyzes concepts, characteristics, and contribution of family businesses, overall and specifically in Indian context. Since liberalization of the economy,Indian businesses have been exposed to a plethora of business opportunities and at the same time, due to an onslaught