SPJIMR unveils India: State of Family Business Report 2023
September 25, 2023
SPJIMR’s study reveals family dynamics as a key challenge for Indian Family Businesses, surpassing market volatility
Key Findings:
- Most Indian family businesses are micro or small enterprises, with a strong presence in the service sector.
- A significant 83% of manufacturing businesses fall into the micro or small category, in contrast to 73% in the service sector.
- The tradition of multi-generational involvement persists, with the first and second generations actively engaged in 70% of family businesses.
- Family ownership is predominant, as 51% report 100% family shareholding, demonstrating a commitment to control retention.
- Emphasizing the closely held nature of Indian family businesses, 63.3% hold over 75% of the shares.
- A rising trend of female involvement is observed, particularly in managerial roles.
- While 40% of family businesses have women as owners, the majority (54.7%) have female members actively managing the business.
- Female representation at the CEO and senior leadership levels remains limited.
- Family values and codes of conduct are deeply ingrained in business operations.
- Challenges related to succession planning and business continuity are central concerns for many family businesses.
- Only about a quarter of the family businesses reported adopting digital and/or new technologies as their key priority.
- SMEs, particularly micro family businesses, are shifting towards online sales, showing a notable contrast to their larger counterparts.
Bharatiya Vidya Bhavan’s S. P. Jain Institute of Management & Research (SPJIMR) presents “India: State of Family Business Report 2023.” This comprehensive report offers invaluable insights into the intricacies of family businesses in India, shedding light on their challenges, successes, and evolving strategies.
SPJIMR’s Centre for Family Business & Entrepreneurship report draws on a profound analysis and extensive surveys involving 357 family businesses from 17 cities across India. It provides a detailed exploration of the core attributes of Indian family businesses, with particular emphasis on small and medium-sized enterprises (SMEs).
The report reveals that family businesses in India predominantly consist of micro and small enterprises, significantly contributing to the nation’s business landscape. Notably, 83% of manufacturing businesses were micro or small, compared to 73% in the service sector. This highlights the prevalence of smaller-scale enterprises among the FBs surveyed.
Dr. Varun Nagraj, Dean of SPJIMR, said, “The study underscores the critical role of family businesses in India’s economic landscape. It provides valuable insights into their contributions and challenges, reaffirming the resilience of these enterprises. At SPJIMR, we are committed to fostering the growth and vitality of family businesses, and this report is a testament to our dedication to this sector.”
Generational involvement remains significant, with the first and second generations actively participating in 70% of the businesses surveyed. Family ownership and control are paramount, with 51% of enterprises reporting 100% family shareholding, emphasising the closely held nature of family businesses in India.
Tulsi Jayakumar, Executive Director of the Centre for Family Business & Entrepreneurship at SPJIMR, added, “This report delves deep into the heart of Indian family businesses, exploring their intricacies, values, and ambitions. It showcases their commitment to maintaining control and fostering growth while facing various challenges. We believe this report will serve as a valuable resource for family business leaders, policymakers, and stakeholders invested in the success of this vital sector.”
The report indicates a rising trend of female involvement in family businesses, especially in managerial roles. While 40% had women as owners, a majority, 54.7%, had female members actively managing the business. The report also underlines the complexity of succession in family businesses. While many intend to pass the baton to the next generation, uncertainties, including capability, interest, and conflicts, often delay the transition.
Beyond these challenges, the report highlights the digitalisation journey of family businesses. While approximately 25% of family businesses prioritise digital and new technologies, the majority are embracing online sales for diverse reasons. Notably, SMEs exhibit intriguing preferences regarding digitalisation timing and methods, including their choice of e-commerce platforms, marketing strategies, and future online sales initiatives.
Despite evolving challenges, the report highlights the adaptability and resilience of Indian family businesses, with a majority of FBs reporting stable or increasing sales, market share, employment numbers, profitability, and financial indicators in FY 2022-23.
The “India: State of Family Business Report 2023” is now available for download on the SPJIMR website. Download now
About SPJIMR: S. P. Jain Institute of Management and Research (SPJIMR) is a constituent of Bharatiya Vidya Bhavan (BVB), India’s acclaimed and oldest educational trust. With its unique and distinctive approach to management education, SPJIMR aims to influence managerial practice and advance wise innovation through its teaching, research, and community engagement. For media inquiries, please contact mediarelations@spjimr.org