Thailand Business News
  • Shop
  • Newsletter
  • My Account
    • Account details
    • Cart
    • Checkout
    • Lost password
Latest
  • How Asia could be the winner in the US and China’s Belt and Road race May 21, 2022
  • Thailand Pass eased for international arrivals from 1 June 2022 May 21, 2022
  • SET welcomes beverage manufacturer “PLUS” on May 20 May 19, 2022
  • Thai Banks remained resilient in the first quarter of 2022 (BoT) May 19, 2022
  • Investing in ‘Playful learning’ could add $2.54 trillion to the global economy May 19, 2022
Thailand Business News
  • Asean
  • Banking
  • Business
  • China
  • Economics
  • Press Release
    • Asia Pacific News
    • Submit a Press Release
  • Real Estate
  • Tech
  • Tourism
Follow
10K
4K

Sign Up for Our Newsletter

Get notified of the best articles of the week

  • Companies
  • Corporate

What Family Firms Need to Ensure Longevity

Accounting for 70 percent of global GDP and 60 percent of global employment, family firms are among the main drivers of growth and innovation in today’s economy.
  • 3 minute read
Share
Tweet
Share
Share
Share
Up next
APEC’s role in facilitating regional integration for the well-being of all
Published on 23 November 2017
Author
Insead Knowledge
Share article
Facebook
LinkedIn
Twitter
Mail
Line
Table of Contents Hide
  1. The professionalisation of leading family firms
  2. The champions
    1. About the author

The importance of family business longevity extends far beyond family owners. Accounting for 70 percent of global GDP and 60 percent of global employment, family firms are among the main drivers of growth and innovation in today’s economy.

While strong brands, deep relationships and long-term ownership allow the best performing family businesses to adapt swiftly to an evolving competitive landscape, the family business ownership model carries with it inherent weaknesses.

Three Thai families – Chearavanont, Chirathivat and Yoovidhya – are now included in the Asia’s richest families of 2017 list published by Forbes magazine. 

Two of the richest Thai families are in the top ten of Forbes, claiming fourth and tenth spot.

For the first time The Yoovidhya family, the maker and marketer of Krating Daeng and gold Red Bull energy drinks in Asia, has made the 2017 Forbes list of Asia’s richest families, trailing two other notable Thai clans: the Chearavanonts and the Chirathivats.

The professionalisation of leading family firms

Chief among these is the challenge of maintaining effective leadership over the generations. Indeed, family leaders often postpone or avoid succession planning, and next-generation family members may lack the expertise or desire to run the business.

Family businesses also often suffer from suboptimal corporate governance – as studies show that they have less diverse and impactful boards than non-family firms – and often struggle to attract and retain top professional talent.

In our latest report, “The Institutionalization of Family Firms”, we surveyed 123 family businesses to understand the characteristics of successful family firms in Asia-Pacific and the Middle East. Outperformance of a subset of these family firms – the “champions” – underscores how introducing formal policies, procedures and professional best practice supports leading family firms’ operations and long-term health.

The champions

The exhibit below presents the main takeaway from our research: the significant jump in institutionalisation between first- to third-generation family firms and fourth-generation firms and beyond.

Each bar in the graphs shows the average institutionalisation score of our survey participants by generation, with the different colour segments of each bar representing the contribution to the total score of the six attributes measured in our survey.

Exhibit 1

To enable user-friendly analysis, we combine first-, second- and third-generation family firms (“ascendants”) and fourth-generation and beyond (“champions”) into two groups. In addition to outperforming in aggregate, champions outperform ascendants on each of the six attributes measured in our survey, underscoring the proficiency gap across business functions between these two groups.

So what caused this proficiency gap? Reviewing survey data by attribute, we found the following:

  • Professional boards: 34 percent of ascendants didn’t have a board and 21 percent had a board consisting only of family members. Champions were twice as likely to have boards with independent directors and appropriate sub-committees.
  • External capital: 55 percent of champions had a public market listing vs. 18 percent of ascendants. Champions were also more likely to have raised equity capital from external investors, including private equity (PE) funds, strategic investors and high-net-worth individuals.
  • Monitoring and information systems: Champions monitored KPIs every month on average – vs. quarterly for the ascendants – and leveraged enterprise resource planning systems more frequently. For example, 64 percent of champions used a customer relationship management tool vs. 31 percent of ascendants.
  • M&A: 55 percent of champions had in-house corporate/M&A departments…

Read More

About the author

Insead Knowledge
Website

INSEAD Knowledge is the expert opinion and management insights portal of INSEAD, The Business School for the World. Knowledge showcases the latest business thinking and views from award-winning faculty and global contributors

  • Insead Knowledge
    https://www.thailand-business-news.com/author/inseadknowledge
    How the Rural-Urban Divide Plays Out on Digital Platforms
  • Insead Knowledge
    https://www.thailand-business-news.com/author/inseadknowledge
    How Boards Can Steer Companies to “Build Back Better”
  • Insead Knowledge
    https://www.thailand-business-news.com/author/inseadknowledge
    Why Thai Firms Should Care About the Career Stage of China’s Officials
  • Insead Knowledge
    https://www.thailand-business-news.com/author/inseadknowledge
    Skin-lightening products market to reach US$31 billion by 2024

Leave a Reply Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like
How the petrochemicals industry can reduce its carbon footprint
  • Economics
  • Companies
  • Corporate

Thai Industries Sentiment Index showing a 3-month consecutive growth

The Federation of Thai Industries (FTI) said the Industries Sentiment Index (ISI) for November 2021 stood at 85.4 points, showing a 3-month consecutive growth from the improving COVID-19 situation.
  • National News Bureau of Thailand and Headline Editor
  • December 8, 2021
  • Corporate
  • Press Release

Bangkok drops 12 places in global cost of living index

Thai cities have fallen in the rankings of the world’s most expensive locations for overseas workers globally, with Bangkok dropping 12 positions to 57th place, and all other Thai cities moving out of the top 125 locations globally.
  • Pr News and ECA International
  • December 15, 2021
  • Corporate
  • SET

How Thai businesses can manage modern slavery risks?

New tools developed in conjunction with with the Stock Exchange of Thailand and Finance Against Slavery and Trafficking have launched.
  • Pr News and Headline Editor
  • December 29, 2021
Must Read
    • Tourism
    Thailand Pass eased for international arrivals from 1 June 2022
    • 2 minute read
    • China
    • Investment
    How Asia could be the winner in the US and China’s Belt and Road race
    • 2 minute read
    • Banking
    Thai Banks remained resilient in the first quarter of 2022 (BoT)
    • 2 minute read
Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 14,281 other subscribers

PR News
  • The Best Places to Visit in Thailand
    The Best Places to Visit in Thailand
  • Myanmar Government Approved USD 3.82 Billion in Foreign Investment and USD 651 Million in Domestic Investment in First Year of State Administration Council
    Myanmar Government Approved USD 3.82 Billion in Foreign Investment and USD 651 Million in Domestic Investment in First Year of State Administration Council
  • CryptoBiz to setup operations in Thailand, with Rahul Rathod spearheading Global Expansion
    CryptoBiz to setup operations in Thailand, with Rahul Rathod spearheading Global Expansion

How Asia could be the winner in the US and China’s Belt and Road race

This infrastructure race will clearly have a major impact on the future of global trade…

Thailand Pass eased for international arrivals from 1 June 2022

Foreign nationals are still required to apply for a Thailand Pass but will only need to…

SET welcomes beverage manufacturer “PLUS” on May 20

The Stock Exchange of Thailand (SET) will list Royal Plus pcl, a manufacturer and…

Thai Banks remained resilient in the first quarter of 2022 (BoT)

Banks’ overall loan quality in the first quarter of 2022 remained stable from the…
Thailand Business News
10K
4K
  • Advertising
  • Community Standards
  • Cookie Policy
  • Newsletter
  • Privacy Policy
  • RSS Terms
  • Terms of Use
  • Contact Us
Developed by Siam News Network
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT