Niraj - Successor's Dilemma in an Indian Family Firm

Niraj, a young MBA participant, is in a dilemma regarding the family business in India. After a few years abroad, he is feeling pressure to join the business, but is not sure of what he "should" do -- being torn between strong expectations and loyalty to his family, and at the same time eager to try other career opportunities. This case, written by the Solvay Chaired Professor of Technical Innovation, Ludo Van der Heyden and Programme Director, Christine Blondel looks at the issues facing Niraj, the next generation of the family business.

by Ludo Van der Heyden, Christine Blondel
Last Updated: 23 Jul 2013

This case describes the dilemma faced by a young MBA participant, Niraj, regarding the decision to join his family's business in India. Such dilemmas are typical for many next generation members. They feel strong expectations put on them, have a sense of loyalty towards the family, and at the same time are eager to try other career opportunities. The first discovery made by participants in our MBA classes on family firms is that many of them feel this pressure and tension, and are relieved to be able to speak about it. This is one of the reasons why networking and sharing is so important for members of family firms.

The 'Niraj: Successor's Dilemma in an Indian Family Firm' case, written by the Solvay Chaired Professor of Technical Innovation, Ludo Van der Heyden and Programme Director, Christine Blondel looks at the issues facing Niraj, the next generation of his family's business from Niraj's perspective and reflects his perception at the time of the class. He went back to India over the following summer, and discovered that the expectations put on him were probably not as high as he had expected, even though his father and uncle wanted him to come back, probably believing that if he stayed away too long, he might not be interested any more. A lot of discussions and clarifications took place during that summer.

Very often, family members have unchecked perceptions and assumptions. A typical example is assumptions regarding the expectations put on them. Yet another discovery is that initiating conversations in the family around careers and the family business challenges one's initial perceptions. Communication, voice to everyone and clarity are indeed the first principles of Fair Process in family firms*.

Niraj was still very much tempted by careers outside the business, and, upon his MBA graduation took a consulting job in a prominent firm in a European capital. He stayed in touch with the family business; even more so when he moved to India for a job in the subsidiary of a global company in Mumbai. During that time, a private equity partner entered the family business, taking a 70% stake. That was rather unsuspected, given the initial reaction of the brothers to the first bank (for a much smaller stake). But the quality of relationships with the partners, as well as the need for the elders to ensure financial security for themselves and their wives, played an important role in this decision. Another learning is thus that situations change, sometimes unexpectedly, meaning that the context for decisions changes as well!

While the case is presented as Niraj's dilemma, it equally illustrates many aspects of a typical medium-size family business with strong family values: development, governance (the family owner-managers taking the key decisions), culture, links with stakeholders, family ties and the role of women - where spouses are involved but daughters much less.

The family created a holding company to keep their 30% stake, and to start some diversification. Niraj's uncle managed this holding, while his father and cousin were managing the business. Niraj finally joined his uncle and now works in the holding company. Throughout the years, he came closer to the family business - and to the family - getting a sense fulfilment and "doing the right thing", by getting more and more involved.

* Fair Process: Striving for Justice in the Family Business ", Family Business Review, etc…

INSEAD 2003

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