Family systems and cultural factors impacting to succession of Indian and Japanese family businesses: Evidences from literature review

Family businesses play a key role in the Indian economy through their contributions to the country’s business growth and stability. Family businesses in India account for a whopping 79 percent of the national GDP. With 111 publicly-traded family-run companies valued at USD 839 billion, India is home to the third-largest number of family businesses globally. As new generations join the family business, it is an enormous challenge to keep the family & business together. It has been observed that just 13 percent of the family business survive till third generation & only four percent go beyond the third generation and one third of business families disintegrate because of generational conflict. Family Businesses form the backbone of the Indian economy and hence there is a need to extend the life span of the family businesses so that the economy can continue to derive benefit from their contribution. For many Japanese heirs, taking over the family business is not about increasing wealth, but rather about running the business their ancestors founded to preserve an old legacy. A global study shows that adherence to family values is the main reason why Japan has the oldest family businesses in the world. This research paper surveyed the literature on family system and family business of India and Japan particularly how family system impacts on a succession matter. Researchers began to understand family systems and cultural linkages using Hofstede’s cultural dimensions and explored two countries’ family systems including historical perspective. It was also analyzed how such family systems influence family business succession. This allowed the researchers to compare family systems of two countries and respective behaviors of successors. The study provided typical secondary cases from Japan as an example that demonstrate family system impacts on family business succession.