Family businesses reshaping economy: ISB study

There has been an upsurge of debt in the services sector which meant that growth in total debt of the family firms in the manufacturing sector has slowed down considerably.

By   |  Published: 3rd Aug 2020  6:17 pmUpdated: 3rd Aug 2020  6:18 pm

Hyderabad: Thomas Schmidheiny Centre for Family Enterprise at Indian School of Business (ISB) released a study that reiterates how family firms are playing a catalytic role in reshaping Indian economy and charting new vibrant businesses portfolio.

The white paper titled – ‘Family businesses and India’s transition to a service-led economy (1991 – 2018)’ found that Indian family firms moved from manufacturing to services post-liberalization and then from traditional to modern services as the millennium ended.

Using the data of companies listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), the study analysed industry-wise affiliation of 4,589 companies over a period of 28 years.

The study underlined the family firms’ willingness to adapt to rapidly growing sectors such as digitisation and IT shows their agility and hunger to succeed.

This study reinforces the importance of family firms to the Indian economy and dispels any doubts that Indian family firms have failed to catch up with the evolving trends in the economy.

The key findings from the study are family businesses have transitioned to services and have subsequently dominated the space.

The businesses transition to modern services happened in the early 2000s and sectors like financial services, IT and technology, and telecommunications have been the strongest in the past 25 years.

There has been an upsurge of debt in the services sector which meant that growth in total debt of the family firms in the manufacturing sector has slowed down considerably.

Appropriate policy incentives and interventions will facilitate family firms to contribute more extensively to employment, trade, and domestic output.