Most Asian conglomerates are family-controlled businesses. Succession in any family business is a tricky thing. We look at a few cases as part of the Asian Conglomerate Series.
Note: This is Part 12 in a series of articles and cases on Asian Conglomerates. Read Part 11 here. You may read more about the Asian Conglomerate Series here, or view all the published cases here.
The vast majority of Asian Conglomerates are family-controlled businesses. As a result, you would think that family succession is a big thing in the annals of Asian business. And you would be right.
The pros and cons of family-run businesses are well studied, and by this point fairly well known. At its best, controlling families — such as the Ochs-Sulzberger family (behind the New York Times), or the Fords (who still control a large chunk of the Ford Motor Company) — provide their companies with long-term vision, enduring values, and a steady hand. At its worst, ostensibly healthy businesses are crippled by family dysfunction.
This is a series on Asian Conglomerates, which means we must talk a little about succession. But in truth, whole books can and have been written about succession in family businesses. As such, succession is mostly out of scope for this series. We may return to this topic in the future, but for now, I want to talk about a handful of things that are related to the core themes we’ve already been looking at.
Political Influence, Skill, and Succession
We’ve published three cases on succession alongside this essay. They are:
- Succession in Samsung.
- Robert Kuok on Preventing a Group Fracture, and
- Robert Kuok giving way to his nephew in Giving Way in Wilmar.
One major element that is present with Asian Conglomerates, that is not present in many Western counterparts is the nature of passing on businesses when political influence and access lies with the patriarch.
This issue of access presents unique difficulties not often seen in Western contexts. In this series, we’ve already seen one hilarious example: when the South Korean government charged Samsung chairman Lee Kun-hee for corruption. Arguably, Lee was simply doing things that his father — Samsung founder Lee Byung-chul — did as part of the natural course of doing business. And thankfully for him, the balance of power that Samsung held over South Korea was such that Lee Kun-hee could walk away untouched. But the pattern then repeated with Lee Kun-hee’s son, though it now appear that Lee Jae-yong will also be able to walk away … though not as cleanly as his father.
The point, though, is that we’ve seen how regime changes may cause what was acceptable in one era to be unacceptable in the next; this … complicates succession — a matter that was already fraught to begin with.
In the grand scheme of things, this quirk of business in Asia is not that big a deal. Successions are messy because family relationships can be messy, and Asian families aren’t exactly well known for great communication. Samsung’s succession, for instance, was of interest to so many because of the way it unfolded like a palace drama:
Originally published , last updated .
This article is part of the Operations topic cluster, which belongs to the Business Expertise Triad. Read more from this topic here→
