Family businesses outgrow family control and management. This has been the experience of the developed world. Practically all enterprises that grew into global giants in due course started as family firms. Lever Brothers, Du Pont, Ford all went through this process. Is Indian big business moving in this direction?

It is significant that as many as 12 of the Indian business houses that occupied centrestage in 1951 (Tata, Birla, Dalmia-Sahu Jain, Kirloskar, Shriram, Lalbhai, Walchand, Thapar, Mafatlal, Mahindra, Bangur, and Singhanias) were still among the top 100 groups, according to a list drawn by Business Today in 1997. If we also include the splinter groups, born out of the splits, the number of such houses would go up to 19. This means that almost one-fifth of the total number of prominent business houses have remained under the firm control of the promoting families for several decades.

With the exception of the Tatas, all major enterprises in these groups are headed by the members of the promoting families; and the succession to the top leadership of a group is normally synonymous with the succession in the family. No one conversant with the situation in the Indian corporate sector was surprised when a young and still rather inexperienced Kumar Mangalam Birla was appointed to the group chairmanship after his father Aditya Vikram passed away a few years ago in the prime of his life.

A similar thing had happened in the house of Tatas also when a 34-year-old and still rather raw J.R.D. Tata was placed at the top of the Tata organisation in 1938. Another Tata, Ratan, took over the reins from him in 1991. But the fact that with somewhat better luck the job could have gone to a non-Tata, tells something about the change that had occurred in the managerial structure of the house during the intervening 53 years. Nani Palkhivala, Russi Mody, Sumant Moolgaokar, Darbari Seth, K.M. Chinnappa, to mention only a few, had become almost household names in the business world by the time J.R.D stepped down. What Ratan Tata inherited from his predecessor, thus, was not a family business but, in the words of Darbari Seth, a 'commonwealth' of enterprises.

Why have the other business houses in our sample not moved in this direction? Is it because their leadership has been much closer to the traditional family system in India than J.R.D, who with his western-orientation, consciously nurtured the change? Is it because the family somehow could not produce sufficient number of Tatas to preside over the destinies of the constituent units of the vast empire? Or was this kind of change a natural consequence of the kind of industries the house promoted?

Be that as it may, the other groups in our sample have taken a different route to professionalisation: education and training. The older generation of leaders in most of these houses were meagerly-educated and could boast of little technical expertise. Their successors in contrast have come to the helm after receiving relevant training. Unlike their predecessors, they have a much better understanding of the world around them; with their technical understanding, they can lead from the front; and with their exposure to the managerial structures in the developed world, they are in a much better position to perceive the value of introducing appropriate innovations in their own managerial systems. Whether this, coupled with the mounting pressure on the joint family system as a result of growing urbanisation, will lead to the weakening of the family management is anybody's guess.

Going by the experience of the developed world, family firms normally go through a considerable time-lag before they outgrow the founding families. The experience of the businesses that has come into being in the recent past, therefore, may not be relevant for our purpose. But one occasionally hears voices emanating from these quarters the like of which was seldom heard from the older generations. Addressing a gathering at Ahmedabad recently, Sunil Bharti Mittal asserted that he had no intention to remain at the helm of the firm beyond a point and would certainly not expect his children to succeed him. Is this a pointerof things to come or just a pious wish of a young mind?