|Date:||20 October 2017|
|Venue:||NUS Business School
Mochtar Riady Building
Innovation -3a (#03-07 Seminar Room)
|Presenter:||Senior Research Fellow Alex CAPRI
Professor CHUNG Chi Nien
Associate Professor LAN Luh
Professor David Mitchell REEB
|Moderator:||Associate Professor Lawrence LOH|
Event Summary and Power Point Slides
Business leaders from the region including Indonesia, Malaysia and Singapore attended a Masterclass Series on Family Business in a forum organised by the Centre for Governance, Institutions and Organisations (CGIO) of NUS Business School on Friday, 20 October 2017. The forum took place in NUS Business School’s Mochtar Riady Building, seminar room Innovation -3a. Approximately 90 participants signed up for the Masterclass forum.
The lectures were delivered by four of NUS Business School’s faculty members; Professor CHUNG Chi Nien, Associate Professor LAN Luh, Professor David Mitchell REEB and Senior Research Fellow Alex CAPRI. The forum concluded with a panel discussion moderated by Associate Professor Lawrence LOH.
The Masterclass Series on Family Business covered four topics with the following salient points:
1. Professor Chung Chi Nien’s topic: 3 myths about Family Business
Popular beliefs and the oft quoted ‘wealth does not pass 3 generations’ seemed to suggest family businesses is short lived and can’t drive economic growth. The fact is, family businesses account for a majority of enduring businesses in both developed and developing economies.
Prof Chung also debunk the myth that professional management is superior to family management in enhancing firm’s performance. In addition, his research shows there is a threshold for the maximum number of both family and professional management members that would enhance a firm’s performance.
The author has requested that his slides are not to be uploaded.
2. Associate Professor LAN Luh: Structuring for Succession – Legal Aspects
The issue of ownership and control is a strategic deliberation for family businesses that needs to be considered before succession issue is looked at. Once there is a clear understanding of this 2 distinct yet important phenomena, family businesses could think about the various options that comes with succession planning. Prof Lan took the audience through options such as total transfer of ownership, split ownership, setting up of trusts and holding companies. Each option and its implications were also discussed at the lecture.
Associate Professor LAN made an interesting point that in her previous consulting career, she often advised the conflicting family members to settle their problems out of court rather than in court. This would avoid media attention and also being the subject of case studies in classes.
Associate Professor LAN’s slides can be accessed here: CGIO Masterclass - Prof LAN Luh Luh -Structuring for Succession, Legal Aspects
3. Professor David REEB: Family Firm Innovation – Inhibited or Stealth
Generally research shows that family businesses spent less on research and development as well as issue fewer number of patents in comparison to non-family business firm. This would suggest family firms lack innovation. But there are many good reason why family businesses chose not to issue patents for new products. One reason would be most family firms would consider innovating in ‘stealth’ as a better option to leaking out trade secrets through patents.
Prof REEB”s research on introduction of new products showed that those developed by family businesses do match or even outnumber the number of patented products in the market.
Professor REEB also made a compelling case for the merits in issuance of dual class shares where family firms with greater control in ownership through dual class shares give better financial returns to its shareholders. The higher returns are achieved with substantial innovation by family businesses that has a controlling stake in the company.
Professor David REEB’s slides can be accessed here: CGIO Masterclass – Prof David REEB - Family Firm Innovation
4. Senior Research Fellow Alex CAPRI: Family Business and Digital Economy
For family businesses, especially small and medium sized enterprises, the digital economy is a boon rather than a bane. Alex took the audience through the 4 D’s of disruption – digitization, densification, diversification and decentralisation and explained how each aspect enables a business to be nimble and offers bespoke products. In addition, the use of cloud computing reduces the costs of customers’ profiling as well as product and customer tracking, Alex also pointed out that family business would need to synergise their business strategy with that of a digital strategy to capitalise on the many benefits digital transformation brings.
He ended by stating that there is never a better time than now, especially for small businesses to take advantage of the digital economy and grow the business.
Senior Research Fellow Alex CAPRI’s slides can be accessed here: CGIO Masterclass - Prof Alex CAPRI - Family Business and Digital Economy
Some of the questions and comments raised at the panel discussion included:
- Traditional versus new ways of working norms.
- The tensions between keeping the accumulated wealth for the next generation and using that wealth to generate new products, growing the business and creating social impact.
- How do family businesses decide what transformation is needed versus what core parts of its businesses need to be retained to maintain its identity without losing its competitiveness?
- The rate of digital adoption in Singapore versus rest of the world