No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
Family business reassessed: corporate structure and late-starting industrialization in Thailand
Abstract
The family business still remains a dominant form of business group management in Thailand. One reason is the underdevelopment of both domestic capital markets and the joint-stock company form of business organization. In addition the "zaibatsu' has proved able to carry on internal reform, or adapt to changing business environments. In concrete terms, this means improvements in management practices, willingness to employ personnel from outside the controlling family, and forward-looking, innovational enterprise operations. -from Author
... The rise of a more skilled new geneneration with its high level of education and international experience is observed also in generational transitions of business groups in other countries such as Thailand and South Korea (Lee and Yoo, 1987;Suehiro, 1993). The new generation family members have higher levels of formal education, usually with graduate degrees from the U.S. or Europe (Kim, 1996;Lee and Yoo, 1987). ...
... The new generation family members have higher levels of formal education, usually with graduate degrees from the U.S. or Europe (Kim, 1996;Lee and Yoo, 1987). Instead of being exposed to traditional education and commercial practices, they have learned modern concepts of management, new technologies and been part of a new network of personal relationships (Suehiro, 1993). ...
... The rise of a more skilled new geneneration with its high level of education and international experience is observed also in generational transitions of business groups in other countries such as Thailand and South Korea (Lee and Yoo, 1987;Suehiro, 1993). The new generation family members have higher levels of formal education, usually with graduate degrees from the U.S. or Europe (Kim, 1996;Lee and Yoo, 1987). ...
... The new generation family members have higher levels of formal education, usually with graduate degrees from the U.S. or Europe (Kim, 1996;Lee and Yoo, 1987). Instead of being exposed to traditional education and commercial practices, they have learned modern concepts of management, new technologies and been part of a new network of personal relationships (Suehiro, 1993). ...
The paper explores the involvement of family members from different generations at various levels and functions of Turkish family business groups as well as their educational background and international experience. The sample is composed of 57 family members who are involved in eight prominent family business groups in 2008. The results show that a higher percentage of the old generation family members hold directorship positions at the holding board and at listed affiliates while a higher percentage of the young generation family members have executive positions at the affiliates. With their pervasive involvement at both holding company and affiliate levels in boards and executive positions, owner families seem to both rule and manage the family business groups. The results also show that in both the older and the younger FBGs, the younger generation family members have significantly higher levels of education and international experience.
... Second, while the use of pyramid structures and crossholdings is common in many countries, use of these control features is not common in Thailand (Claesens, Djankov, and Lang, 2000). As a result, informal business alliances form among different families in Thailand, where one family in the alliance takes the role of controlling shareholder (Suehiro, 1993). This multi-family structure focuses the role of directors as a means to mitigate agency conflicts between members of the alliance. ...
The relation between executive pay and firm performance has been studied extensively for many economies around the world. To date, studies focus on the use of compensation contracts to align interests of executives with those of owners. However, the primary agency conflict in family firms is between the controlling family and minority owners while the primary agency conflict in widely-held, non-family firms is between owners and managers. Recognizing this, we investigate whether pay-performance relations differ between directors and managers depending on ownership structure. Prior studies of Asian firms investigate the pay-performance relation for either directors or managers, but not both. A unique feature of this study is that we examine how ownership structure affects the pay-performance relation for both directors and managers. Using a unique data set composed of 218 Thai firms, we document that firms with higher levels of family ownership demonstrate a strong link between director, but not managerial, compensation and performance. Conversely, firms with lower levels of family ownership tend to link managerial, but not director, compensation to performance. We find consistent results when controlling for the quality of a firm's corporate governance practices. Our findings support the notion that the primary agency conflict in family firms is between the controlling family and minority owners, while the primary agency conflict in non-family firms is between owners and managers.
... Unlike local¯rms in Japan and Korea, most Thai¯rms started their businesses from trading activities. There were very few industrialist business groups [Suehiro (1993)]. Many Thai family businesses later formed JVs with foreign¯rms which own proprietary technologies. ...
This paper examines how a sectoral innovation system evolves over time and what the underlying factors derive from the development of automotive industry in Thailand which is presented as a case example. Since 1960's, the government policies and the development of liberal investment climate have been a push for the influx of large-scale foreign direct investments (FDI) in Thailand. Automotive industry has also been targeted as a major assembly base of foreign carmakers while the local suppliers were mostly slow and passive learners. In the late- 1990's, foreign carmakers began acting as "lead" firms to invest in R&D and related activities. This induced positive coevolution in other actors, especially the first-tier foreign suppliers and some local suppliers, in the sectoral innovation systems which, in turn, became stronger, more coherent and product-specific. According to Thailand Automotive Institute (TAI), the production volume is expected to grow to two million units by 2015 which would bring Thailand to be on the top-ten list of the largest auto-producers in the world. This research paper has implications on the concept of sectoral innovation system, corporate technology strategies and government technology and innovation policies.
... For two main reasons, family businesses attempt to create highly diversified groups, often in unrelated areas. First, the owner families seek to diversify their business lines and products to spread risk (Suehiro, 1993). Evidence suggests that managers who own their firms are more likely to diversify due to their greater need for risk reduction (see for example, Danis et al., 1997). ...
Large diversified firms have been a dominant factor in the economies of many developing countries. Nonetheless, they have received only limited research attention, and consequently our knowledge of the nature and extent of their behaviour is limited. This research sought to contribute to filling this gap. Analysis of 163 diversification moves undertaken by 44 firms in various developing countries shows a considerable variation across developing regions and over time in terms of the objectives that drive the diversification activities and the strategies pursued to implement them. This variation can largely be attributed to specific characteristics of countries and regions that affect the behaviour of firms.
... The family based system is appropriate in countries with incomplete markets, imperfect legal systems and where property rights are not well defined (Suehiro 1993;La Porta 1998;Williamson 1995). Enforcement of the laws that may exist could also be haphazard. ...
This research focused on the Chinese family owned businesses listed on the Bursa Malaysia’s Main Board, Second Board and Mesdaq. Using a combination of qualitative and quantitative approaches, this research was largely exploratory in nature. The objectives were to determine the adequacy of Government policies, the extent and nature of the corporate governance (CG) practices of the Malaysian Chinese business community (MCBC) and the impact of culture on such practices. Other important objectives were to offer recommendations for good CG practices as well as to identify issues meriting further research.
CG became prominent as a result of the 1997 Asian Financial Crisis. The multitude of corporate failures and the scale of its impact caused several authorities to categorically identify CG as an important trigger for the crisis.
Since Malaysia was hit by the crisis, the Government and its various agencies took immediate and drastic measures, including capital controls, to stem the domino effect from propagating into all sectors. The Government’s initiatives included the formulation of the Malaysian Code of Governance and the strengthening of the regulatory framework for the more effective functioning of the Securities Commission and Bursa Malaysia.
The Malaysian Chinese business community (MCBC) has long dominated the Malaysian economy and the corporate sector. Its operations are characterized by high levels of ownership concentration, cross holdings and significant management control.
Despite the government’s race based affirmative policies, including the New Economic Policy, the Chinese remained remarkably persistent. The research findings revealed that this was largely due to their business practices being guided by the teachings of I-Ching, Confucianism and Taoism.
The research also revealed that Chinese business philosophy (which is largely family control) generally does not lend itself to transparency and disclosure. The situation is however changing with the advent of globalization. This is creating the need for high technology products and services as well as for capital and expertise from outside the family circle.
Three research propositions were tested by this research. They were developed from the gaps in the existing scholarship on the research topics. Based on the analysis of the secondary data and the primary data collected through a focus group and a questionnaire survey, this investigative study resulted in several research findings. These showed that Malaysia has a good CG framework. However, the CG practices in the Malaysian Chinese family businesses warranted improvements.
The findings also permitted the crafting of several recommendations for consideration by the public authorities and the MCBC. It also generated new theory as reflected by a modified Family Based CG System to more appropriately explain the CG practices of Malaysian Chinese family controlled businesses.
... Donckels and Frohlich (1991), for example, noted a common feature of family businesses in European countries, namely that financial independence has been observed as the most important objective for family firms and that family capitalism is considered as the preservation of the ''fortunes'' of the family. Therefore, for the family to retain controlling ownership of the business and its finances, they have to rely more on internal funds than on external sources (Suehiro, 1993;Useem, 1984, p. 177). Similarly, by studying family firms in Australia, Smyrnios et al. (1998) wrote that the proportion of capital in the family's hands is one of the key determinants of the type of financing family businesses resort to, whether it be capital gains, business savings, or loans from the family or financing institutions. ...
The relationship between family ownership and business expansion is the subject of controversy among researchers. This article expands on the mediating role of financing preference in the context of family small and medium enterprises (SMEs) in China. In the research programme, the relationship between family ownership and business expansion was empirically examined using data collected from a survey of 206 Chinese family businesses in Henan Province. On one hand, the results show family ownership has a negative effect on a firm's total expansion level and a positive effect on a firm's internal financing preference (ratio of internal to external funds). On the other hand, we found an inverted U-shaped relationship between family ownership and a firm's annual expansion rate. The findings of this research generally indicate a complex relationship between family ownership and family business expansion: (a) Family businesses have a tendency to stagnate; stagnation is therefore a factor in the mediating role of financial preference on business expansion in size. (b) The presence of external equity partners may reduce the limitations of full family ownership; however, selling the majority of the firm is not an effective way to achieve rapid expansion.
... Family-owned businesses are important factors in the growth and internationalization of emerging economies (Barton & Wong, 2006; Gallo & Pont, 1996; Kim, Kandemir, & Cavusgil, 2004; Suehiro, 1993; Yeung, 2005). Recent studies suggest that family businesses may have performance advantages over non-family firms. ...
This paper attempts to understand the role of two highly relevant founder family characteristics, harmony among family members and the degree of democratization in decision-making, in the institutionalization and adaptive capability development processes of family firms in Turkey as an exemplar of an emerging market. The paper examines how institutionalization and adaptability jointly drive firm-level differences in quantitative (i.e., sales growth, market share, and return on investment) and qualitative performance (i.e., quality of goods/services, new product development, employee satisfaction) components. Data were collected from 436 respondents in 132 family firms through structured questionnaires administered to at least three respondents from each firm. Findings indicated that among the institutionalization dimensions, transparency had the strongest effect on both quantitative and qualitative firm performance, whereas adaptability influenced qualitative performance only. Harmony in family relations increased efforts for institutionalization, whereas democracy in decision-making enhanced adaptability. Implications of these findings are discussed and several future research directions are suggested.
... According to Suehiro (1993) the family business can be thought of as a form of enterprise in which both the ownership and management are controlled by a family kinship group either nuclear or extended, and the fruit of which remains inside that group, being distributed in some way among its members. 4 ...
This study examines the effect of family ownership structure on capital market development in four Association of Southeast Asian Nations (ASEAN) countries, namely, Thailand, Malaysia, Indonesia, and the Philippines using panel data analysis. The results indicate that greater family influence in the stock exchange has detrimental effect on capital market development. The results can be considered valid as three alternative capital market development indicators, namely stock market capitalization, total share value traded, and number of companies listed are used.
This chapter examines six periods in Thailand’s history since the 1950s which contain periods with a single veto player with low vulnerability, a single veto player with high vulnerability, very many veto players with low vulnerability, and very many veto players with moderate vulnerability. The temporal variation allows us to observe the sequence of changes that occurred in the policy environment and economic governance institutions in reaction to the changes in political constraints. As expected, greater systemic vulnerability led to fewer political rents and more coordinative institutions in single veto player government periods but had little impact under very many veto player government periods.
Historical perspective offers valuable insights into the origins and purposes of inter-firm networks and business groups, and questions simple distinctions between 'marketized' Western and 'networked' East Asian systems. The 19th century witnessed a rapidly expanding global economy and the spread of colonialism, and Western multinational enterprises and indigenous enterprises significantly influenced each other's development. Both relied on networks of trust relationships, shared investments, and entrepreneurial deal-making suited to Asia's developing trade-orientated economies. After the Second World War, decolonization forced Western multinationals to withdraw, and reformed and newly-established nation states encouraged the growth of local business groups. Analysis demonstrates the importance of international and market factors in shaping business systems, and subsequently, the relevance of both government policy and external influences. The reliance of multinationals on global networks since the 1990s has historical antecedents, and re-emphasizes the impact of international trends on national business systems. © 2017 R. Fitzgerald Published by Elsevier Ltd. All rights reserved.
One of the factors that affect Indonesia's economic growth is the existence of business firms. It cannot be ignored that most business firms in Indonesia is family owned firms, and which are considered to constitute as the backbone of the economic development. Family firms represent the most enduring business model in the world. The continuing success of family firms through the generations relies on ensuring the next generation. However, the issue of family firms is rarely discussed in particular from the perspective of corporate law. In fact, from legal perspectives, there is some issues deal with this type of firms, amongst other, the lack of an overall definition of the term “family business”. It is because family businesses and small medium enterprises (SMEs) are widely understood synonymously in spite of the fact that they exist in every size class. Other issue is the questions of its legal basis or legal framework in terms of its corporate governance. Many Indonesian business players lack the basic understanding of corporation’s law. It is partly because these obligations are incompatible with the values and cultures in Indonesia where “kinship principle” is deeply rooted. This article aims to describe the characteristics and the legal frameworks for the family firms in Indonesia. It also recommends the government to take progressive measure by providing clear regulations on the family firms in Indonesia. This will reinforce family firms contribution in economic development of Indonesia in the future.
This article begins by pointing to the distinctions made between control, rule, and management to be employed as a guiding framework in examining continuity and change in leadership. This is accompanied by a review of the earlier literature that has had something to say on the way family business groups are run. This article then turns to identifying and discussing the different perspectives that have informed more recent studies, followed by an assessment of the scant empirical evidence that is available. The penultimate section considers the benefits of bringing in a power perspective, largely neglected in the present literature, as an additional approach for addressing change and continuity in the top leadership of family business groups. Finally, the concluding section of this article explores the issues that require further research attention and the methods that need to be pursued.
Presents empirical findings from different South-East Asian countries to demonstrate that Chinese businessmen employ a variety of strategies in their networking, entrepreneurship and organisational and firm development; and concludes that much more research is needed in order to provide a full understanding of Chinese business success. © 2004 selection and editorial matter, Edmund Terence Gomez and Hsin-Huang Michael Hsiao.
This article aims to examine the development of business groups in Thailand. It considers business groups, not just as a response to market failure or institutional voids in emerging markets, but as vehicles for economic catch-up with more industrialized nations. This article briefly describes the development of business, with an emphasis on family-run groups, and their survival despite changes in economic and political environments until the 2000s. It then sketches the structure of ownership and management of family business groups. It also examines the business diversification and internationalization strategies of major business groups before and after the 1997 Asian financial crisis. It also looks at the impacts of the crisis, and at corporate governance reform, focusing on the banking sector and listed companies. Finally, this article concludes by looking at the competitive capabilities of leading Thai business groups, and considers their future challenges.
Historical perspective has successively illuminated our understanding of economic change, industrialization and the emergence of business systems, and indicated the influence of politics, law and culture as well as natural endowments and markets. Our empirical knowledge of business systems and their formation has deepened over several decades, and many disciplines including organizational analysis have continued to employ historical explanation. Business historians, therefore, are well placed to contribute to these debates, demonstrating the importance of development pathways to the emergence of business systems. By stressing the role of economics and the historical processes, they add a different perspective and the use of case-studies is a protection against generalizations. A number of topics have received attention, including: the rise of trade and investment; the role of European and Asian trading companies; the links between governments, business groups and industrialization; international politics and the state; and finance, ownership and organizational structures. Yet the study of Asian business history outside Japan is at an early stage.
This article examines family businesses in post-crisis Thailand. The analysis focuses on their corporate management and governance restructuring. The findings indicate that family business still strongly persists and can be categorized into four groups, namely, closed family businesses, specialized family businesses, authoritarian family conglomerates, and modern family conglomerates. Given the falling trade barriers and the increasing globalization, the local family firms will face a challenge in capital market and the pressure of ICT development.
We examine the separation of ownership and control for 2,980 corporations in nine East Asian countries. In all countries, voting rights frequently exceed cash-flow rights via pyramid structures and cross-holdings. The separation of ownership and control is most pronounced among family-controlled firms and small firms. More than two-thirds of firms are controlled by a single shareholder. Managers of closely held firms tend to be relatives of the controlling shareholder's family. Older firms are generally family-controlled, dispelling the notion that ownership becomes dispersed over time. Finally, significant corporate wealth in East Asia is concentrated among a few families.
In this chapter I sum up the basic problems for a new theory of 21st century financial crises in light of the Asian and other subsequent crises. My conclusion is that there are indeed deep structural causes at work in the global markets that affect the political economy of countries and regions. Methodologically, new concepts, models and theories are constructed, at ;least partially, to conduct further meaningful empirical work leading to relevant policy conclusions. This book belongs to the beginning of intellectual efforts in this direction. Political economic analyses at the country level, CGE modeling within a new theoretical framework, and neural network approach to learning in a bounded rationality framework point to a role for reforms at the state, firm and regional level. A new type of institutional analysis called the 'extended panda's thumb approach' leads to the recommendation that path dependent hybrid structures need to be constructed at the local, national, regional and global level to lead to a new global financial architecture for the prevention--- and if prevention fails--- management of financial crises.
The authors identify the ultimate ownership structure for 2,980 corporations in nine East Asian countries. They find that: A) More than half of those firms are controlled be a single shareholder. B) Smaller firms and older firms are more likely to be family-controlled. C) Patterns of controlling ownership stakes differ across countries. The concentration of control generally diminishes with higher economic and institutional development. D) In many countries control is enhanced though pyramid structures and deviations from one-share-one-vote rules. As a result, voting rights exceed cash-flow rights. E) Management is rarely separated from ownership control, and management in two thirds of the firms that are not widely held is related to management of the controlling shareholder. F) In some countries, wealth is very concentrated and links between government andbusiness are extensive, so the legal system has probably been influenced by the prevailing ownership structure.
This study investigates the relative importance of factors shaping banking and corporate landscapes in Thailand after 1997 through an empirical analysis of micro-data of Thai banks and firms. The results of the analysis of the bank data show that the deceleration of bank credit growth is mainly attributable to the fallout from the Asian crisis and postcrisis regulatory changes. While high non-performing loans (NPLs) and foreclosed assets on balance sheets hinder the resumption of lending, those banks that were well capitalised, larger or domestic could resume lending faster. The analysis also showed that big, domestic, well-capitalised banks with higher NPLs are more prone to diversify into securities investments. The analysis of the firm sample indicates that Thai firms have diversified their sources of financing over the period of 1997-2000, which is reflected in the rise of the share of debt securities and trade financing. As a conclusion from the above analyses, the ...
Les changements après la crise dans le paysage des banques et des entreprises en Asie dynamique : Le cas de la Thaïlande
Cette étude analyse l’importance relative des facteurs modelant le paysage des banques et des entreprises en Thaïlande après 1997 par le biais d’une analyse empirique de micro données des banques et entreprises thaïlandaises. Le résultat de l’analyse des données bancaires montre que la décélération de la croissance du crédit bancaire est principalement attribuable aux retombées de la crise asiatique et aux changements de réglementation après la crise. Tandis que les prêts non productifs élevés et les avoirs saisis sur les bilans retardent la reprise des prêts, les banques qui étaient bien capitalisées, plus grandes ou nationales ont pu reprendre les prêts plus vite. L’analyse montre également que les grandes banques, nationales, bien capitalisées avec des prêts non productifs élevés sont plus enclines à se diversifier en des i
This book provides a sophisticated and informative analysis of the 'inner circle' of top American executives who play a leading role in the international corporate network by promoting a political environment favourable to all business.
Property in transition (Book I, chapter 1) …The typical business unit of the 19th century was owned by individuals or small groups; was managed by them or their appointees; and was, in the main, limited in size by the personal wealth of the individuals in control. These units have been supplanted in ever greater measure by great aggregations in which tens and even hundreds of thousands of workers and property worth hundreds of millions of dollars, belonging to tens or even hundreds of thousands of individuals, are combined through the corporate mechanism into a single producing organization under unified control and management.… Such an organization of economic activity rests upon two developments, each of which has made possible an extension of the area under unified control. The factory system, the basis of the industrial revolution, brought an increasingly large number of workers directly under a single management. Then, the modern corporation, equally revolutionary in its effect, placed the wealth of innumerable individuals under the same central control. By each of these changes the power of those in control was immensely enlarged and the status of those involved, worker or property owner, was radically changed. The independent worker who entered the factory became a wage laborer surrendering the direction of his labor to his industrial master. The property owner who invests in a modern corporation so far surrenders his wealth to those in control of the corporation that he has exchanged the position of independent owner for one in which he may become merely recipient of the wages of capital.
Deep and detailed research into the workings of corporate enables Professor Herman to throw considerable light on how the board of directors operates, how important outside directors are, how new members are selected, and how multiple directorships interlock the large corporations. Throughout the book the author contrasts the power of the managers with that of other interest groups - bankers, family - and he concludes that power lies with the managers. But this has not changed the basic objectives of the corporation - the pursuit of growth and profits - nor has it enhanced social responsibility. After thorough investigation Edward Herman concludes that government regulation has done surprisingly little to reduce the autonomy of the corporation. Just as the influence of bankers and investors has been resisted, so has the effect of regulation. Improved communications and controls, geographic dispersion, and the enhanced adaptability and mobility of the large corporation have all played a part in maintaining corporate power and managerial control. Corporate Control, Corporate Power will be essential reading for executives, policy makers, regulators, and all those concerned to make the corporation more responsible and accountable.
Capitalism in Contrasting Cultures
- G. G. Hamilton
- W. Zeile
- W. J. Kim
Kokumin keizai no shoruikei
- K. Nakagawa
Shoji ni kansuru kanko chosa hokokusho: goko no kenkyu
- T. Negishi
Corporation and Law in ASEAN Countries: A Case Study of Thailand
- Pichet Maolanond
- N. Yasuda
Tai ni okeru sangyo konguromaritto no keiei kaikaku: Saiamu gurupu no jirei kenkyu
- Suehiro
Gendai Kankoku kigyo no shoyu to keiei
- Hattori
Kigyo shudan no bunseki
- Y. Kobayashi
Networks and Partnerships: The Social Organization of the Chinese Business Elite in Taiwan
- I. Numazaki
Tai no zaibatsu: famiri bijinesu to keiei kaikaku
- A. Suehiro
- M. Nambara
Chugoku keizai no kozo teki kenkyu
- M. Yamana
Chirathiwat lae hang central kam-lang-cha phan khao-su yuk-thi sam
- Saengthongkham
Premier krup: mua Suwit-Seri Osathanukhro thot nakak na-thi-song
- Phoemphon Phophoemhem
Nihon keizai no hatten to kigyo shudan [Japan's economic development and business groups]
- J Hashimoto
- H Takeda
Kamon Sukoson: thang song phraeng khong Kamola” [Kamol Sukosol Group: Mr. Kamola at the crossroads], Setthakit kan-muang
- Group
Wikhro laksana kan-pen-chao khong thurakit khanat-yai nai prathet Thai [Analysis of ownership patterns of big businesses in Thailand
- Kroekkiat Phiphatseritham
Thaksin Chinawat: asawin haeng khlun luk-thi-sam [Thaksin Chinawat: leader of the third generation
- Matichon
Koshinkoku kgyoka to kigyosha katsudo
- Nakagawa
Tai-kei kigyo shudan no shihon chikuseki kozo: seizogyo gurupu o chushin to shite
- Suehiro
Bangkok Bank: Management Reforms of a Thai Commercial Bank,
- Suehiro