Family businesses play a pivotal role in Asia’s economy. In South-east Asia, family businesses account for more than 60 per cent of publicly listed companies in most countries within the region, and an even greater proportion of private companies. Their impact often spans generations and includes significant contributions to job creation, wealth accumulation, and community development.
While family businesses exist across the Asia Pacific region, many are concentrated in Hong Kong and South Korea, where some of the world’s top 500 family enterprises and the largest chaebols reside.
Currently, Asian family businesses are undergoing a major shift in which it is anticipated that over 30% will go through a leadership succession from one generation to the next in the coming years According to Nihon M&A Center Holdings, about 2.45 million owners of SMEs will exceed the retirement age of 70 by 2025, with half of them yet to have a successor in place. This underscores the urgency of a planned leadership transition among family businesses.
Leadership planning concerns have become evident in these social circles in recent years. A 2024 survey found that HNWIs in South-east Asia are more worried than those elsewhere that a lack of succession planning could lead to family disputes.
The Legacy of Family Businesses in Asia
Asian family businesses often trace their roots to visionary first-generation founders—risk-takers who built companies from the ground up, creating something enduring out of ambition, resilience, and hard work. These early entrepreneurs emphasize values such as reputation, stability, and long-term planning, laying a strong foundation based on family legacy and a goal of passing on a successful enterprise to future generations.
This emphasis on longevity and reputation continues to define many family-owned businesses in Asia. These businesses continue to generate wealth, create jobs, and contribute significantly to their local economies. These enterprises have been instrumental in providing stability and fostering economic development across diverse sectors, from manufacturing and retail to agriculture and technology.
Second-Generation Entrepreneurs: Preserving and Gradual Change
For second-generation entrepreneurs, continuing the legacy handed down by the founder is paramount. This generation aims to preserve the core values that shaped the business while recognizing the need for gradual modernization. As a result, they face a delicate balancing act: how much of what is being done should they keep and how much should they change so that they steer the company into new territory and adapt to shifting market demands?
Their approach to innovation is measured, as they choose to expand step-by-step by entering adjacent markets or leveraging established strengths rather than embracing radical change.
The complexities of managing family dynamics and succession planning add another challenge for the second generation as they navigate expectations from family members who may hold more conservative perspectives.
Succession planning may be a challenging process when expectations of family legacy conflict with the need for capable, professional management to keep the business competitive.
Some second-generation leaders proactively engage the next generation early, preparing for smoother leadership transitions and aligning family members with the company’s future vision. This helps mitigate potential conflicts and ensure continuity.
Third-Generation Entrepreneurs: Innovation and Global Reach
In contrast, third-generation entrepreneurs bring a fresh perspective, often focusing on business transformation. Having grown up in a digitally connected world, they are typically eager to adopt new technologies and disruptive business models, introducing change at a faster pace.
This generation's willingness to embrace rapid innovation is evident in their strategies, which frequently leverage big data, artificial intelligence, and digital marketing tactics. They desire to position the family business globally, moving beyond regional markets to achieve international reach and competitiveness.
Third-generation entrepreneurs’ exposure to international education and networks, afforded by family wealth, further prepares them to operate within global markets, diversifying business opportunities. E-commerce, digital platforms, and data analytics play an essential role in this generation’s approach, allowing them to reach new audiences, streamline operations, and adapt to rapidly shifting consumer expectations.
Additionally, the values of third-generation entrepreneurs increasingly reflect a broader shift toward impact-driven business models. Many prioritize environmental sustainability, social responsibility, and ethical business practices, aligning their companies’ goals with personal values.
The Interplay Between Generations
Although there are generational differences in mindset, second and third-generation entrepreneurs can collaborate effectively by leveraging each other’s strengths. Younger generations often introduce innovation and a global mindset, while older family members provide stability, historical knowledge, and a measured approach to risk.
This intergenerational collaboration can lead to a stronger, more versatile organization that marries the stability of the past with the agility needed for future success. However, there remains a risk of intergenerational conflict, especially around issues like risk tolerance, innovation, and management style. Establishing strong communication channels and fostering mutual respect is essential for bridging these gaps, ensuring continuity, and maintaining a shared vision.
Mentorship becomes crucial in bridging the generational gap in family businesses. In successful family enterprises, older family members take on the role of mentors by sharing their experiences, insights, and values with younger entrepreneurs. Additionally, family councils and boards provide structured guidance on major business decisions, often including external parties for a balanced perspective. These forums enable different generations to actively shape the company’s direction, balancing time-tested practices with fresh, innovative ideas.
Conclusion
The mindsets of second and third-generation entrepreneurs in Asia reflect a dynamic blend of tradition and transformation. While the second generation focuses on preserving legacy and gradual change, the third generation is inclined toward innovation, globalization, and social impact.
Looking ahead, family businesses in Asia have a unique opportunity to thrive by embracing tradition and innovation. By fostering collaboration across generations, these enterprises can build a resilient foundation, balancing heritage with adaptability to meet future challenges and continue their legacy of success.
Family-owned businesses in Asia can greatly benefit immensely from this dual approach, which combines the stability of tradition with the agility of innovation, positioning them for long-term, sustainable growth and an enduring positive impact on society.
Who is Thanit Apipatana:
Thanit Apipatana is a Bangkok-based entrepreneur, investor, and startup advisor with a keen interest in venture building, real estate, F&B, sports and philanthropy. Mr. Apipatana has advised and invested in companies in the region, including Singapore-based proptech startup Mogul.sg and Thai-based Life Below Labs. As a thought leader, Mr. Apipatana shares his insights on entrepreneurship, F&B, education, sports and the social sector.
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