THE CHALLENGE OF FAMILY TIES

       While the illness of Apple founder and CEO Steve Jobs has spooked Wall Street, similar concerns can be found among Thai investors over the future of family-run business in which they have invested.
       "There is fear over the power transition to the second and third generations of family firms, who may or may not be as competitive as their predecessor,"said Suvabha Charoenying, managing director of Thanachart Securities.
       The majority of listed companies in Thailand are still considered family businesses in fact if not in style. Many of them have been core economic agents for industrial and financial development for decades.
       Family businesses account for about 80% of companies listed on the Stock Exchange of Thailand. Well-known family firms or groups include the Chirathivat family's Central Group, the Sophonpanich family's Bangkok Bank,the Lamsam family's Kasikornbank and the Sarasin family's Thainamthip.
       Family firms in this case means businesses that were set up by an individual family which still has considerable influence on the organisation regardless of current ownership proportion.
       "The core values of family businesses are good in many ways, but we would want to see a strong transition [of a new generation] in listed companies,"Ms Suvabha said.
       Family businesses' weak points such as internal family conflicts need to be curbed or eliminated through the involvement of more outside managerial professionals when recruiting, she said.
       Yupana Wiwattanakantang, professor at the Institute of Economic Research at Japan's Hitotsubashi University, said many Thai and Asian business leaders still chose to have their sons or daughters to run their businesses rather than non-family members, which limits the pool of potential talent.
       "Problems are also that the talent or the skill sets of their parents are not always passed on to their children or what we call the 'idiot son' syndrome,"said Prof Yupana.
       She said inferior managerial capabilities among second or third generations tend to emerge because the children have been spoiled with everything prepared for by their parents.
       "It is often the case that the founders or the first generation don't want to let go until they are too old or too ill to handle the firm, then they would start training the next generation which is quite late already," Prof Yupana said.
       Therefore, she said, successful transition should start with early planning of who will be the successor, accompanied by early and constant training.
       Prof Yupana said many Japanese family firms, such as that of the Mitsui family, have lasted for many generations because there were more successor choices besides blood heirs.
       "The Japanese firms solve the problems of passing on assets by using nonblood heirs such as sons-in-law or adopted sons if their children are not competent enough to run the company,"she said.
       "They also go for outsiders as professional managers, such as what Toyota Motors did or even choose to give up their companies, like the Morita family's Sony."
       Ms Suvabha said that although there should be less fraud within a family business as the reputation of the family name is at stake, the misuse of money for personal interests is still a challenge.
       "What people fear is that family members might use the company's money like their own family money, such as changing cars every two or three years,"she said.