Family business groups in Thailand: coping with management critical points

Abstract

Using insights drawn from business history and business group literature, we develop a model to analyze how family business groups in late industrializing countries cope with management resource limitations that plague them in their pursuit of growth and diversification. A field study was conducted analyzing 215 family business groups in Thailand. Results suggest that family business groups will survive, and even prosper, if they are able to adapt their strategies and modernize their management styles to overcome three management resource limitations (or “management critical points”)—fund raising, production technology, and human resources. There is a detailed discussion of the different strategies that help to extend these upper limits or management critical points. We then divide family business groups into four types, which are based on their diversification and management strategies. We argue that their performances vary and that the modernized single business type and the modernized conglomerate type will be the future forms of family business groups, which will ensure that they remain competitive in the new global economy. Using our model, we conclude that family business groups in Thailand are still disinclined to make the transition to managerial enterprises, according to the conventional Anglo-Saxon model.