For decades, he managed the affairs of the Murugappa Group of companies. Yet after retiring as chairman in 2004, M.V. Subbiah, now 72, chose to study management. He spent a year at the Kellogg School of Management in the US, researching familyrun businesses.
The sojourn gave him a nuanced perspective and very definite views on such businesses. He is totally opposed to family businesses having written constitutions. "The notion of such a constitution comes out of Anglo-Saxon culture, which is based on do's and don'ts. Our culture is Vedic and driven by dharma which lays down what each person has to do,'' he says. Japan has some of the oldest and most successful family businesses, he points out, but the concept of a family constitution does not prevail there.
|Size: Rs 17,051 crore|
No. of generations in business: 4
Key measures in place: Reliance on formal and informal communication channels
Goal: To live by values for future generations to learn and imbibe
Mantra for success: Family reputation more valuable than money
Curiously, however, the Murugappa Group - a Chennai-based Rs 17,051-crore conglomerate with interests in sugar, farm inputs, bicycles, industrial products and financial services that started as a moneylending and banking business in 1900 - is working on a written constitution. Put this to Subbiah and his response is pat. "It is permanently in the draft stage," he says.
"Dialogue is far more important than a written constitution," he says. "There should be communication between family members. The strain comes in when family members stop communicating with one another." He adds: "There have been many family businesses across the world which had a written constitution but still collapsed, as they failed to practise it in spirit."
He says that reputation is more important than money. "This cannot be effectively conveyed in writing. We need to live by it for the next generation to imbibe it,'' he adds. He sees merit in a written constitution only when a family is large and its members are not involved in the day-to-day running of their companies.
Subbiah rubbishes the view that professionally-run businesses do better than family-owned ones, using a modern weapon: data. He says research shows family businesses that stick to Indian values are more successful than those that are merely professionally-run.