In a recent analysis conducted by KPMG, it was determined that family businesses in Asia and Oceania exhibit a robust culture of transgenerational entrepreneurship. This can be attributed to their capacity to maintain a legacy over generations, resulting in high business and sustainability performance, generational continuity, and the preservation of family ties.
The report titled “Unlocking legacy — The path to superior growth in family businesses” surveyed 2,683 family business CEOs from 80 countries, territories, and regions, indicating that legacy plays a crucial role in guiding the strategic decisions of family businesses and significantly influencing long-term business performance and sustainability.
Karmen Yeung, the National Head of KPMG Private Enterprise in China, emphasized the importance of striking a balance between tradition and innovation to establish a lasting legacy in family businesses. She highlighted the positive impact of legacy on business performance, as well as the environmental, social, employee, and supplier sustainability impact of family businesses.
The analysis revealed that 43% of respondents reported a combination of high business, environmental, and social performance, and strong legacies, underscoring the strong link between legacy and transgenerational entrepreneurship. Additionally, family businesses with the highest transgenerational entrepreneurship scores were found to have the highest business and sustainability scores.
In China, where 75% of family businesses are still managed by the first generation, it was observed that first- and second-generation businesses had the highest material legacy scores. However, as the number of family generations in the business increases, there is a tendency for the material legacy scores to decrease, reflecting a shift in focus from tangible assets to intangible values as families grow larger and more complex.
The report also highlighted the relatively young company age profile in Asia and Oceania, aligning with the rapid economic development and entrepreneurial growth in the region. It was noted that wealth is traditionally considered to be the family legacy in this region, and the philosophy of “keeping ownership and management within the family” is commonly adopted.
Peter Lee, Partner, Family Advisory, Private Enterprise Practice, KPMG China, pointed out that younger generations entering family businesses are reshaping the focus from the past to the future. He emphasized the importance of embracing change without losing sight of the foundations upon which the business has been built.
Furthermore, KPMG’s data revealed that legacies are often amplified by transgenerational entrepreneurship among younger generations, who play a crucial role in compelling their predecessors to openly communicate about what matters to them and reinforce their business legacies.
Interestingly, the analysis found that female family business CEOs prioritise other elements of legacy, such as corporate social responsibility or innovation, over biological legacy. It was noted that the positive impact of legacy on sustainability is stronger in family businesses led by female CEOs, and that some female leaders focus on communal success and the well-being of employees, community engagement, and environmental sustainability as part of their legacy.
In conclusion, KPMG’s analysis sheds light on the strong culture of transgenerational entrepreneurship in family businesses in Asia and Oceania, and the significant impact of legacy on business performance and sustainability. The findings demonstrate the resilience and adaptability of family businesses in the region as they strive to sustain their legacies for future generations.
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(Source: Adapted from Asia demonstrates strong culture of transgenerational entrepreneurship in family businesses, KPMG analysis finds Legacy on sustainability stronger in family businesses led by female CEOs by Media OutReach)