Anglo vs. Asian family business: a cultural comparison and analysis.

Author:Gupta, Vipin
 
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INTRODUCTION

Asia is challenging the economic might and business models of the Anglo region, just as Japan did during the 1970s and 1980s, but with even greater potential impact on the world markets, thus illustrating what some have deemed the "Asian century" (Ashkanasy 2002). Family businesses have been, and remain, the mainstay of Asian (and most global) economies. Until recently, however, the literature on families and family businesses in Asia has been both scant and scattered. As Chrisman et al. (2003) note, family businesses are launched for reasons other than the desire for dollars and cents (or rupees and yen). They state, "Family businesses ... bring together so starkly the economic and noneconomic realities of organizational life ..." (2003, p. 442). Thus, family businesses must be examined within the cultural contexts in which they are bred, nourished, and grow.

Fortunately, recent developments in cultural assessment and measurement methodology have provided tools to enable a better understanding of families and family businesses vis-a-vis the use of regional clusters and comparative lenses (Ronen and Shenkar 1985; Gupta and Hanges 2004). Thus, the Asian cluster can be identified as not only unique, but uniquely different from the Anglo cluster, which is highly individualistic (Hofstede 2001, House et al. 2004). This is noteworthy since, in refining theories of family business, it is important that they are examined in their cultural contexts and all their diversity.

These developments indicate that while the Asian cultures share pluralism, there are also two particularly strong lines of demarcation: Indo-centric and Sino-centric. Huxley (1997), for example, in his review of ancient legal systems, suggests that during the third and second centuries before the Common Era (BCE), three distinct schools of natural law flourished, which originated in India, China, and the Hellenistic world. Similarly, while recognizing diversity within the Sinocentric cultures, Brett (1997; quoted in Gupta and Hanges 2004, p. 189) observed: "Confucian influence extended to those Eastern societies located within the China cultural orbit namely Korea, Japan, Hong Kong, Taiwan and Singapore, not to mention overseas Chinese communities everywhere. In China, itself, Confucianism has provided the indispensable mainstay of a system of education that is more than two thousand years old."

Using the regional cluster tool, it becomes possible to develop a common view of family businesses across the Indo-centric and Sinocentric regions, and to contrast them with a similar view of family businesses across the Anglo region. Thus, the purpose of this paper is to address two gaps in the literature: (1) the absence of any comparative study of family businesses within Asia along the Indo-centric and Sino-centric demarcation lines, and (2) between the Asian and the Anglo regions along the varying significance of families and family businesses. This paper analyzes the characteristics of family businesses in three clusters: (1) the Anglo cluster, including Australia, New Zealand, Canada, the U.S.A., and the U.K.; (2) the South Asia cluster, including Pakistan, India, Bangladesh, Indonesia and Thailand; and (3) the Confucian Asia cluster, including Japan, China, Singapore, Taiwan, and South Korea.

This analysis was conducted as part of the CASE (Culturally sensitive Assessment Systems and Education) Compendium project. The CASE Compendium project reviewed literature on family business in each region and systematically analyzed 110 articles on family businesses authored by over 300 scholars worldwide. Nine etic dimensions have been identified in the CASE Compendium project, and are summarized in Table 1 (Gupta et al. 2008 a,b,c). (Etic is a term that is used to describe items that are being analyzed without considering their role as a structural unit in a system. Emic, in contrast, is a term that is used when items are being analyzed with respect to their role as a structural unit in a system.)

RESEARCH DESIGN

To systematically address our research objective of identifying family business models around the world, we applied the following data collection procedures.

  1. A Call for Papers was issued that clearly outlined the project guidelines, themes, and clusters. Using a number of databases, the Call for Papers was distributed to all Family Business Centers, Institutes, and so on around the world and to faculty members teaching family business-related topics. At the same time, meta research was conducted of existing literature to identify possible contributors who had previously published papers on family business topics, particularly in global settings. A special invitation was sent to these writers to solicit their interest in participating in the project.

  2. Once we received submissions for each cluster, we engaged in a content analysis and thoroughly screened each manuscript to obtain a representative sample. Specifically, the editors analyzed each manuscript using the following criteria: application field, research methodology, data, level of analysis, focus of study, related constructs, and variables. On average, twenty submissions were received per cluster. After the screening, an average of ten submissions was retained per cluster, with instructions for revising and editing issued to submitters.

  3. The content analysis helped to not only identify the family business research currently being undertaken in each cluster, but also unveil the most frequently studied constructs and the related variables.

DESCRIPTIONS OF ANGLO, CONFUCIAN AND SOUTHERN ASIA CLUSTERS

The distinguishing features of the three clusters, based on the seminal GLOBE book, Culture, Leadership, and Organization (House et al. 2004) and the CASE project follows.

ANGLO CLUSTER

The Anglo cluster is based on several factors including ethnic and linguistic similarities, and migration patterns originating centuries ago from Northern Europe. These migrants fused their culture with the local Celtic culture in Britain, giving rise to an Anglo culture that later diffused through the English migrants (Gupta and Hanges 2004). The GLOBE results suggest that the Anglo culture is distinguished by its strong performance orientation, but weak family orientation. yet, the Anglo cluster strongly believes in the value of family orientation and of gender egalitarianism, though not in the value of institutional collectivism and uncertainty avoidance.

Family businesses are important to the Anglo cluster. Seventy five percent of 800,000 companies in Australia (Baring 1992), 76 percent of the top 8,000 companies in the U.K. (Stoy Hayward 1989), and about 90 percent of all businesses in the U.S. (Pistrui et al. 2000) are estimated to be family businesses. Gupta et al. (2008a) conclude that most family businesses in the cluster assure transparency and due diligence by regulating the involvement of family.

CONFUCIAN ASIA CLUSTER

The Confucian Asian cluster is defined by the strong historical influence of China and Confucian ideology (Gupta and Hanges 2004). Confucian societies are distinguished by their reliance upon "networks" which are coordinated through the mechanism of trust (Lowe 1998). The GLOBE results identify Confucian Asian culture to be distinguished by strong performance and family orientation, and strong institutional collectivism. At the same time, the Confucian Asian societies do not believe in significantly increasing their performance orientation, family orientation, or, for that matter, gender egalitarianism (Gupta and Hanges 2004).

Family businesses have a strong tradition in the Confucian Asian region. Prior literature suggests that the family business is a dominant form amongst Chaebols in South Korea; in China, the family business is a dominant form among the ethnic Chinese expatriate business families (El-Kahal 2001). Gupta et al. (2008b) conclude that most family businesses in the cluster tend to accommodate family members by diversifying into new lines of business.

SOUTHERN ASIA CLUSTER

Southern Asia cluster is founded in the cultural sequence that spanned from ancient Persia to the modern Philippines (Gupta and Hanges 2004). The GLOBE results reveal Southern Asia cluster to be distinguished by strong family and humane orientation--a hallmark of its deep community orientation. The societies also show a strong belief in future orientation, institutional collectivism, uncertainty avoidance, and assertiveness, but not as much in gender egalitarianism.

Piramal (2000) estimated that 71 percent of market capitalization in India as attributable to family businesses. The family businesses are even more common amongst the privately held corporations. Gupta et al. (2008c) conclude that most family businesses in the cluster have all members of the family as their joint and undivided owners; such an approach is seen as both humane as well as respectful of family feelings.

INSIGHTS FROM THE CASE COMPENDIUM PROJECT

One of the most compelling insights from the CASE Compendium Project is the cross-cultural differences in the family involvement. Below we summarize the core CASE findings on each of the nine dimensions of family business in the three regional clusters. Table 2 provides a snapshot of selected references for each theme. A complete set of references is available from Gupta et. al. (2008a, b, c).

REGULATED BOUNDARY

In the Anglo region, boundaries between the family and the business are highly regulated. The family business is not obligated to take care of the family members in times of their need. Conversely, it may not have free access to the private resources of the family members, if facing financial constraints. In any event, resource exchange between the family and the business is clearly accounted. For example, Craig and Moores (2004) discuss the case of how the Dennis family in Australia professionalized their business by laying out clear boundaries...

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