Major factors contributing to the sustainable profitability of South African Indian family businesses

Abstract

Indians arrived in South Africa since 1860 predominantly as indentured labourers. Despite over a century of pointed hostility towards Indian entrepreneurs, they managed to endure hardship and thrive. Today they run some of the most successful family businesses in South Africa. Family businesses internationally have had a reputation of struggling to survive beyond the first generation. This study attempted to identify factors that contributed to family business survival. Of the factors identified, which of these factors were adopted to a significantly greater extent by highly profitable family businesses as compared to family businesses exhibiting average profitability. Two family business groups were studied. A control group and a success group. Both groups were profitable companies; however the success group had a higher profitability for the past five years as compared to the control group. Thirteen factors were identified as key contributors to family business longevity. All thirteen factors were adopted by 45% of the Indian businesses. Of these eight factors: strategic planning, governance structures, succession planning , open family communication, family networks, trust, cultural values alignment and harmonious family relations were proved to be adopted to a significantly higher extent by the highly profitable companies.