Ensuring Family and Business Continuity at India’s GMR Group
(10 pages of text)
Most family businesses do not survive beyond two or three generations. One of the main reasons for this short lifespan is the lack of governance mechanisms in family businesses. With better family governance, business development becomes a richer experience and continuity is ensured across generations. This case is about an Indian family business, GMR Group, which was established a quarter-century ago, and by 2010 had become one of the major diversified infrastructure organizations in the country, with large-scale interests in infrastructure (energy, roads, and airports) and manufacturing (agri-business, mainly sugar). Since its founding, the Group had come a long way, from an independent proprietary enterprise to a family-owned holding corporation with several companies under its control, along with external stakeholders. The growth of the group had been led by the entrepreneurial zeal and organizational capabilities of its founder, G.M. Rao. Having seen many family businesses breaking up for lack of adequate governance mechanisms, Rao led the way for the writing of his family business's constitution with the help of several experts in 2007. The writing process of the constitution and the policies and processes developed were optimal for maximizing GMR's performance and the family's prosperity in current and future generations. This case captures the essential processes and outcomes of writing a family business constitution.
This is primarily a case history of the journey of an entrepreneur of humble beginnings who establishes a large infrastructure corporation within a short time span. The case captures the processes followed by the entrepreneur and his family in developing multiple instruments for family governance. Hence, the case can be used to understand the processes typically followed by business families to develop family governance using several structures, systems, and processes. The case can be used in any course on family business, particularly with focus on family governance and/or family entrepreneurship. Since this is a case history, the recommended class strategy would be to understand the context and process followed by the family in building family governance.
India, Large, 2009-2010
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