Family-owned enterprises are the cornerstone of Asia’s economy, contributing roughly 70 percent of GDP and employing over 60 percent of the workforce in some markets. Much more than just commercial entities, these firms are deeply embedded into the social fabric and are typically driven by long-term vision and entrepreneurial stewardship. 

In this edition of “The INSEAD Perspective: Spotlight on Asia” podcast series, Sameer Hasija, Dean of Asia at INSEAD, asks Bala Vissa, Professor of Entrepreneurship and Family Enterprise, for his thoughts on the status of family businesses in the region and the challenges that are currently reshaping their future.

For Vissa, The André and Rosalie Hoffmann Chaired Professor of Family Enterprise at INSEAD, a generational shift is leading to a succession gap for many family enterprises. Younger family members are turning their backs on the business and increasingly seeking alternative careers. On top of this, they may not have the fundamental skills needed to take over the firm or, in some cases, could lack the “hunger in the belly” that inspired the previous generation to succeed.  

Family businesses also suffer from a fundamental structural challenge, as they operate as two distinct social systems with often contradictory priorities. In a family system, the core values are harmony and loyalty, whereas a business system prioritises efficiency and competence. This creates a "tightrope" for succession: the firm must conduct the leadership transition in a way that preserves family harmony – avoiding conflicts between relatives – while simultaneously ensuring the business has the talent required for profitability and growth.

More general disruptions such as climate change and geopolitical uncertainty are making it increasingly difficult for the current generation to simply hand over the reins of a stable, profitable business to the next generation. What’s more, the pace of digital transformation and the emergence of AI are forcing firms to modernise traditional business models if they hope to remain competitive in a hyper-connected era. 

According to Vissa, the significant surge in family offices in the region, particularly in financial hubs like Singapore and Hong Kong, is one attempt to navigate these complexities, driven in part by companies’ efforts to professionalise their businesses. Family offices can also provide a vehicle for younger generations to fulfil their aspirations. As well as offering a chance to demonstrate their entrepreneurial spirit, family offices give them the scope to focus on areas of specific interest to them, be that sustainability or technology. 

Hasija and Vissa conclude by discussing the important role that business schools like INSEAD play in that process. Through workshops and programmes, they help connect family firms to private equity and allow both sides to better understand how they can work together to foster resilient growth and long-term success in today's rapidly changing global environment.