The Marwaris Page 12
The Right Corporate Culture
The firm or group must have a style which befits its market and the times. Changes or adjustments constitute one of the most difficult tasks. Corporate culture in a firm is critical in inspiring loyalty, especially of competent managers about which commentators like Tarun Khanna are so concerned. Financial incentives can go only thus far, and are sometimes counterproductive.
Don’t Get Blown away by Fads
The shelf life of half the management fads is six months. Professors, including those from business schools, devise striking and attractive theories which bear no responsibility for success. A responsible manager has to be more tentative and experimental in his approach. As any school debater knows, there are usually at least two sides to any question, even multiple sides as in the Anekantavada of Jain logic. The problem is to decide which is right in a given situation.
Do Not Miss New Developments
Some businesses describe themselves as ‘knowledge businesses’. As a matter of fact, all are. The world’s oldest family businesses have had some very successful ventures and a lot of failed ones because of missed opportunities.
Afterword
Do We Know More Today Than We Did in 1978?
My earlier book, The Marwaris (1978), was based on existing secondary material, census data, contemporary newspaper sources and primary material, and also used the account books of one of the nineteenth-century Great Firms of Tarachand Ghanshyamdas, kindly provided by its heirs, and a database of over eight hundred family histories which were contained in a series of caste handbooks published in a small town in central India, mostly in the 1930s.
Since 1978, popular and academic ‘scribblers’ have been active, and we need to ask what they have added to our knowledge.
Many businessmen, among them Marwaris, more sophisticated and globalized with their degrees from US Ivy League colleges and their equivalents elsewhere, have committed their thoughts on business success to paper, and we should learn from what they have to say.
What is striking in the case of India is how little they talk about business. The businessmen’s memoir volumes deal extensively with the political, social and even cultural involvements of successful businessmen. Some of them are critical and analytical, to a greater or lesser extent. However, the space devoted to the details of business in their texts is limited. Perhaps, the most forceful business biography in India is Prakash Tandon’s autobiography, now available in a one-volume edition.1 This volume recounts the experiences of one of the first Indians to become a chartered accountant, and then a chief executive in a multinational firm (Unilever’s Indian subsidiary). His tenure at Unilever was followed by his post-retirement experience in managing two gigantic parastatals, the State Trading Corporation and the Punjab National Bank. Like many professional managers, Tandon did not come from a business family but from a service background. As a professional manager in a multinational and later primarily in parastatals, Tandon was certainly not a traditional businessman.
Among traditional business community members, K.K. and B.K. Birlas’ recent autobiographies and the biography of their father G.D. Birla by Medha Kudaisya give important insights into how large Indian family firms function.2 The Birla volumes are only part of a wave of business biographies, many of which contain interesting insights on the inner workings of large firms. So many of these concentrate on the Birlas that to follow family threads and identify numerous family members scattered over generations is difficult.
A lot of academic literature exists on family firms and a significant amount on Indian family firms. Some of this literature is historical and biographical in nature and recounts the experiences of particular firms and family members. A partial list of this literature is available in a bibliography prepared by N. Benjamin and N. Rath at the Gokhale Institute in Pune.3 However, as explained to me by Alan Thrasher, the South Asian specialist at the Library of Congress in Washington, business biographies are often privately printed and do not get included in the normal bibliographical reference systems.
Aside from this academic and biographical literature, as far as I can tell, there isn’t a lot of narrowly construed ‘business literature’—novels and films on business subjects—though it is not entirely absent. For example, Satyajit Ray’s Mahanagar deals with one sort of business; the businessman is frequently characterized as a villain in Indian cinema. There is also a popular theme in Indian cinema in all the regional variants (Bollywood, Tollywood, etc.)—that of the honest businessman trying to protect his commercial honour while surrounded by thieves.
Two of Chetan Bhagat’s bestsellers—on call centres and marketing—certainly deal with particular business environments.4 If Sankar’s comparable novels in Bengali have a less national exposure, that is not due to a lack of quality.5 Bhagat and Sankar’s novels might be considered an Arthur Hailey, James Michener or Tracy Kidder phenomenon—novels which describe a particular economic and social reality for their audience. These are not usually considered business literature. In contrast to literature from other countries, such books are few in India.
Surprisingly, there exists an enormous amount of Japanese business literature, novels and biographies where the plot or subject is primarily business-centric.6 Japanese business novels really concern themselves with commercial issues. Taichi Sakaiya is concerned with predicting trends and deals with people who recognize and seize the trends. Takeshi Kaikõ, in a business novel, though that is not his preferred genre, deals with the complexities of marketing consumer products—in his case, better packaged sweets. Other authors deal with matters at the level of central banks deciding on currency strategies, or businessmen dealing with the problems of dissident shareholders or key customers. But these again really debate on the subject of what is good for society in general, rather than what is good for a business. The criterion differentiating ‘business literature’ from other genres is that it is written from the viewpoint of the entrepreneur or firm, rather than the society as a whole.
Yet a larger volume of research about family businesses and business groups is produced in forms other than biographies or even novels. Business schools, and business management as a discipline, have produced vast studies and case studies dealing with the advantages of family firms and the specific challenges they face in reconciling their family and business rationales. Academics, after all, must publish or perish.
In addition to all this recent literature, I draw shamelessly on my own earlier research; let me make my apologies for borrowed thoughts, references and even language from my 1978 book. Since my earlier book on the Marwaris was more academic than the present one, I frequently omit my original references—those who are interested can refer to the original.
Notes
1. Preface
1.K.K. Birla, Brushes with History, 83ff.
2.Markowitz, Merchants, Traders and Entrepreneurs, 238–39. See also Wikipedia, ‘Bhaiband’, en.wikipedia.org/wiki/Bhaiband and Wikipedia, ‘Lohana’, en.wikipedia.org/wiki/Lohana.
3.Damodaran, India’s New Capitalists, 8–41.
4.Tod, Annals and Antiquities of Rajasthan, 166.
5.See Parson, ‘The Bazaar and the Bari’.
6.Census of India 1931, 529. The 1931 Census was the last attempt at consolidating an accurate collection of caste and community figures. Post-Independence India has been reluctant to encourage casteism. But even before the British stopped their caste enumerations a competitive politicization of the census process by competing communities was undercutting its validity.
As the 1931 Census report states: ‘Of the 846,811 persons born in Rajputana and enumerated elsewhere, the majority in all probability came from Marwar, Bikaner, Jaipur, Jaisalmer and Mewar, but above all from Marwar and Jaipur, and consists of those traders, with their dependants, who are known indiscriminately as Marwaris and play such an ubiquitous and important part in commerce and banking throughout India.’ (Census of India 1931,
68.)
This is obviously higher than our 3,00,000 estimate, and the detailed rationale appears in Timberg, The Marwaris, 107–24, as well as a detailed plotting on the basis of various data primarily from decennial censuses which document the timing of migrations and the sort of enterprises Marwaris were involved in in each region.
7.The 1921 Census reported 6,27,000 merchant-caste members in Rajasthan, forming 6 per cent of the population there. The 1961 census shows roughly 3,00,000 people born in Rajasthan but located elsewhere in India; this figure does not count the many Rajasthanis born to the diaspora but does count those from non-merchant communities. A more detailed census analysis is available in Timberg, The Marwaris, 84–90.
8.Yang, Bazaar India, 199ff.
9.Tewari, Business Communities and the Freedom Struggle, 22–35.
10.‘Rank of Cities on Sanitation 2009-2010’, Press Information Bureau, May 2010.
11.Wacziarg and Nath, Rajasthan.
12.From the Lal Niwas Hospitality website. Available online at http://www.lalniwas.com/contactus.php.
13.For lists of these, see Tewari, Business Communities and the Freedom Struggle.
14.Hardgrove, ‘Sati Worship and Marwari Public Identity in India’, 723–52. The Jalan connection is specified in the article since Rani Sati herself was a Jalan; the Tulsian connection is one that I have frequently been told about.
2. The Beginning of the Bazaar Economy
1.Ray, ‘Asian Capital in the Age of European Domination’, 449–554.
2.Sinha, ‘Introduction’, v–xxiii.
3.Little, The House of Jagatseth.
3. The Marwaris, the Bazaar Economy and the British Raj
1.Cohen, ‘Tradition, Values and Inter-Role Conflict in Indian Family Business’.
2.Timberg, The Marwaris.
3.Milman, ‘The Marwari’, 29.
4.Hopkins, ‘Ancient and Modern Hindu Guilds’, 169–205.
5.Bengal Hurkaru, 10 May 1834.
6.See references in Timberg, The Marwaris, 140.
7.Sharp, Good-Bye India, 18–20.
8.Das, India Unbound, 108–10.
9.Misra, Business, Race, and Politics in British India, c.1850–1960, 7–11, 57–59, 105, 109–12, 126–32, 194–95, 198.
10.There were several large Baghdadi Jewish firms, and though their families intermarried they were quite separate families. Most of the larger Jewish firms eventually shifted their headquarters to London and sold their Indian interests. As the ever-quotable Sir Victor Sassoon said, ‘I gave up on India, and China gave up on me.’
11.This is because a part of the letters were taken from Germany to Russia by the Soviets and only made public after the end of the Soviet Union—and because they have only recently been translated into English from Western Yiddish, a language now largely dead.
12.Ritu Birla, Stages of Capitalism, 143–98; Hardgrove, Community and Public Culture.
13.Gazetteer of Bombay Presidency, 66–67.
14.Bajranga Lal Kedia v. King-Emperor, All India Reporter 1921, Calcutta, 719; Thakurdas Mundra v. Emperor, All Indian Reporter 1930, Calcutta, 637, India Cases 128 (Calcutta High Court), 330.
15.Edwardes and Campbell, The Gazetteer of Bombay City and Island vol. 1, 299–300.
16.The late Dr Anand Chandavarkar found this reference for me.
17.Wacha, A Financial Chapter in the History of Bombay City; Krishnan, ‘Bombay Cotton’.
18.Jhunjhunwala and Bharadwaj, Marwaris: Business Culture and Tradition.
19.Crabtree, ‘India’s Billionaries Club’, Financial Times, 16 November 2012.
20.The French playwright Molière describes an uneducated businessman who is proud to discover once he has the time that he has been writing ‘prose’ all his life unwittingly.
21.Owens and Nandy, New Vaishyas. The terms themselves come from McClelland, The Achieving Society.
22.Singer, When a Great Tradition Modernizes; Rudolph and Rudolph, The Modernity of Tradition.
23.McClelland, The Achieving Society, 178.
24.Banfield, The Moral Basis of a Backward Society.
25.Piramal, Business Maharajas, 195.
4. The Marwaris in Independent India: In Traditional Industries and Sunrise Sectors
1.Kudaisya, The Life and Times of G.D. Birla, 45.
2.Hardgrove, ‘Sati Worship and Marwari Public Identity in India’.
3.Interview with Prabhudayal Himmatsinghka, Calcutta, 1971.
4.Hardgrove, ‘Hindi Literature as a Political Space’, 804–06.
5.Hardgrove, ‘Community and Public Culture’.
5. Do the Marwaris and the Bazaar Economy Still Shine after 1991?
1.Kudaisya, The Life and Times of G.D. Birla, 336.
2.Piramal, Business Maharajas, 128.
3.Tripathi and Jumani, The Concise Oxford History of Indian Business, 155–81, 234, 235.
4.Damodaran, India’s New Capitalists, 312.
5.Khanna and Palepu, ‘The Evolution of Concentrated Ownership in India’, 283–94.
6.See ‘The World’s Billionaires’, Forbes.com, 2010.
7.See ‘India’s Top 100 Richest’, available online at www.sophia-ajz.sulekha/blog.post/2009/11/india-s-top-100-richest-52-billionaires-48-millionaires.
8.‘High Net Worth Individuals’, Economist, 26 June 2010.
9.Bardhan, ‘Notes on the Political Economy of India’s Tortuous Transition’, 31–36. On the other hand he accepts the benefits of liberalization: ‘The reforms have unleashed a great deal of hitherto pent-up entrepreneurial energies, and . . . particularly the private corporate sector is now much more vigorous and self-assured in facing global competition and holding its own’. The focus of Bardhan’s piece is on the countervailing political forces for economic equity that have also been unleashed.
10.Sinha and Varshney, ‘It Is Time for India to Rein in Its Robber Barons’, Financial Times, 6 January 2011.
11.Piramal, Business Maharajas.
12.Alfaro and Chari, ‘India Transformed?’, 22.
6. What Produces Business Success: Lessons Learned
1.Talreja, ‘Succession in Indian Family Firms’, 3.
2.O’Hara and Mandel, ‘The World’s Oldest Family Companies: Convincing Evidence that Smaller Firms Usually Outlast Larger Ones’. The second oldest is a Japanese inn started in 718 ce, the third a French vineyard (which seems like more of a museum) founded in 1000 ce, and the Barone Ricasoli wine and olive operation near Florence dating to 1141 ce. Among names that people may recognize are the Sumitomo Corporation claiming to have been founded in 1630 ce, the Kronenbourg Brewery (1664 ce), Taittinger Champagne (1734 ce), the Jose Cuervo tequila company (1758 ce), Waterford Wedgwood china (1759 ce), Faber Castell pencils (1761 ce) and Bass Pale Ale (1777 ce). It seems that a number of the listed family firms like Cadbury Schweppes (1783 ce) have ceased to be family firms in recent years. Absent from the list is M.M. Warburg founded in 1798 ce, perhaps because of the Nazi association in its family connection.
3.Jackson, The Sassoons, 168.
4.These matters are discussed threadbare mostly with regard to the US in Bertrand and Schoar, ‘The Role of Family in Family Firms’, 73–96. This is a review article on previous studies in many different countries but it does not directly challenge the proposition—it only argues that family firms are correlated with trust. Also see Barontini and Caprio, ‘The Effect of Family Control on Firm Value and Performance’.
5.Barontini and Caprio, ‘The Effect of Family Control on Firm Value and Performance’.
6.Bernard and Schoar, ‘The Role of Family in Family Firms’.
7.Cohen, Tradition, Change and Conflict in Indian Family Business.
8.Kudaisya, The Life and Times of G.D. Birla, 194; B.K. Birla, A Rare Legacy, 80.
9.K.K. Birla, Brushes with History, 41.
10.B.K. Birla, A Rare Legacy, 27ff. He also reports being steered by his uncle as a thirteen-year-old when he was encouraged
to start investing in shares: B.K. Birla, A Rare Legacy, 25–26.
11.Piramal, Business Maharajas, 189.
12.Ibid.
13.Datta, Kausik, ‘Kumar Mangalam’, Business Standard, 19 September 2005.
14.K.K. Birla, Brushes with History, 313–14.
15.Ibid., 282–83.
16.See Khanna and Palepu’s account of how the Tatas have with consistency correctly selected industries to invest in. Also see the excellent documentation on the development of their enterprises in Benjamin and Rath, ‘Modern Indian Business History’.
17.B.K. Birla, A Rare Legacy, 27.
18.Kudaisya, The Life and Times of G.D. Birla,195–96.
19.K.K. Birla, Brushes with History, 83ff.
20.This idea belongs to the considerable realm of Mark Twain oral traditions and is not precisely traceable.
21.Piramal, Business Maharajas, 258.
22.Wiwattanakantang, ‘Are Japanese Family Firms Successful?’.
23.Piramal, Business Maharajas, 256–59.
24.The phrase is Max Weber’s.
25.Nassim, Antifragile.
26.Piramal, Business Maharajas, 403.
27.Ibid., 407.
28.For some consideration of this problem, see Ho, Liquidated and Zaloom, Out of the Pits. These anthropologists of financial markets and their predecessors ranging back to the great Walter Bagehot strive mightily, often with limited success, to understand the moral outlook of participants in the New York, London and Chicago markets.
29.Kudaisya, The Life and Times of G.D. Birla, 395.
30.The Mandelias and the groups of the Khetans and Kanorias are all examples.
31.Leonard, ‘Family Firms in Hyderabad’, 827–54.