Power play in Chinese family firms: insiders vs. outsiders
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History has shown the instrumental role of family businesses in the economy. A 2025 index from EY shows that 500 global family businesses earn US$17.6 billion annually, with 80 per cent yielding more than US$5 billion. Many of them are headquartered in Asia, including Hong Kong with household names like Jardine Matheson, Sun Hung Kai Properties, Chow Tai Fook and the like.
It is natural to have family members in executive roles to ensure the firms continue their legacy and identity. On the other hand, family firms often hire professionals outside the family at top management levels to sustain growth and remain competitive. The firms' success then depends on how well these family and non-family managers collaborate, combining their unique skills and perspectives to create a competitive edge.
Inevitably, hypothetical dividing lines or faultlines emerge between the two that can impact company performance in various ways. While these divisions can lead to conflicts and impair operations, they can also enhance information sharing and positively affect the firms' earnings, like a double-edged sword. The question is, how far can these lines affect the dynamics of family firms?
'While family and non-family managers collaborate as members of the same team, they differ significantly in terms of family affiliation, personal goals, and the treatment they receive from the controlling family,' says Dora Lau, Associate Professor (Teaching) in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School.
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To explore the implications of this division among Chinese family firms, Professor Lau conducted a study titled Top management team faultline size and family firm performance, in collaboration with Li Wenwen of Sun Yat-Sen University, He Ai of South China University of Technology and Li Xiaotong of Qingdao University of Science and Technology. 'The study found that large demographic faultlines between family and non-family managers would benefit firm performance,' Professor Lau says.
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