Liberalisation led to rise of standalone family firms: Study

Hyderabad: Liberalisation led to the rise of Standalone Family Firms (SFFs) in India which are the primary drivers of accelerating the growth of the services sector in the country, according to a study conducted by a centre at the Indian School of Business (ISB).

The Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business conducted the study, which was authored by Nupur Pavan Bang and Professor Kavil Ramachandran from the Centre and Professor Sougata Ray of IIM Calcutta, a statement from the ISB said.

The authors studied 4,809 firms listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India as a part of the study, it added.

However, the study finds that not only did the family firms withstand the new rush of competitive forces in the economy, but also adapted to the changing business environment, it said.

"The study shows that the representation of family businesses grew at a much faster rate than the non-family businesses. In fact, evidence suggests that removal of restrictions and controls in the liberalised era actually unleashed their entrepreneurial spirit," it said.

In 1990, family firms represented 15.7 percent of the GDP in terms of their total income, whereas by 2015, they represented 25.5 percent of the GDP, it said.

In comparison, non-family firms formed 20.5 percent of the GDP in 1990 and 26.6 percent in 2015, the study mentions.