Asia Pacific Journal of Management

, Volume 30, Issue 3, pp 749–767 | Cite as

Incubating the next generation to venture: The case of a family business in Hong Kong

  • Kevin Au
  • Flora F. T. Chiang
  • Thomas A. Birtch
  • Zhujun Ding
Article

Abstract

Many Chinese family businesses face the dilemma of building good operating and governance structures and systems while fostering an entrepreneurial spirit across generations. In this study, we explored trans-generational entrepreneurship in Automatic Manufacturing Ltd. (AML), a Hong Kong SME, to shed light on this problem. The first generation founded the company and chose a unique development path that emphasized quality, innovation, and learning before grooming a cadre of professional managers. To continue the family entrepreneurial spirit, AML used the “familiness” resources embodied within the family and its business to incubate the second generation. To test the wings of the second generation as entrepreneurs and then lure them back to AML to take over the responsibilities of the first generation, a unique succession plan nurturing spin-offs by the second generation was developed and implemented. Such a systematic approach, although still under experimentation, has the potential to become best practice for other family businesses. The implications of this approach for research in portfolio entrepreneurship and open innovation are also discussed.

Keywords

Family business Trans-generational entrepreneurship Angel investment 

References

  1. Ahlstrom, D., Young, M. N., Chan, E. S., & Bruton, G. D. 2004. Facing constraints to growth? Overseas Chinese entrepreneurs and traditional business practices in East Asia. Asia Pacific Journal of Management, 21(3): 263–285.CrossRefGoogle Scholar
  2. Argyris, C. 1985. Strategy, change, and defensive routines. Boston: Pitman.Google Scholar
  3. Arregle, J.-L., Hitt, M. A., Sirmon, D. G., & Very, P. 2007. The development of organizational social capital: Attributes of family firms. Journal of Management Studies, 44(1): 73–94.CrossRefGoogle Scholar
  4. Au, K., & Cheng, C. Y. J. 2011. Trans-generational entrepreneurship: Challenges to Automatic Manufacturing Limited in Hong Kong. Manuscript submitted to the Entrepreneurship Global Casebook Project of the Academy of Management.Google Scholar
  5. Au, K., Craig, J., & Ramachandran, K. (Eds.). 2011. Family enterprising in Asia: Exploring transgenerational entrepreneurship in family firms. Cheltenham, UK: Edward Elgar.Google Scholar
  6. Au, K., & Kwan, H.-K. 2009. Start-up capital and Chinese entrepreneurs: The role of family. Entrepreneurship: Theory and Practice, 33: 889–908.CrossRefGoogle Scholar
  7. Carlock, R., & Ward, J. L. 2001. Strategic planning for the family business. London: Palgrave.CrossRefGoogle Scholar
  8. Carter, S., & Ram, M. 2003. Reassessing portfolio entrepreneurship. Small Business Economics, 21: 365–371.CrossRefGoogle Scholar
  9. Chesbrough, H., Vanhaverbeke, W., & West, J. 2006. Open innovation: Research a new paradigm. Oxford: Oxford University Press.Google Scholar
  10. Claessens, S., Djankov, S., & Lang, L. H. P. 2000. The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58(1–2): 81–112.CrossRefGoogle Scholar
  11. Craig, J., & Moores, K. 2006. A 10-year longitudinal investigation of strategy, systems, and environment on innovation in family firms. Family Business Review, 19: 1–10.CrossRefGoogle Scholar
  12. Erikson, T., Sørheim, R., & Reitan, B. 2003. Family angels vs. other informal investors. Family Business Review, 16(3): 163–171.Google Scholar
  13. Eisenhardt, K. M. 1989. Building theory from case study research. Academy of Management Review, 14: 532–550.Google Scholar
  14. Eisenhardt, K. M. 1991. Better stories and better constructs: The case for rigor and comparative logic. Academy of Management Review, 16: 620–627.Google Scholar
  15. Goodstadt, L. F. 2005. Uneasy partners: The conflict between public interest and private profit in Hong Kong. Hong Kong: Hong Kong University Press.Google Scholar
  16. Granovetter, M. 1973. The strength of weak ties. American Journal of Sociology, 78: 1360–1380.CrossRefGoogle Scholar
  17. Jiang, Y., & Peng, M. W. 2011. Are family ownership and control in large firms good, bad, or irrelevant?. Asia Pacific Journal of Management, 28(1): 15–39.CrossRefGoogle Scholar
  18. Kanter, R. M. 1977. Men and women of the corporation. New York: Basic Books.Google Scholar
  19. Karra, N., Tracey, P., & Philips, N. 2006. Altruism and agency in the family firm: Exploring the role of family, kinship, and ethnicity. Entrepreneurship: Theory and Practice, 30(6): 861–877.CrossRefGoogle Scholar
  20. Lee, J., & Li, H. 2009. Wealth doesn’t last 3 generations: How family businesses can maintain prosperity. New Jersey: World Scientific.Google Scholar
  21. Miller, D., & Le Breton-Miller, I. 2005. Managing for the long run: Lessons in competitive advantage from great family businesses. Boston: Harvard Business School Press.Google Scholar
  22. Nemeth, C., & Kwan, J. 1987. Minority influence, divergent thinking and the detection of correct solution. Journal of Applied Social Psychology, 9: 788–799.CrossRefGoogle Scholar
  23. Nordqvist, M., Zellweger, T., & Habbershon, T. 2010. Transgenerational entrepreneurship. In M. Nordqvist & T. Zellweger (Eds.). Transgenerational entrepreneurship: Exploring growth and performance in family firms across generations. Cheltenham, UK: Edward Elgar.Google Scholar
  24. Ostgaard, T. A., & Birley, S. 1996. New venture and personal growth networks. Journal of Business Research, 36: 37–50.CrossRefGoogle Scholar
  25. Plate, M., Schiede, C., & von Schlippe, A. 2010. Portfolio entrepreneurship in the context of family owned business. In M. Nordqvist & T. Zellweger (Eds.). Transgenerational entrepreneurship: Exploring growth and performance in family firms across generations. Cheltenham, UK: Edward Elgar.Google Scholar
  26. Poza, E. J. 2007. Family business. Mason, OH: Thomson South-Western.Google Scholar
  27. Prahalad, C. K., & Bettis, R. A. 1986. The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7(6): 485–501.CrossRefGoogle Scholar
  28. Redding, S. G. 1996. Weak organizations and strong linkages: Managerial ideology and Chinese family business networks. In G. G. Hamilton (Ed.). Asian business networks. Berlin: de Gruyter.Google Scholar
  29. Salvato, C., Chirico, F., & Sharma, P. 2010. A farewell to the business: Championing exit and continuity in entrepreneurial family firms. Entrepreneurship and Regional Development: An International Journal, 22(3–4): 321–348.CrossRefGoogle Scholar
  30. Sieger, P., Zellweger, T., Nason, R., & Clinton, E. 2011. Portfolio entrepreneurship in family firms: A resource-based perspective. Strategic Entrepreneurship Journal, 5: 327–351.CrossRefGoogle Scholar
  31. Silva, J. 2006. Venture capital investments in family businesses: The financier perspective. In J. E. Bulter (Ed.). Venture capital and the changing world of entrepreneurship: 239–248. Greenwich, CT: Information Age.Google Scholar
  32. Steier, L. P. 2007. New venture creation and organization: a familial sub-narrative. Journal of Business Research, 60(10): 1099–1107.CrossRefGoogle Scholar
  33. Steier, L. P. 2009. Familial capitalism in global institutional contexts: Implications for corporate governance and entrepreneurship in East Asia. Asia Pacifica Journal of Management, 26(3): 513–535.CrossRefGoogle Scholar
  34. Su, Y. Y., & Carney, M. 2012. Can China’s family firms create intellectual capital?. Asia Pacific Journal of Management. doi:10.1007/s10490-012-9302-z.
  35. Upton, N., & Petty, W. 2000. Venture capital investment and US family business. Venture Capital, 2(1): 27–39.CrossRefGoogle Scholar
  36. Wilkund, J., & Shepherd, D. A. 2008. Portfolio entrepreneurship: Habitual and novice founders, new entry, and mode of organizing. Entrepreneurship: Theory and Practice, 32: 701–725.CrossRefGoogle Scholar
  37. Whyte, M. K. 1996. The Chinese family and economic development: Obstacle or engine?. Economic Development and Cultural Change, 45(1): 1–30.CrossRefGoogle Scholar
  38. Yin, R. K. 2009. Case study research: Design and methods. London: Sage.Google Scholar

Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  • Kevin Au
    • 1
  • Flora F. T. Chiang
    • 2
  • Thomas A. Birtch
    • 3
  • Zhujun Ding
    • 4
  1. 1.Department of Management and Centre for EntrepreneurshipThe Chinese University of Hong KongHong KongPeople’s Republic of China
  2. 2.Department of ManagementHong Kong Baptist UniversityHong KongPeople’s Republic of China
  3. 3.Centre for Industry and GovernmentUniversity of CambridgeCambridgeUK
  4. 4.Department of ManagementThe Chinese University of Hong KongHong KongPeople’s Republic of China

Personalised recommendations