Incubating the next generation to venture: The case of a family business in Hong Kong
- 1.4k Downloads
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.
KeywordsFamily business Trans-generational entrepreneurship Angel investment
This paper is based on a case studied under the Successful Trans-Generational Entrepreneurship Project (STEP) and presented at the Asia Pacific STEP Family Summit in Hong Kong, 2008 (see Au, Craig, & Ramachandran, 2011). It was also presented at the Asia Pacific Journal of Management Special Issue Conference at Renmin University of China, Beijing, 2011. The project was partially supported by a research grant of the Hong Kong UGC awarded to the first author (CUHK 440008). We thank Mike Peng (Consulting Editor) and Yuan Lu (Guest Editor) for helpful comments.
- Argyris, C. 1985. Strategy, change, and defensive routines. Boston: Pitman.Google Scholar
- 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
- Au, K., Craig, J., & Ramachandran, K. (Eds.). 2011. Family enterprising in Asia: Exploring transgenerational entrepreneurship in family firms. Cheltenham, UK: Edward Elgar.Google Scholar
- Chesbrough, H., Vanhaverbeke, W., & West, J. 2006. Open innovation: Research a new paradigm. Oxford: Oxford University Press.Google Scholar
- Erikson, T., Sørheim, R., & Reitan, B. 2003. Family angels vs. other informal investors. Family Business Review, 16(3): 163–171.Google Scholar
- Eisenhardt, K. M. 1989. Building theory from case study research. Academy of Management Review, 14: 532–550.Google Scholar
- 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
- 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
- Kanter, R. M. 1977. Men and women of the corporation. New York: Basic Books.Google Scholar
- Lee, J., & Li, H. 2009. Wealth doesn’t last 3 generations: How family businesses can maintain prosperity. New Jersey: World Scientific.Google Scholar
- 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
- 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
- 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
- Poza, E. J. 2007. Family business. Mason, OH: Thomson South-Western.Google Scholar
- 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
- 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
- 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.
- Yin, R. K. 2009. Case study research: Design and methods. London: Sage.Google Scholar