Study of The Factors Influencing Consolidation Or Integration Disintegration Of Small Scale Family Owned Business in Chhattisgarh

Abstract

Small Industrial Units play a significant role in Indian economy in spurring its economic growth. There are 12 million SMES in India, Which employ approximately 40 million people and accounts for over 45% of industrial production and above 40% of exports done. The contribution of MSMEs in GDP is 8%. 96% of these firms are a family business(CII, 2011). newlineAmong the fortune 500 companies, 175 are family enterprises (IMD International, 2000). 40% of the listed companies in the United States are a family business (Jean and Hong, 2008). These 24 million family businesses employ 62% of the workforce and account for 64% of the GNP in United States (NMIMS, 2011). newline75% of the top 500 major enterprises in India are controlled by families and 99% of registered companies are family enterprises (IMD International, 2000). Amount half of the thirty companies on the BSE Sensex are controlled by their founding families (CII, 2011). newlineAbout 40% of these family firms die within the first five years die within the first five years, while 66% of remaining die oe leave the control from ownership during the first generation itself. Only 13% survive upto the third generation. newlineThere are almost 40 thousand small- scale Industries in Chhattisgarh which provide employment to approximately 1,22,000 people of the state (CSIDC, 2011).Out of the total numbers 1012 units are registeres paddy mills(DRMA, 2011). The majority of these firms are family owned. A smaller family business tends to be more dependent on internally generated funds for survival and development. Their share capital, retained profits and internally generated equity is governed by the philosophy of keeping it in the family tradition. They are not enthusiastic about parting it with venture capital, which risks losing family business control. They are also skeptical about fast growth as this might entail relinquishing control and dependence on external investors (Poustziouris, 2008). From previous studies no evidence has been found regarding formal development newline