Nurturing transgenerational entrepreneurship in ethnic Chinese family SMEs: exploring Indonesia
| Date | 21 March 2019 |
| DOI | https://doi.org/10.1108/JABS-04-2018-0132 |
| Pages | 294-325 |
| Published date | 21 March 2019 |
| Author | Jacob Donald Tan,Hendrawan Supratikno,Rudy Pramono,John Tampil Purba,Innocentius Bernarto |
| Subject Matter | Strategy,International business |
Nurturing transgenerational
entrepreneurship in ethnic Chinese
family SMEs: exploring Indonesia
Jacob Donald Tan, Hendrawan Supratikno, Rudy Pramono, John Tampil Purba and
Innocentius Bernarto
Abstract
Purpose –This paper aims to explore and explain howpredecessors (incumbents) of ethnic Chinese
family small and medium-sized enterprises (SMEs) in Indonesia or appropriately called Chinese-
Indonesianfamily SMEs nurture their successors in procuringtransgenerational entrepreneurship.
Design/methodology/approach –A total of 25 participantswere involved in this qualitative study which
employed a multi-method triangulation design with the following research instruments: semi-structured
in-depth interviews with experts, incumbents and successorsof Chinese-Indonesian family SMEs, field
notes from conversations and observations during engagementwith participants affiliated to the family
SMEs, a focus group discussion with academicians and literature reviews. Another key approach is
source triangulation, where different participants –e.g. from among the experts, from among the
incumbents, successors and family members in each family business case were interviewed and
engagedoutside the interview sessions.
Findings –The proposed theoreticalframework depicts comprehensive attributesof nurturing Chinese-
Indonesian successors to continue enterprising at the helm of family SMEs. Propositions are used to
explain the impacts these attributes have on transgenerational entrepreneurship specifically. At the
personal level, incumbentshave to focus on discovering the successors’ passionsand nurture them in
formal education,childhood involvement, as well as bridging themin entrepreneurialknowledge through
cultural values, mentorship, autonomy and role modelling. Incumbents also had to plan for their
retirementsto provide autonomy for successors. At the firm/familylevel, incumbents must be able to set a
foothold on family governance, firm governance and ownership distribution to reduce conflicts in their
family businesses. Furthermore, as a minority group with past traumatic experiences, Chinese-
Indonesian family SMEs usually equip themselves with contingency plans to protect their assetsfor the
long-termfuture.
Research limitations/implications –This study was conducted in Indonesia amongst Chinese-
Indonesian family SMEs and thus it is not generalisable in other settings. Literature reviews on family
SMEs successionare still scant, especiallyon the Chinese-Indonesian.
Practical implications –Predecessors/incumbents of Chinese-Indonesian family SMEs could consider
implementing the proposed nurturing strategies to their successors to sustain the longevity of the business
based on trust, stewardship and harmony. The theoretical research framework resulted from this study
offers general suggestions on how to nurture the next generation specifically from personal/interpersonal
perspectives, which must be accompanied by specific scopes of family and firm aspects. This study
extends beyond indicating the factors (ingredients) by explaining how to nurture transgenerational
entrepreneurship (cook the ingredients) in SMEs for a tactful transition. Hence, the incumbents play vital
roles and must be poised to adjust their mindsets to certain aspects indicated in this study.
Social implications –Most overseas Chinese businesses are family-owned, and besides Indonesia
constituting the largestChinese population outside the Republic of China,this 3 per cent of Indonesia’s
people are knownfor controlling about 70 per cent of the economy.Furthermore, SMEs play a significant
role in the Indonesianeconomy, as they provide about 97 per cent off the country’s employmentand 57.8
per cent ofthe gross domestic product. Hence, thelongevity of Chinese-Indonesian familySMEs must be
well managedto bolster the economy and social welfare of the country.
Jacob Donald Tan is based
at the Business School,
Universitas Pelita Harapan,
Tangerang, Indonesia.
Hendrawan Supratikno is
based at the Commission
XI (Banking and Finance),
Dewan Perwakilan Rakyat
Republik Indonesia,
Jakarta Pusat, Indonesia.
Rudy Pramono is based at
the Center for Research
and Community
Development, Universitas
Pelita Harapan, Tangerang,
Indonesia. John Tampil
Purba and
Innocentius Bernarto both
are based at the Business
School, Universitas Pelita
Harapan, Tangerang,
Indonesia.
Received 17 April 2018
Revised 14 September 2018
Accepted 12 November 2018
PAGE 294 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 13 NO. 2 2019, pp. 294-325, ©Emerald Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-04-2018-0132
Originality/value –A transgenerational entrepreneurship model in the context of Chinese-Indonesian
family SMEs which incorporates the nurturing process of the successor to step up the helm of the
businessis proposed in the study.
Keywords Indonesia, Ethnic Chinese, Small-and-medium enterprises (SMEs),
Transgenerational entrepreneurship
Paper type Research paper
Introduction
One ethnic group that stands out in Indonesia is the Chinese-Indonesians. How they
play a significant role in the nation’s economy through their entrepreneurial spirit and
skills needs to be closely examined. According to the World Economic Forum (2016)
(June 27), Indonesia consists of 7.67 million Chinese-Indonesians, the largest
Chinese population in the world residing outside of China. Another significance is that
they are known to constitute 3.5 per cent of the population but contribute 70 per cent
of Indonesia’s economy (Chua, 2004;Huntington, 1997;Suryadinata, 1999); Karsono
and Suprapto (2015) stated the Chinese-Indonesian family businesses contributed
over 60 per cent of Indonesian monetary activities. Referring to the most recent
publication by Globe Asia August (2016), from the top 20 conglomerate groups
ranked in terms of revenues, 60 per cent of them are owned by Chinese-Indonesians.
This data indicates the significance of the roles of Chinese-Indonesians to the
country’s economy: The current population of around 258 million people, ranke d
fourth in the world after China, India and the USA (USA Census Bureau, 2016), with a
gross domestic product (GDP) of US$932,259bn in 2016 that ranked 16th in the world
economy (World Bank, 2018).
Thus, it is essential to investigate the development of Chinese-Indonesian family small
and medium-sized enterprises (SMEs), as they strive to manage the longevity of the
business. The significance of this phenomenon is proposed by Zellweger et al. (2012b)
referring to John Ward’s 30/13/3 survival statistics, while Breton-Miller et al. (2004) stated
it as 30/15, which means 30 per cent of the family firms will survive to the second
generations, 13 per cent or 15 per cent to the third, and barely 3 per cent beyond the
third. However, the trend of family business longevity has frequently referred to John
Ward’s 30/13/3 survival statistics: 30 per cent of family firms survive to the second
generation; 13 per cent survive to the third generation; 3 per cent survive to the fourth
generation (Ward, 1987).
The Economist Intelligence Unit (2014) surveyed 250 family-owned businesses in
Southeast Asia (SEA). The respondents stated that succession plan is vital to the firms’
growth strategy, as it is easier to attract investment from confident investors as well as
trust from customers. The research report indicated that smaller firms are not prepared
for succession planning, thus leading to this study which focuses on Chinese-Indonesian
family SMEs. Despite the Indonesian firms being the best prepared in succession
planning in the SEA, they are the most stressful in experiencing conflicts among family
members over the business strategies. Handler (1994) explained it appropriately with his
annotation that family business succession is a multistaged process that stretches from
before the appointment of the successor to the effective management by the successor
in handling the business risks and family dynamics. Although the key factors and
processes of transitioning family firms from one generation to another have been
identified such as in Barnes and Hershon (1976) and Breton-Miller et al. (2004),the
individual- or interpersonal-level studies that are inclusive of emotional and other non-
financial aspects of how families cultivate entrepreneurship from one generation to
another have not been primarily focused for research (Bau
`et al., 2013;Jaskiewicz et al.,
2015;Nordqvist et al.,2012).
VOL. 13 NO. 2 2019 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 295
Moreover, Zellweger et al. (2012b), Jaskiewicz et al. (2015) and Chaimahawong and
Sakulsriprasert (2012) recommended further research to explore family business
succession in various countries or regions to extend the findings of the strategies used
for succession, as societal changes affect longevity over time. Although Jaskiewicz
et al. (2015) introduced three broad constructive strategies –strategic education,
entrepreneurial bridging and strategic succession –for entrepreneurial legacy, the
particular attributes in each of the strategy are for the most part different and not
contextual to this study’s focus on Chinese-Indonesians. Thus, the research gap to be
inquired is how do incumbents in Chinese-Indonesian family SMEs nurture their
successors to achieve transgenerational entrepreneurship? In other words, how can
successors be cultivated so that they can produce transgenerational value for the
longevity of the firms? In analogical stance to cooking, past literature may have stated
the “ingredients” to extend transgenerational entrepreneurship to successors but
hardly explore and explain how to cook them together into “delicacies”, especially from
individual-level perspectives.
The extant literature on Chinese-Indonesian family business succession is still scant (see
Table I). Furthermore, because of past Indonesia’s history of cultural assimilation of the
Chinese and being the 1998 riot victims, the researchers had to take a qualitative approach
to probe into the mindsets of this distinctive ethnic group. This research is also challenging,
as Chinese-Indonesians are known to be reserved, or in other words, tight-lipped. There are
a total of 25 participants whom the researchers approached, and almost all have the
Chinese-Indonesian background. This study commences with the articulation of Chinese-
Indonesian background and transgenerational entrepreneurship. The researchers also
slightly highlight the motivational drive of family business and acutely direct the theoretical
background from family- or firm-level to individual-level perspective by emphasising on
family business career, leadership and succession process. Through explorative findings,
the researchers theorise by discussing the detailed aspects of which incumbents should
focus on their successors –successor’s essence, strategic education, entrepreneurial
bridging and strategic transition –to perform accessory pathways towards transgenerational
entrepreneurship.
Table I Extant literature related to family business in Indonesia
Author (year) Title Research methodology
Utami (2017) The Role of Personality System Succession Pattern in
Family Business in Indonesia
Quantitative (survey data using PLS)
Efferin et al. (2015) Management Control and Leadership Styles in Family
Business, An Indonesian Case Study
Qualitative, case study
Karsono and Suprapto (2015) The Downfall of Chinese Family Businesses in East Java,
Indonesia
Qualitative (interviews)
The Economist (2014)
A Report from The Economist
Intelligence Unit
Building Legacies, Family business succession in
South-east Asia
Report
Wahjono et al. (2014) Succession Planning as an Economic Education to
Improve Family Business Performance in East Java
Province of Indonesia
Qualitative, case study (content analysis)
Rachmania, et al. (2012) Influencing Factors of Entrepreneurial Developmentin
Indonesia
Quantitative (data survey)
Tirdasari and Dhewanto (2012) Family Business Succession in Indonesia: A Study of
Hospitality Industry
Qualitative, case study
Koning (2007) Chineseness and Chinese Indonesian Business
Practices: A Generational and Discursive Enquiry
Discursive
Efferin and Hopper (2007) Management Control, Culture, and ethnicity in a Chinese
Indonesian Company
Qualitative, grounded theory
PAGE 296 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 13 NO. 2 2019
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