Strategizing family business with a Chandlerian perspective on 3Ms: a case study of London Biscuits Berhad in Malaysia
| DOI | https://doi.org/10.1108/JABS-10-2019-0302 |
| Published date | 29 September 2021 |
| Date | 29 September 2021 |
| Pages | 181-199 |
| Subject Matter | Strategy,International business |
| Author | John Lee Kean Yew,Jesrina Ann Xavier |
Strategizing family business with a
Chandlerian perspective on 3Ms: a case
study of London Biscuits Berhad in Malaysia
John Lee Kean Yew and Jesrina Ann Xavier
Abstract
Purpose –This paper aims to exploreand explain following a generational change,the latter generation
in Chinese family firm is seen to apply different innovation strategies to thrive in a competitive
environment. The Chandlerian perspective on management, marketing and manufacturing techniques
(3Ms), derived from Americanbusiness historian, Alfred Chandler has shown conclusively that oneof a
small yet establishedenterprises in Malaysia, LondonBiscuits Berhad (LBB) was able to capture a larger
market by focusingon strategy and structure. This case study analyticallyand empirically describes the
insights surrounding enterprise development among family small and medium enterprises (SMEs) in
Malaysia.
Design/methodology/approach –By using the longitudinalway to compare the development of family
business throughtime, the historical profiles that were obtained fromMalaysia’s companies commission
house (Suruhanjaya Syarikat Malaysia) shows how organizational characteristic is often formulated by
capitalizingtacit knowledge as a controlled input in the productionprocess while promoting organization
capabilities, as generations change. Secondly, findings from the interviews will show how the latter
generationof this family firm innovates and adds value in product manufacturingby upgrading its quality,
using resourcesand revitalizing the stages of business cycle.
Findings –Findings show that enterprise development is influenced by objective setting during
generational change. As time goes by, the next generations have a tendency of minimizing risk and
maintaining harmonyin the family enterprise. The next generation starts to recruit and retain professional
staff while contributing innovative ideas toward the enterprise development, in comparison to the
founding generation.The findings also show that diversificationactivities (manufacturing), improvement
in domestic and international networking (marketing) and professional management adoption
(management)can clearly be seen in the developmentof LBB.
Practical implications –This case studytraces how organizational and administrativecharacteristics of
a firm are crucialif the enterprise is to capitalize on tacitknowledge and commercialize it throughproduct
development. It also clearly indicates that family enterprises may last several generations if the
Chandlerianperspective on 3Ms is successfullytransferred and practiced among familymembers.
Originality/value –The selected case study focuses on the Chandlerian concept, which is the
contribution of organizationcapabilities that foster strategic competition. This is done by investigating a
successful enterprise run by a prominent Chinese family in Malaysia, which has gone through
generational change. This paper proves that strategizing a family enterprise through the Chandlerian
conceptof 3Ms can transform a small business intoa large and successful multinationalenterprise.
Keywords Family business, Malaysia, Strategic management, Generational change,
Organization capabilities
Paper type Case study
1. Introduction
In Malaysia, nearly 80% of Malaysian businesses are family-owned and most of them
are small and medium enterprises (SMEs) with activities in trading, manufactur ing and
retailing contribute RM521.7bn (US$124.98bn) of the nation’s gross domestic p roduct
John Lee Kean Yew is
based at the Malaysian
Chinese Research Centre,
Department of Chinese
Studies, Faculty of Arts and
Social Sciences, University
of Malaya, Kuala Lumpur,
Malaysia.
Jesrina Ann Xavier is based
at the School of
Management and
Marketing, Faculty of
Business and Law, Taylor’s
University, Subang Jaya,
Malaysia.
JEL classification –L260,
M130, O140
Received 6 October 2019
Revised 10 March 2020
28 August 2020
4 February 2021
1 June 2021
Accepted 5 June 2021
DOI 10.1108/JABS-10-2019-0302 VOL. 16 NO. 1 2022, pp. 181-199, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 181
in 2018 (Ngui, 2002;Amran and Ahmad, 2010;Kheng and Minai, 2016). SMEs provide
5.7 million jobs to 70% of Malaysia’s workforce (SME Annual Report 2018/2019, 2021).
Approximately 25% of the SMEs in Malaysia are still managed by Chinese families in
Malaysia (Zwart, 2007) and are often small (Abdullah et al.,2015;Chin and Lim,
2018), except for few public listed Chinese firms (Gomez, 2012).
Eventually, majority of these family SMEs in Malaysia evolved away from traditional SMEs,
as they strive to manage the longevity of the business. Some of these family SMEs will
survive into second generation or even third generation by retaining a business culture like
the founders (Yew, 2020). This indicates that family SMEs in Malaysia prefer to share a
strong attachment to their respective cultural values. The key challenges of these SMEs are
always associated with succession planning, openness innovation, talent management and
retention (Nee, 2007). Nevertheless, some family SMEs in Malaysia can manage their
strategic planning effectively while others are stuck with poor management and inter-
generational aspirations. A study conducted by Price Waterhouse Coopers - PWC (2018)
shows that less than one-third of the surveyed family SMEs have a robust and formalized
succession plan by transferring the management to the next generation or by hiring
professional management.
Chinese businessmen in Malaysia have a history of intra-ethnic business partnership. The
business traditions exist among migrants in the colonial period with some firms diminishing
halfway and some emerging professional family firms (Gomez, 2004;Nee, 2007). Gomez
(2004) on the other hand states that the economic success of most family enterprises in
Southeast Asian countries is caused by Chinese immigrants. Some were founded by the
first generation of migrants from China and have since been handed down to the second
and even third generation of family membersto run professionally.
As stated in the list of the 40 richest Malaysians in 2008, 32 out of the 40 richest people is
dominated by Chinese families and accounts for 80% of the top 40 (Singh, 2008).
Therefore, preparing the new generation on how to handle the family business is necessary
in cases where a family dreams that the legacy would live on while ensuring the firm’s
growth, nurturing entrepreneurial spirit in the family by devising the best business plan or
knowledge transformation (Welter, 2011). While the topic of family influence in
entrepreneurship has been studied by Aldrich and Cliff (2003), more research is still
required to understand how knowledge transformation may impact innovation, corporate
venturing and renewal of strategies,especially in countries like Malaysia.
In investigating the theory behind the entrepreneurship of multigenerational family-owned
enterprise, it is pertinent to gain understanding on the connection between family,
knowledge transformation, generational change and entrepreneurship (Drakopoulou Dodd
et al.,2013
;Randerson et al.,2015;Seaman, 2015). The paradigm shift toward generation
plays a vital direction on the enterprise’s development. In other words, the prospects of
family SMEs will be threatened. Considering the claim that “a family enterprise does not
survive beyond the third generation” (Lee and Li, 2009), this case study recommends that
much focus should be given from the Chandlerian perspective on organization capabilities
which facilitates the enterprise development of family businesses in Malaysia. The evolution
from family enterprise to professional management can now be seen in firms all over the
world.
1.1 Chinese family business in Malaysia
Generally, Chinese family businesses in Malaysia have three types of enterprise structures
which are “old wealth,” “new wealth” and “declining wealth.” In simple words, old wealth
describes the family-owned enterprises which were established before the introduction of
the New Economic Policy (NEP). Most of them are founders who started the business with
poor technological skills and tend to “have entrenched poor management and control
PAGE 182 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 16 NO. 1 2022
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