The liberalisation has led to the rise of Standalone Family Firms (SFFs) in India and they were the primary drivers of accelerating the growth of the services sector in the country, according to a study conducted by Indian School of Business.

It traces the progress of Indian family businesses over a 26-year period from 1990 to 2015. The authors studied 4,809 firms listed on the Bombay Stock Exchange and the National Stock Exchange.

As per the findings of the study, close to 73 per cent of the listed standalone family firms were incorporated in the period 1981 to 1995. In comparison, only 49 per cent of the business group affiliated family firms were incorporated in the same period.

“The growth in the number of standalone family firms was driven primarily by the new firms in the services sector. Wholesale trade, financial services and information technology were the most favoured industries for the listed standalone family firms,’’ ISB said in a release issued here.

The study shows that the representation of family businesses grew at a much faster rate than the non-family businesses. In fact, evidence suggests that removal of restrictions and controls in the liberalised era actually unleashed their entrepreneurial spirit.

In 1990, family firms represented 15.7 per cent of the GDP in terms of their total income, whereas by 2015, they represented 25.5 per cent of the GDP. In comparison, Non-family firms formed 20.5 percent of the GDP in 1990 and 26.6 percent in 2015.

Family firms accounted for 28 per cent of all indirect taxes and 18 per cent of all direct corporate taxes in the financial year 2015, while non-family firms accounted for 26 per cent and 25 per cent, respectively.

The study was done Nupur Pavan Bang and Kavil Ramachandran of the Thomas Schmidheiny Centre for Family Enterprise at ISB and Sougata Ray of IIM Calcutta.

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