Today, the majority of Asia’s publicly owned companies are still family controlledand the manner in which control is exercised can often be boiled down to one sentiment: a family business is the family’s business. For decades, boardroom positions and top jobs at such companies have been passed down from fathers to sons and daughters, not to professional managers outside the clan. Profits have been used to shore up a sister (or cousin) company, instead of going to shareholders. A banker eager to lend to family concerns from Kuala Lumpur to Kyoto has been happily able to dispense with the borrower’s balance sheet and P&L statement, which often concealed more than they disclosed. But he ignored at his peril the current blood pressure of the “Old Man” or the risk of antagonizing Wife No. 2 by getting too chummy with No. 1 Son.
But if you talk to the patriarchs and scions of the families that own Asia, they’ll tell you that it is no longer business as usual. For the past several years, they have increasingly come under fire for inefficient, outmoded and nepotistic practices. One of the outcomes of the 1997 Asian economic crisis was that the once revered taipan became closely associated with crony capitalism, and crony capitaliststhat cloistered business-government cabal that parcels out national economic spoils to a privileged fewgot a heavy dose of blame for the region’s collapse. Today, free trade, looser controls of capital flows, the information explosion and global competition are making it harder for family businesses to carry on like secret societies. Asians are more suspicious of concentrated economic power, no longer willing to take on faith the wisdom of their socioeconomic superiors. Shareholders are demanding “transparency” and genuine financial data, and that publicly owned companies be run for the benefit of all stakeholders, not just those who share genes. “The rules of the game have changed,” says Jamie Allen, secretary general of the Asian Corporate Governance Association in Hong Kong, a nonprofit organization that monitors the behavior of Asia’s company managers.
From India, TIME covers the Ambanis.