Developing Your Next CEO for the Family Business

yuuuFamily businesses have four options when considering a new CEO, but the crucial decision is whether a family member or outsider would be the best choice. John A. Davis looks at each option. A good book on CEO succession is The CEO Within by my Harvard Business School colleague Joe Bower. Bower studied how companies perform after hiring a new CEO, noting whether the successor had been recruited from inside or outside the company.

Bower makes a strong case for making “Insider Outsiders” your next CEO. These internal candidates with some outsider views have a more objective and independent view about how your company needs to change and adapt. Executives with the right mix of Insider and Outsider attributes, Bower claims, are likely to do a better job and create more economic value as CEO. I agree but CEO selection is more complex for family companies.

Options for Family Companies

In family companies, you also have the choice of family and non-family successors, giving you four broad choices for CEO successors:

The Family Insider
Family Insiders like Cargill’s Whitney MacMillan and Axel Dumas of Hermès (see Fig. 1) are the traditional and preferred choice of successor

A Quest for Repositioning The Emerging Internationalization of Chinese Companies


tylHow can emerging market firms (EMFs) improve their export performance? The so-called emerging markets or transition economies and their relations with the mature market economies of Europe and North America are creating strong competitive and cooperative forces. Firms from emerging markets are internationalizing and becoming new multinational companies (MNCs). According to certain projections, relations between the EU and North America and Asia and South America will change drastically (Jansson, 2007a). For example, a projection made by Goldman Sachs in 2003 of how Brazil, Russia, India and China will grow up to 2050 shows exciting results (Wilson and Purushothaman, 2003). This development was previously noted by Kumar and McLeod (1981) and Lall et al. (1983). However, a developed country’s perspective continues to dominate the literature (Zou and Stan, 1998).

Small- and medium-sized enterprises (SMEs) in China work under significantly different conditions compared to larger companies with global ambitions that, with few exceptions, have strong support from local authorities and government (Keister, 2000; Zeng and Williamson, 2003; Deng, 2004; Wu, 2005; Buckley et al., 2007).


Stock Buyback Plans, Seen as Shareholder Boon, Can Backfire

Stock buybacks are a boon for shareholders, right?

buyThat’s been the spin, anyway, as hedge fund activists have pushed corporate managers to spend billions repurchasing shares in recent years.

But not all buybacks are created equal, and exhibit A is LPL Financial Holdings, a brokerage and investment advisory firm in Boston. LPL recently completed a $275 million stock buyback spree that was exceedingly costly, increased the company’s debt and wound up primarily benefiting a powerful insider investor.

Shareholders typically like repurchase programs because a company’s earnings per share rise as the number of its shares outstanding falls, often propelling its stock price. These purchases can also support a company’s stock when the overall market is in decline.

Stock buybacks are a boon for shareholders, right?

That’s been the spin, anyway, as hedge fund activists have pushed corporate managers to spend billions repurchasing shares in recent years.

But not all buybacks are created

Take 10 Minutes to Get Started With content writing

The actual struggles of content marketers is creating enough content and keeping the quality high at the same time. It is something expert writers should work through on a regular basis. You should take 10 minutes before starting any content. In this way, you can write better content. Here are few things to do before you start content writing:


  1. Identify the target of the content

Before start writing, take a deep breath and start thinking about goal you’ve decided for content. If you know the target beforehand, it can help set the tone for everything which is about to come afterward.

  1. Do some RESEARCH

You have to keep in research mode to keep your queue filled with amazing content ideas.

Research could not just be reserved for writing or planning sessions. The content quality can enhance the substantially if you perform it on a regular basis because of the fact that the ideas pop into the head.

  1. 3. Decide on a hook

In content writing, each part of content should have a hook. Whether it’s an ego hook, a humor hook, an attack hook or

Tips On Trading CFD’s Like A Pro

Contract For Difference is a form of derivative trading, between a buyer and a seller, which attempts to capitalize on the price fluctuations regarding an underlying instrument. CFD is a virtual trading platform in which you can trade shares without physically owning them. The difference between the selling and buying price of the asset in question determines your returns from CFD trading. Standard and Fixed Risk are the two types of CFD trading accounts on CMC markets.

Tips On Trading CFD’s Like A Pro

Craft Clearly Defined And Realistic Trading Plan

Establishing a trading plan before opening a trade eliminates a reactive trading. Staying in the game by keeping your account intact should be your first goal when starting out in CFDs. Have clearly defined objectives, entry points, and exit points. Never make major alterations to your plans during the session. Always stick to your plan. A Successful CFD trading career needs craft and patience. Your trading plan should capture the following aspects of CFD trading;

-Entry Strategy: Test numerous entry strategies before selecting the most promising strategy.

-Recording Keeping strategy: Always ensure that your trading statistics are up to date.

Best Free Forex Advisor to the market with the trade results

Forex modern market differs significantly from the state in which he was 10 years ago. Of course, many of the changes that have taken place during this period, have benefited traders, but a new problem – the network has so much extra information that was extremely difficult to find among her rational grain, were no exception to this rule, and robots.

Therefore, today’s review, I decided to devote the best free Forex Adviser called Forex Cleaner.

This robot can quietly and slowly pick up the money from the market, with its algorithm it is a real training modules for beginners, as it works on the basis of simple and informative indicators, working on any kind of accounts, even on direct trading.

In part, this is why I ranked it to the class of the best free Forex Advisors, but that there were other objective reasons, namely:

  • Forex Cleaner requires virtually no setup – all of its indicators are already optimized for safe position trading.
  • The expert does not use Martingale method (more about the famous Martingale system) and does not apply averaging, which ensures a survival on “difficult” market.
  • It was developed in 2011, already after the global financial crisis revealed the shortcomings of many

Economics of the Ethanol Business

What happens when a group of Missouri corn farmers gets into the energy business? What appears to be a very lucrative decision quickly turns out to be much more risky. Professor Forest Reinhardt leads a case discussion on what the protagonists should do next. From HBS Alumni Bulletin. Key concepts include:

  • The case examines the complex political and economic underpinnings of the ethanol industry.
  • By investing in corn-based ethanol, farmers reduce their exposure to corn prices, but at the expense of exposure to the oil market.
  • The case promotes greater understanding of the way materials and energy flow in the modern U.S. agricultural system.
by Julia Hanna

What happens when a group of Missouri corn farmers gets into the energy business? With consumers paying more than double for gasoline than they did a year ago, turning crops into fuel, not food, seems like a good way to go—but not so fast.

In “Mid-Missouri Energy,” HBS professor Forest Reinhardt, with Senior Researcher James Weber and Agribusiness Program Director Mary Shelman (HBS MBA ’87), examines the complex political and economic underpinnings of the ethanol industry and the dilemma facing the farmers of Mid-Missouri Energy (MME).

The farmers must make major

Business Summit the Evolution of Agribusiness

Agribusiness has come to be seen not just as economically important, but as a critical part of society. The future for this massive industry will be both exciting and complex.

Editor’s Note: This is a summary of an HBS Business Summit presentation. View a full summary and video of the event on the HBS Centennial Web site linked below.

Professor Bell moderated a discussion of agribusiness past, present, and future. Professor Goldberg shared his perspective on the inception of the field of agribusiness and its evolution; the other panelists discussed present and future challenges based on their unique vantage points.

Through the study of agribusiness at Harvard Business School, the notion of the value-added food chain was born. Both the study and practice of agribusiness have evolved significantly over the decades. During that time, agribusiness has come to be seen not just as economically important, but as a critical part of society. Agribusiness touches on health, nutrition, safety, science, and government. One particular step in the evolutionary process is a transformation that occurred in the past decade. Some industry players have gone from being low-margin commodity producers to higher-margin providers of “solutions.”

The future for this massive industry will be both exciting and complex.

How to Predict if a New Business Idea is Any Good

In 2008, entrepreneur Brian Chesky and his two San Francisco roommates made the rounds of Silicon Valley VC firms with what they thought was a great idea: a website and mobile app that would allow homeowners to open their homes to strangers to sleep on their floor while traveling, in exchange for a nightly fee.

Of course, now we know the idea as Airbnb, a $10 billion business with 1.5 million listings around the world. But back then it must have seemed crazy. The liability issues alone seemed insurmountable—to say nothing of the likelihood that people would be willing to give the keys of their houses to total strangers who may or may not be serial killers.

Five VC firms rejected the nascent company’s pitch outright, and another two didn’t even bother to reply. “Investors must have thought, who would ever do this?” says Assistant Professor Pian Shu, a member of the Technology and Operations Management unit at Harvard Business School. “They didn’t know it would turn out to be a multibillion dollar industry.”

“By definition, when an investor makes an investment, it changes the probability of success”

In a new working paper, Shu asks the

When Negotiating a Price, Never Bid with a Round Number

Investors who offer “precise” bids for company shares yield better outcomes than those who offer round-number bids, according to research by Petri Hukkanen and Matti Keloharju

by Carmen Nobel

Here’s an easy tip for anyone negotiating to buy a car, a house, or even a company. When you make an initial offer, don’t bid with a round number like $10,000 or $1 million or $15 per share. Rather, bid with a more precise number, like $9,800 or $1.03 million or $14.80 per share.

According to a recent study of mergers and acquisitions, investors who offer “precise” bids for company shares yield better market outcomes than those who offer round-numbered bids.

“If one party gives a round number, it gives the signal that the party doesn’t really know what it’s doing”

“It turns out that if you make a precise bid, the targets are more likely to accept it, and more likely to accept it at a cheaper price. And with cash bids, they’ll generate a more positive market reaction,” says Matti Keloharju, a visiting scholar at Harvard Business School and co-author, with Petri Hukkanen, of

CEOs and Coaches How Important is Organizational ‘Fit

How big a factor is matching the right coach with the right team? As the Super Bowl approaches, Boris Groysberg and Abhijit Naik discuss football-related research that also has implications for the world of corporate hiring.

by Boris Groysberg & Abhijit Naik

“It’s a match made in heaven!”

One hears this said at weddings, at the end of mergers, at the hiring of CEOs, and, of course, at the hiring of coaches in the National Football League. Human history is rife with examples of a union of two entities being described thus, in the language, perhaps, of misguided optimism.

In truth, it is deceptively difficult to predict ex-ante the success of any union. We’re reminded of this as the Super Bowl approaches: when it comes to predicting the success of a football coach, short memories, hope, and impatience rule the day.

“Research has shown, quantitatively, that it definitely matters which coach is matched up with which team”

The question of whether matching matters takes on critical significance in the corporate world as well. Choosing talented employees makes a great difference to team productivity, but is merely hiring star candidates enough? Do companies often try to fit square pegs

How Do You Hire an ‘Impostor’

In Hiring, Should We Give Self-Confidence a Greater Weight Than Humility?

Summing Up

A respondent to this month’s column, Joel, provided the question for this summary. As he asked, “should we be focusing on hiring people who exude more confidence than their achievements justify?”

In advocating the employment of “imposters,” a term, by the way, that was regarded as objectionable by many, most respondents implicitly rejected the notion. They pointed to the desirable qualities of imposters, people who believe that their achievements are attained in spite of their limited capabilities, as employees. And several identified personally with the phenomenon.

Desirable qualities of imposters were described in different ways. Julie Cohen said, “The balance of competency and occasional self-doubt keep them constantly striving to improve.” Shyamsunder Panchavati, in opting for hiring imposters, commented that, “I would any day prefer self moderation to empty haughtiness.” Nilgun Yetis described them as “very talented and wholehearted people.” GuestReader put it this way: “Lack of certainty in one’s ability to succeed is reasonable at the outset of a new or unknown task.”

Deepa S suggested that, “‘imposters’ could well bring in the balancing element in the teams of

Working for Japanese Corporations in China A Qualitative Study


Japanese corporations have increased their presence in China significantly over the last decade and China has become for Japanese companies much more than just a cheap place for production. Seeing China as a market for their products and services, Japanese companies are transferring higher functions to China and need qualified manpower to fulfil them (Taura, 2005). However, Japanese firms report significant problems in this regard.

First, Japanese companies have to cope with high numbers of employees resigning from their positions. A survey by the Japan–China Investment Promotion Organization (NCTSK, 2005) found the separation rate for regular workers to be 11.5 and 12.4 per cent for university graduates, with the latter staying, on average, no longer than 3.2 years with their companies. Second, they have problems when competing for the best employees. Surveys have indicated that Japanese companies do not rank among the most popular employers, and are even frequently named as those foreign companies that people would least want to work for (Zhang, 2003). In 2004, according to a Chinese recruitment website (, Sony, although the most popular Japanese company, was only ranked 24th; only one other Japanese company, Matsushita, made it

Ambush Marketing in China Counterbalancing Olympic Sponsorship Efforts


The Olympic Games have experienced phenomenal growth over the past 30 years. Hosting the Olympics is now a complex and expensive undertaking requiring the support of the private sector: ‘Without the support of the business community, without its technology, expertise, people, services, products, telecommunications, its financing — the Olympic Games could not and cannot happen. Without this support, the athletes cannot compete and achieve their very best in the world’s best sporting event’. (J. Rogge,; accd. 7 December 2007)

The revenues from TV broadcasting and other marketing rights (eg sponsorship) make up most of the finance sources of the Organising Committee for the Olympic Games (OCOG) and National Olympic Committees (NOCs). The International Olympic Committee (IOC) worldwide sponsorship programme (TOP) has increased income by 900 per cent over a 20-year period (Table 1). This suggests that the Olympics are a powerful brand with the ability to provide much benefit to commercial partners. Hence, it is not surprising that despite their exclusive worldwide rights, TOP sponsors are not the only companies seeking to create an association with the Olympic brand. In fact, many non-sponsors feel obliged to use this exclusive marketing platform in the hope of establishing some

Stakeholders and Corporate Social Responsibility (CSR) A New Perspective on the Structure of Relationships

Two central developments in the business world towards the end of the 20th century were globalization and the increasing dominance and impact of information technology (‘informaticization’), and these developments have continued to accelerate in the early 21st century. The principal triggers for this increasing globalization and informaticization have been the continuing structural collapse and/or shift to a market economy of the former Communist countries, and, starting in the USA, the IT revolution, based mainly on the spread of the Internet. Attention is thus now being paid to those changes continuing on from the 20th century. Among Japanese corporations, Toyota, Honda, and Sony have become increasingly internationalized, and the current situation is such that, to quote the Honda CEO, ‘National borders have no meaning for corporations’ (Nikkei Business, 6 December 2005–2 January 2006, 37).

However, when management studies researchers try to establish a profile of business management for the 21st century, do they need to restrict their focus to the twin perspectives of globalization and informaticization in order to investigate the relationship with the performance of financial government, and to assess the issues in increasingly logical terms? The answer is ‘No’ — because, although globalization

International Expansion Strategies of Korean Venture Firms Entry Mode Choice and Performance


As the terms ‘accelerated internationalization’ (Oviatt and McDougall, 1997; Shrader et al., 2000) and ‘born-global’ (Hordes et al., 1995; Knight and Cavusgil, 1996; Madsen and Servais, 1997) indicate, many new ventures begin to operate beyond their national borders right after they are ‘born’ or while they are still ‘new’. In doing so, they are likely to face a double-edged sword: the liabilities of newness and foreignness. Operating as a young organization, a new venture faces the liability of newness not shared by established firms with a long operational history (Stinchcombe, 1965); by expanding abroad and operating in unfamiliar environments, it also faces the liability of foreignness not shared by incumbent firms (Hymer, 1976; Johanson and Vahlne, 1977). Thus, knowing how to penetrate and survive in foreign markets is critical for new-venture internationalization. Indeed, entry mode choice is one of the most important strategic concerns for firms considering international expansion, because it determines the level of resource commitment.

Not surprisingly, entry mode choice has been a topic of considerable inquiry in the field of international management (Brown et al., 2003), but the issue has usually been discussed and empirically tested within the context of established firms such as multinational

The Japanese Pharmaceutical Industry in Transition Has Higher Research Orientation Resulted in Higher Market Value


The Japanese pharmaceutical industry exemplifies the nation’s general drive towards a dominant global standard, a model characterized by high research intensity and high innovative readiness. Pharmaceutical companies that do not follow this lead are destined to forfeit market power. This trend emerged in the late 1980s, up till when Japan’s pharmaceutical firms found themselves in an ideal environment for their immediate intents and purposes. Protected from international competition, these firms were able to charge excessive prices for products for which there would be little or no demand on a global scale. The regulatory regime made the pharmaceutical industry by far the most profitable activity in Japan at the time (Odagiri and Yamawaki, 1986). However, times have changed, as the Japanese government has successfully reduced prices for pharmaceuticals and reduced entry barriers for foreign firms. As a result, Japanese companies have witnessed a dramatic decrease in their domestic market share. To offset this trend, they have started to redefine their strategies towards a higher degree of internationalization.

However, striving for internationalization is easier said than done, since global pharmaceutical markets are intensely science-based and competition is mainly driven by innovative new drugs offering additional

Foreign Direct Investment in China Its Impact on the Neighboring Asian Economies

Extensive and far-reaching reform of the external sector was the principal focus of the broad-based macroeconomic reform and restructuring program adopted by the People’s Republic of China’s (hereinafter China) in 1978. With vertiginous GDP growth, China’s global shares of trade, investment and production have risen in just two decades. Productivity levels, production standards and quality of life for some 400 million of its population in its southern and eastern coastal provinces have been steadily rising.

China’s rapid growth has had a great deal of impact on surrounding Asian economies. Its regional presence has grown markedly over the last quarter-century, so much so that it is influencing regional institutions and economic structure. This includes the emergence of a noteworthy sub-group called the ASEAN-Plus-Three (APT)1 as an important part of the regional architecture (another name for this sub-set of economies is ‘JACK’. short for ‘Japan, ASEAN, China and Korea’). This article inter alia asserts that the APT/JACK has an Asian identity and enormous future potential and could well become the kernel for an EU-like regional structure in future, an Asian Economic Community (Das, 2005). Since the late 1990s, China has consistently taken the initiative in persuading,

Mega Sporting Events in Asia Impacts on Society Business and Management An Introduction

Mega-sporting events today are central stages that not only feature professional athletes representing their country in competing for excellence, but also provide host nations with a universally legitimate way to present and promote their national identities and cultures on a global scale. This introduction to the special issue of Asian Business & Management on ‘Mega-sporting events in Asia’ suggests insights into the emerging field of research related to mega-events and sport and summarizes the history of mega-sporting events in Asia, linking the topic to the growing importance of sports and the interest shown by national governments and cities in staging sporting events in Asia. It also offers a general framework for understanding a range of conceptual and methodological issues related to defining and measuring the impact of mega-sporting events, indicating potential directions for further research.

Mega-Sporting Events in Asia as Focus of Interest

With the Games of the XXIX Olympiad, the host city of Beijing will step into the global spotlight. International Olympic Committee (IOC) president Jacques Rogge declared in his speech on 8 August 2007, in Tiananmen Square, celebrating the 1-year countdown to the 2008 Summer Olympic Games, that the world would be watching China and Beijing with great

Integration Management of Western Acquisitions in Japan

In recent years, Japan has seen a sharp increase in foreign cross-border merger and acquisition (M&A) transactions. Among the larger cross-border M&A transactions in Japan, a few multinational companies are already struggling with their acquisitions. In this study, we systematically analyzed and compared the unsuccessful DaimlerChrysler-Mitsubishi acquisition with the successful Renault-Nissan acquisition. We collected secondary data and conducted interviews with both Japanese and foreign managers. Despite some similar starting conditions, these acquisitions developed widely divergent outcomes. In this study, we have focused on post-acquisition integration and separated it into human integration and organizational integration. Findings indicate that human and organizational integration are strongly interwoven in Japan, with human integration being a necessary prerequisite for organizational integration. These findings highlight the importance of the human factor in the success of acquisitions. Active communication, participation, assertive leadership, commitment and the creation of a sense of urgency have been found to facilitate human integration. With regard to organizational integration, the autonomy of the integration management and independence from any keiretsu network have been identified as important factors.

Historically, Japan has received significantly less cross-border foreign direct investment (FDI) than other developed countries (Eurostat, 1999; Fukao and Murakami, 2005). However, in

Feds Plans to Raise Interest Rates Are Delayed Not Derailed

WASHINGTON — Federal Reserve officials will gather in Washington on Tuesday and Wednesday to debate whether a bumpy start to the year is now in the rearview mirror, clearing the way for higher interest rates.

The Fed is not likely to raise rates this week, but the steady growth of the domestic economy — despite the wobbles of financial markets and the weakness of other developed nations — is strengthening the hand of officials who say that higher rates are necessary to maintain control of price inflation.

It seems increasingly clear that the Fed’s plans to spend 2016 gradually raising its benchmark interest rate have been delayed, not derailed.

The challenge now confronting Janet L. Yellen, the Fed’s chairwoman, is forging a consensus among Fed officials about how soon to resume the march begun in December, when the Fed raised rates, by 0.25 percent, for the first time since the financial crisis.

Some Fed officials still emphasize caution, arguing there is little risk in moving slowly. Lael Brainard, a Fed governor, has been particularly vocal in warning