SECOND-GENERATION LEADERSHIP AND ITS INFLUENCE ON FINANCIAL SUCCESS IN FAMILY-OWNED FIRMS

Abstract

Family-owned businesses play a vital role in driving economic growth, employment, and wealth creation across the globe, particularly in India. As these businesses transition from their founding generation to the second generation, the leadership dynamics undergo significant transformation, which can directly impact their financial success. This study examines the influence of second-generation leadership on the financial performance of selected family-owned companies in India. Through an analysis of key financial ratios—Asset Turnover Ratio, Current Ratio, and Net Profit Margin—this research assesses the operational efficiency, liquidity, and profitability of three family-owned firms: AC Pvt. Ltd., EDW Pvt. Ltd., and GPS Pvt. Ltd. The study also offers a comparative perspective on the financial performance of these companies under second-generation leadership. The findings highlight the varying degrees of success achieved by the firms, revealing that the effectiveness of second-generation leadership plays a crucial role in sustaining and enhancing financial performance. The study provides valuable insights for business families, managers, and policymakers on the importance of strategic succession planning, leadership development, and financial discipline in family-owned enterprises.