Overseas Chinese and Jewish diaspora are often seen as manipulative outsiders in their host countries. However, compared to the 40 million overseas Chinese, the 14 million Jewish diaspora have greater influence, directly or indirectly, on the global economy. The Tanoto Center for Asian Family Business and Entrepreneurship Studies at HKUST, under the leadership of the author, explores how the overseas Chinese can learn from the Jewish diaspora in the areas of succession and innovation in family businesses.
Both overseas Chinese and Jewish diaspora are self-reliant, hardworking, and value education and family. They are well-known as wealth accumulators, and live in strong close-knit societies, and at times have to survive discrimination, prejudices and atrocities in their countries of residence.
The Jewish diaspora, however, has several fundamental differences driving its success. The overseas Chinese are bound dialectically whereas the Jews are bound together by their religion and culture. The Jews show unity as a broader ethnic group, offering a higher level of support as necessary. Unlike overseas Chinese who have a strong aspiration to return home, Jews have no strong notion of “homeland”. Once settled, they assimilate quickly into their host countries.
When comparing the family and business dynamics of the two ethnic groups, there are a few more distinctive differences.
Patriarchy vs. the culture of debate
There is a strict patriarchal relationship in Chinese families. Younger generations are not supposed to challenge older generations’ decisions. Respecting the elder and keeping a harmonious relationship in the family are crucial in Chinese culture. On the contrary, Jews are willing to debate issues openly, even with their parents or those higher up in the hierarchy.
Mr Daniel Green, a third-generation leader of the Jewish family-owned Arnhold Group, said, “From my childhood, we had family Shabbat dinners on Friday nights. At the dinner table, there was a lot of debating, whether it was my dad talking to us about business or my siblings arguing with each other. This instilled the values we have as a family and as a business.”
Mr Robert Meyer, a Jewish entrepreneur and Chairman of Pharmalink International Limited, said, “As Jews, we teach our children, the next generation, to think and to think outside of the box. Questioning authority and debating decisions–in a polite way–are allowed and encouraged.”.
Working in or out of the family business
The room for negotiation influences the way next generation members plan for their own career. Many Chinese parents expect their next generation to come back to the business after they finish their degree. Jewish parents are more willing to let their children try their wings and explore their own profession. Going back to the family business is not a must.
“It is a wonderful opportunity working for yourself,” said Mr Green. “You have a lot more pressure and responsibilities, but at the same time more freedom to make decisions and determine your life path in a different way. I hope to give this luxury to my children if they want it. But if they are not ready to take the responsibility, this can become their burden, taking away their personal opportunities and ruining their life.”
There may be a historical reason for this difference. Early Chinese migrants were mostly unskilled labor seeking economic gains whilst the Jews were mostly political refugees and asylum seekers, who were professionally trained and skilled merchants. Most Chinese migrant families worked together to make a living, and this kind of collectivism barred the evolution of professional careers in the next generation. In contrast, the human capital of Jewish migrant families allowed their members to pursue their own dreams and professions.
Birth order vs. meritocracy
The two diasporas have different succession practices. Chinese tend to let their first-born son take over the business leadership, whilst Jewish families are more inclined to choose their successors based on meritocracy. Research has showed that first born tend to be much disciplined and follow orders. They are also good at implementing parents’ desires. Yet they could be more risk-averse.
The Green family followed more the meritocratic path. “Our family believes that the most capable person should work for the family business,” said Mr Green. “Each of us has his or her own skill sets, which the family can leverage. My elder brother’s expertise is in finance, so he works with my father on family investment. My sister has good experience in non-profits, so she handles the family charitable trust. My education and experience is seen to fit most for the family company.”
Keeping or selling the family business
The two diasporas seem to see business continuity quite differently. Our research shows that few ethnic Chinese family businesses could survive beyond the century mark, while centennial Jewish family businesses are even rarer. Our observation is that Jewish families do not put as much emphasis on business continuity as Chinese do. Rather, they think more on wealth succession. They are more relaxed about selling the family business and using the fund to start a new venture. Chinese, however, want to hold onto the businesses, even when they are not performing.
As an entrepreneur, Mr Meyer’s business is not a family venture. “I never had any intention to pass on my business to my three children nor am I able to do so, as none of them is interested in business. My expectation is that sometime in the next five to ten years the company is likely to be acquired. I have told my children that a large part of my estate will go to charities in Israel.”
When asked about his view related to family business succession, Mr Meyer commented, “In traditional times, the family business was an economic lifeboat necessary for survival. Without it, you might be starving. We now live in a society with lots of opportunities. Although it is a Chinese cultural value that sons and daughters should return to the family business, the question I would pose in today’s world is ‘why?’ The educated Chinese offspring of today can make their own decisions. They should have the option to sell the business and use the funds to do whatever is their passion.”
Innovation and entrepreneurship
Jews are known for their incredible innovation and entrepreneurship, and Israel is known as a “startup nation”. According to a scholar at Hebrew University, innovation and entrepreneurship are not an innate quality of Jews but a character shaped by the environment. Most Jews as well as inhabitants in Israel have long been suffered from the survival issues. The challenge of survival forced Jews to cultivate the entrepreneurial and innovative minds.
Our research found that successful Chinese family businesses also stress on innovation and entrepreneurship, such as the Lee family of Lee Kum Kee Group. The family’s business philosophy encourages members to enter into a new venture even when the anticipated chance of success is not certain. From their first product of oyster sauce invented more than a century ago to over 200 sauce products and the latest health products today, the family has never abandoned their entrepreneurship.
Chinese family businesses should preserve the merits of Chinese culture and traditions, while embracing and learning from other cultures. Besides the comparative study with Jewish family businesses, the Tanoto Center will continue the research with other ethnic groups such as Indian and Japanese family businesses. The results will be shared in the near future.
By Professor Roger King, Founder and Director of the Tanoto Center for Asian Family Business and Entrepreneurship Studies, HKUST Business School