RESEARCH ON THE IMPACT OF GENERATIONAL CHANGE ON FAMILY BUSINESSES' CAPITAL STRUCTURE IN INDIA

Family businesses make a prominent contribution to economies all around the world. They are frequently regarded as critical to future economic advancements since they place a focus on producing wealth for future generations. Next-generation participation is critical to their success and survival. Family businesses also behave differently from non-family firms when making financial decisions. Despite a significant amount of research on family businesses, we still know little about the effect of generational change on capital structure, especially in the context of Indian family businesses. This study aims to address this shortcoming and explores this topic in the context of family-owned Indian firms. The study utilised an interpretive research philosophy and collected qualitative data from seven organisations through 14 semi-structured interviews with participants representing different generations. The data were then analysed using thematic analysis. The findings contribute to the existing literature as it shows that most family firms tend to use more equity finance after a new generation is added. It also shows that of the family businesses that switched to equity financing, the majority employed private equity rather than public equity. Data suggest every organisation gives different significance to elements affecting financial decisions, based on their objectives. The study highlights various elements affecting the financial decision like education and situation of crisis which creates a better understanding of the reasons that lead to a financial decision. This is a novel finding compared to the existing literature on this topic. Based on its findings, study recommends family firms to have an early introduction of new generation to the business, provide flexibility in decision-making, ensure clear division of control and develop a succession plan. The adoption of these recommendations will help to avoid intergenerational conflicts and ensure continued efficacy in financial decision-making in the long run. It can also nurture and develop the intra-family relationships. Future research is recommended to be more inclusive, with a greater variety of participants in different countries