They construct, they expand, and then they collapse. The well-known cycle of family-owned businesses has been repeated across the world for generations. In Thailand, where family-run business groups hold a significant position in the economy, the issue is whether they can overcome the third-generation curse?
At the third Family Business Forum 2025, organized by the Stock Exchange of Thailand (SET) with the theme “Transforming Family Business: Adapt to Survive, Change to Grow,” local and international panelists discussed the reasons why many family businesses fail and explored ways for the next generation of Thai family businesses to become more resilient in the era of artificial intelligence (AI).
What causes the majority of family-owned businesses to collapse by the time they reach the third generation?
There’s an old proverb: “The first generation constructs it, the second develops it, and the third ruins it.”
As noted by Matt Allen, a professor at the Kellogg School of Management and a business owner from the second generation, growing up in a family environment can foster an entrepreneurial spirit. However, without proper structure and open communication, these family relationships may ultimately lead to failure.
Studies shared at the conference showed that 75% of startups around the world are established by families. In Thailand, this number could be as high as 99.7%, among the highest in the world. However, less than half manage to last through the third generation.
The issue is typically not financial, but rather unclear lines between family and business — role ambiguity, competition, and reluctance to adapt. Entrepreneurs usually emphasize dedication and control, whereas heirs focus on technology, health, and creativity. Analysts state that without a clear framework, these distinctions often shift from opportunity to disagreement.
What are the typical internal difficulties?
The speakers highlighted three common problems, the first being conflicting roles when family members act concurrently as owners, administrators, and leaders.
The second problem involves poor communication, especially regarding matters like dividends, succession, and corporate governance. The third challenge is making decisions based on emotions, particularly when family loyalty overrides sound business judgment.
Officials from leading Thai companies, including Central Group and Thai Life Insurance, explained how they navigated these challenges using organized management systems.
If a family is unable to communicate freely, business choices turn into personal matters,” they stated. “However, when all parties concur on the guidelines, everything operates seamlessly.
What strategies can family-owned businesses use to succeed and grow through different generations?
Experts highlighted three key factors for sustained success: transparent leadership, performance-driven administration, and ongoing dialogue.
Currently in its fifth generation, Central Group is guided by a Family Constitution and a Family Council that handle decisions related to leadership, investments, and conflict resolution. The council serves as a link between family unity and business strategy, managing over 200 members while maintaining clarity and focus.
In the same way, Thai Life Insurance sought to enhance professionalism by turning to the capital market. The second generation chose to list the company on the SET, promoting transparency and structure.
“Once listed, all shareholders receive dividends based on their respective holdings,” stated Varang Chaiyawan, director and deputy chief executive of Thai Life Insurance.
This framework resolved conflicts about equity and enabled the company to continue expanding, while every family member was able to enjoy a comfortable life in their own manner.
Is being listed on the stock market truly beneficial for family-owned businesses?
Listing definitely provides benefits, and in various aspects beyond just financial ones, as stated by executives.
Requiring family businesses to distinguish ownership from leadership, implement open financial practices, and create independent governing bodies. This change helps minimize internal conflicts and shifts emotional choices to more professional ones.
“Before listing, everything was under the family name. There were no dividends. Everyone lived simply,” said Prin Chirathivat, deputy group chief executive of Central Group and a third-generation executive in the company.
After listing, profits became visible and distributed equitably. It reduced stress and allowed us to concentrate on expansion.
The chairman of SET, Kitipong Urapeepatanapong, expressed agreement, highlighting that listing is not solely about generating capital.
“Listing represents a transformative milestone that fosters responsibility, promotes creativity, and guarantees enduring impact,” he stated.
As per the SET, there are over 2,000 major family-owned businesses in Thailand that show significant growth prospects, with more than 800 of them already having gone public. The exchange is collaborating with entities like commercial banks, the Federation of Thai Industries, and the Board of Investment to discover potential family-run companies for upcoming listings.
The partnership also seeks to enhance financial education and increase understanding of the procedure and advantages associated with becoming a publicly traded company in Thailand’s stock market, stated Mr. Kitipong.
What actionable measures can households implement to ensure effective succession?
As per the panel members, the initial suggestion is to distinguish between business and family affairs. A highly effective approach is to create a Family Council focused on values and relationships, along with a Corporate Board dedicated to business outcomes.
They also suggest that family-owned businesses conduct frequent meetings, which promotes open communication between different generations.
Following that, implementing mentorship systems enables older family members to guide future leaders via organized leadership initiatives.
Family business owners are also encouraged to emphasize competence rather than rank. Executive appointments should be determined by skill, not family background.
In conclusion, family-run businesses are encouraged to establish a culture of equity, partially by ensuring open distribution of profits and sharing of information, while clearly outlining responsibilities helps minimize conflicts.
The mentorship model based on rotation used by Central Group and the principle of shareholder equality practiced by Thai Life both provide examples for the upcoming generation of family-run businesses.
In what way is the SET facilitating this change?
The Thai stock exchange has prioritized the evolution of family businesses as a national focus, through programs like the Family Business Thailand Project. This initiative, run in collaboration with the Department of Business Development and the University of the Thai Chamber of Commerce, provides executive education in areas such as innovation, leadership, and digital change.
The LiVE Platform Family Business Classroom includes over 180 online courses and has more than 10,000 participants, concentrating on governance and digital competencies. At the same time, the SET Research Funding Programme finances academic research related to succession, governance, and communication in Thai family businesses.
Our objective is to assist family-owned businesses in becoming sustainable, open, and attractive for investment,” stated Mr. Kitipong. “They are more than just companies — they form the foundation of Thailand’s economy.
What role will artificial intelligence play in the future of Thai family-owned businesses?
Executives stated that AI is the greatest disruptor and a challenge to flexibility.
Industries traditionally controlled by family businesses, such as retail, transportation, insurance, and production, are undergoing transformation due to automation, data analysis, and online platforms. Companies that fail to embrace change face the threat of disappearing.
However, companies that adopt AI can tap into new opportunities. With intelligent supply chains and predictive customer analysis, AI has the power to turn traditional operations into global players.
AI is no longer a choice — it’s crucial for survival,” said Mr. Kitipong. “Families that embrace it will endure. Those that don’t will vanish.
The SET is encouraging AI-readiness initiatives that educate family businesses on ethical AI application, including aspects like ethics, cybersecurity, and adherence to regulations, ensuring that technology supports but does not supplant human leadership.
Can Thai family-owned businesses genuinely escape the cycle?
They may do so if they adapt prior to a crisis compelling them to alter, stated Prof Allen.
Legacy is not about control. It’s about maintaining a steady flow,” he stated. “Families that start with a clear goal and adjust with structure will not only endure beyond the third generation, but also flourish in the fourth.
Mr. Kitipong stated, “When families develop effective communication, exchange values, and allow professional standards to direct the business, the legacy does not cease — it expands.”
Provided by SyndiGate Media Inc. (Syndigate.info).
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