But is managing investments truly a retreat from entrepreneurship? Does trading in public markets, allocating funds to high-growth ventures, or running a sophisticated family office require less skill than managing a traditional business? Is risk-taking only valid when it involves building a brick-and-mortar empire, rather than deploying capital to fuel multiple industries? Kotak’s concerns, while well-intentioned, stem from a narrow and outdated view of business leadership.
Family businesses have never remained static. Across generations, industries evolve, new business models emerge, and skill sets shift. The assumption that every inheritor must directly run an enterprise disregards this natural evolution.
Economic success today is not just about operating factories or retail chains; it is also about strategic capital allocation, risk assessment, and leveraging financial markets to create long-term value. Many family offices are not passive wealth managers; they are active investors driving managing people and aspirations, technological innovation, venture funding, and innovation capital expansion. This is another sophisticated, modern approach to sustaining and growing wealth.
The world’s strongest economies have demonstrated that leadership in business is not about hereditary privilege but capability. The notion that every generation of a promoter family is naturally best suited to lead a company contradicts principles of meritocracy and corporate governance. Business acumen is not a birthright; it is cultivated through experience, knowledge, and adaptability. Today, professional managers often outperform hereditary leaders in running complex organisations. Forcing uninterested or underqualified family members into leadership roles can weaken businesses rather than strengthen them. Indian dynastic businesses in the past century have shown how many have simply imploded.
Financialisation is also an essential economic evolution. Globally, many family-run enterprises have transitioned into institutionally owned businesses while retaining family influence through governance, rather than direct management. This shift enables businesses to tap into specialised leadership talent, enhance operational efficiency, and compete at a global scale. Expecting every generation to run a business in the same way as their predecessors ignores how modern economies function. Family offices today act as institutional investors, playing a pivotal role in economic growth through strategic funding rather than direct ownership.
John Maynard Keynes described ‘animal spirits’ as the confidence and willingness to take economic risks. In today’s economy, risk-taking is no longer confined to running manufacturing units or retail chains—it extends to investing in startups, backing disruptive technologies, and participating in venture capital, even if they are not directly linked to their family businesses. The younger generation is not shying away from entrepreneurship; they are redefining it. Their risk appetite is no less than that of their predecessors, but their methods are different, shaped by the realities of a digital and globalised economy.
Kotak’s statement could also be misinterpreted as advocating for a nepotistic approach to leadership succession in family-owned businesses. While this may not have been his intent, it is a flawed path regardless. In today’s world—especially in publicly listed companies—both promoters and non-promoters comprise highly skilled professionals with the talent and leadership potential to drive businesses forward. Statements from promoters about the next generation’s role risk being misconstrued as an endorsement of hereditary succession, sidelining the meritocratic inclusion of professional managers. Such an approach contradicts the principles of modern corporate governance, where leadership should be earned through competence rather than inherited by default.
Kotak’s remarks also reflect an outdated assumption about the role of promoter families in publicly listed companies. Businesses today are accountable to a diverse group of stakeholders—shareholders, employees, institutional investors—not just family owners. Prioritising hereditary succession over professional leadership risks undermining transparency, efficiency, and fair competition. In a financial system where companies rely on public markets and bank loans, leadership must be based on capability, not lineage.
There is, however, a real concern that is being overlooked: succession planning. Less than 10% of Indian family businesses—despite constituting over 80% of Indian enterprises, from the largest conglomerates to the smallest kiranas and mom-and-pop stores—engage in structured succession planning. The challenge is not whether the young inheritors are running businesses or managing funds—it is whether they are being prepared to lead at all.
A truly dynamic economy does not thrive by restricting entrepreneurship to a privileged few who inherit businesses by birthright. Instead, it flourishes when individuals across socio-economic segments are empowered to take risks, innovate, and build enterprises from the ground up. We must create an ecosystem that not only encourages new business creation but also normalises and supports genuine failures—because risk-taking is the foundation of progress. If we continue to glorify only inherited success while penalising entrepreneurial setbacks, we risk reinforcing an economic order where wealth circulates within closed networks rather than expanding through fresh ideas and hard-earned ambition.
Success in business is neither genetic nor inherited. India’s economic future does not depend on nostalgia for past business models but on how well we prepare the next generation to lead—whether through direct entrepreneurship, strategic investment, or professional governance. Each individual in a family enterprise—whether in operations, ownership, or governance—must play their role to their strengths. This is what ensures lasting economic progress, not simply the continuation of old ways.
