Abstract
Abstract
Stewardship theory of corporate governance is a normative alternative to agency theory. This article argues that the stewardship behaviour of managers results in exemplary corporate governance practices when the espoused values of the firm are aligned with the enacted values. The case study method is used to prove this argument by studying corporate governance practices in a family-owned business group in India. The Murugappa Group is a 100-year-old family-owned business group, known for their ethical practices and currently managed by the fourth-generation family members, without undergoing any split. The espoused as well enacted values of the group are studied and corporate governance practices of the group firms analysed in this article. The article focuses on the governance structure of the group, its succession planning practices and the ownership structure. The analysis indicates that aligning the enacted values with the espoused value helped the group to adapt itself to the changing external economic environment and continue creating shareholder value, the essence of corporate governance.
Introduction
Business firms have many stakeholders, and the primary among them are employees, shareholders, creditors, customers, government, business partners and society. Jensen and Meckling (1976) viewed the corporation as a nexus of contracts among self-interested and potentially opportunistic parties. The contracts between the stakeholders such as employees, customers, creditors and the company are legally complete contracts which can be enforced through law enforcement system. On the other hand, the contract between the company and shareholders is not a complete contract covering every aspect of business decisions because of significant uncertainty, information asymmetries and contracting costs. Hence, the relationship between shareholders and the manager of a firm has been described as the ‘pure agency relationship’, because it is associated with the separation of ownership and control (Jensen & Meckling, 1976). This agency theory led to the birth of corporate governance issues. The incomplete nature of the contract between shareholders and the company makes it relatively easier for the later to violate the ethical norms while fulfilling their responsibility towards farmer. Hence, the shareholders needed to find other ways to protect their interests. The ways in which shareholders, that is, the suppliers of finance assure themselves that the corporate entities fulfil the responsibilities towards them, that is, getting a return on investment are known as corporate governance (Shleifer & Vishny 1997).
Stewardship theory was introduced by Donaldson and Davis (1989) as a normative alternative to the agency theory. The executive manager, under stewardship theory, far from being an opportunistic shirker, essentially wants to do a good job, to be a good steward of the corporate assets. Grounded in psychology, sociology and leadership theories, stewardship theory argues for the possible alignment between the principals and agents which is reflective of a psychological contract or a close relationship with agent behaving in a community-focused manner, directing trustworthy moral behaviour towards the firms and its shareholders (Davis, Frankforter, Vollrath, & Hill, 2007). Thus, stewardship theory holds that there would be no inherent, general problem of executive motivation (Donaldson & Davis, 1991). Davis, Schoorman and Donaldson (1997) argued that, among other factors, managers who identify with their organisations and are highly committed to organisational values are more likely to serve organisational ends.
In the family-controlled firms, the ownership and management are the same, as the family members themselves are the managers, or they exert enormous control over the strategic decisions of the firms. Hence, the agency theory may not hold well in family-controlled firms (Ang, Cole, & Lin, 2000). The family members are committed to the business. Also, they are altruistic towards each other as a result of kinship obligations that are part of the axiomatically binding normative moral order in most cultures (Stewart, 2003). The existence of high levels of commitment is frequently regarded as one of the strong advantages of family firms compared to non-family firms (Tagiuri & Davis, 1996). Hence, ideally, the stewardship theory should hold well in family-owned firms. However, in practice, family-owned firms also have serious corporate governance problems.
In this article, I try to explain the reason for the phenomenon using espoused value theory. I argue that closing gap between espoused value and the enacted values will bring out the stewardship behaviour of the managers in the family-controlled firms and help them to follow exemplary corporate governance practices voluntarily. The case method is used to prove my argument, by studying the value system of an Indian family-owned business group. I consider the Murugappa Group, which is known to be an ethical group, and analyse how their efforts to narrow the gap between the espoused values and the enacted values helped them to adopt exemplary corporate governance practices voluntarily.
To study the effect of Murugappa Group’s value systems on its corporate governance practices, case study and content analysis research method have been adopted. The data for the research is obtained from the annual reports of the group companies, official group filings with the stock exchanges, media interviews given by the members of top management of the group, other media reports and the existing research literature on the group.
Espoused Values and Enacted Values of Organisations
Values can be defined as generalised, enduring beliefs about the personal and social desirability of modes of conduct or ‘end-states’ of existence (Rokeach, 1979). Organisations also have core values that help the management and employees to make sense of and guide their everyday interactions. The most important set of values are the ‘espoused values’. Schein (2006) defines espoused values as the articulated, publicly announced principles and values that the group claims to be trying to achieve. Organisations publicly state those values in documents, such as vision and mission statements, annual reports and strategic plans (Taylor, Levy, Boyacigiller, & Beechler 2008). Espoused values are different from what some have termed as organisational values (e.g., Rousseau, 1990), that is, the values that are shared by all or by a large proportion of an organisation’s members (Daly, Pouder, & Kabanoff, 2004). Espoused values reflect what top management believe their organisations to be like, what they would like or prefer their organisations to be like, or how they would like their organisations to be perceived by significant stakeholders (Kabanoff & Daly, 2002). These values affect an institution’s operation and development of organisational systems and limit the range of design options (Greenwood & Hinings, 1993).
But, the actual values in practices might differ from that of the espoused values, in terms of employee behaviour and management actions and they are called ‘enacted values’ (Schein, 1985). Enacted values involve a theory-in-use that explains behaviour, which neither the institution nor the individuals may explicitly understand (Marie Schuh & Miller, 2006). The outcomes derived from these enacted values reflect the underlying pervasive organisational culture (Stoner, 1989).
When espoused values are reasonably congruent with the values enacted in the workplace on a day-to-day basis, values are said to be in alignment. This can bring the employees together by strengthening the organisational culture as well as serving as a source of identity (Delcampo, 2006).
Murugappa Group—Origins
The Murugappa Group is a US$4.65 billion (financial year 2016–2017) Indian business group known for their ethical practice (Subramanian, 2009). The group has business interests in engineering, abrasives, finance, general insurance, fertilisers, farm inputs, sugar, bioproducts, cycles and plantations. The beginning of the Murugappa Group dates back to 1900 when Dewan Bahadur A. M. Murugappa Chettiar established a money lending and banking business headquartered in Moulmein, Burma (now Myanmar). From Burma, which was then a part of British India, it spread to rest of India and also to Malaysia, Ceylon (now Sri Lanka), Indonesia and Vietnam. In the 1920s and 1930s, almost three-fourths of family wealth was tied to the Burmese business. However, in the late 1930s, before the Japanese invasion of Burma, Murugappa family moved the assets to the South Indian state of Madras (now known as Tamil Nadu) and its capital ‘Madras City’ (now known as Chennai).
After moving to Madras, the group got into manufacturing sector in 1942, initially focusing on Abrasives. In 1949, they began manufacturing of bicycles, by setting up ‘TI Cycles of India’ (TICI) in collaboration with ‘Tube Investments’ of the United Kingdom. Later, the company backwardly integrated to make steel tubes for bicycle frames by forming a subsidiary called Tube Products of India (TPI) in 1955. In 1959, Tube Investments of India (TII) was formed by merging TICI and TPI. In 1960, TII went for another backward-integration to make bicycle chains by forming TI Diamond Chain (TIDC), which got merged with the parent company in 2004. The Murugappa Group acquired controlling stake in TII in the 1970s and 1980s from the British partner.
The abrasive manufacturing business also took solid foundation when Carborundum Universal Ltd (later become Carborundum Universal Madras India Ltd—CUMI)) was founded in 1954 as a tripartite collaboration between the Murugappa Group, Carborundum Inc, USA, and the Universal Grinding Wheel Co Ltd, UK. Later, the Murugappa Group bought out the partners and attained the complete management control. The group also forayed into financial services in the late 1970s. It got into the agricultural sector by taking over the loss-making EID Parry in 1981. As on January 2017, the group had 28 companies, of which 11 were listed on Indian stock exchanges.
Ethical Practices at the Murugappa Group
The Murugappa Group has always been known for their ethical values and high moral standards (Subramanian, 2009). The group’s business philosophy is indicated by a couplet from the Arthashastra, the ancient Indian treatise on wealth creation and governance, which is as follows:
The fundamental principle of economic activity is that no man you transact with will lose, then you shall not.
The Murugappa Group was one of India’s top 20 business groups during the 1960s. The Indian economy took a decisive socialist turn in the 1960s and the Indian government imposed many restrictions on the private businesses. One of the prominent government controls, known as ‘licence raj’ required the private business firms to obtain licences to start new businesses or create additional capacity for the existing business through greenfield expansion. The licences were very difficult to get and hence those who were awarded licences enjoyed near-monopoly conditions. It was almost impossible to get licences without bribing the government officials and politicians (Kaplinsky, 1997; Mohan & Aggarwal, 1990).
But the Murugappa Group refused to follow this unethical route and hence could not get licences to start new businesses or to expand the existing ones. The group applied for 17 licences and got only one and hence started only one new manufacturing business on its own between 1964 and 1980 (Ward, 2002). Comparing this with other Indian business groups, which expanded their businesses through unrelated diversification during the same period, provides testimony to the ethical values of the Murugappa Group.
In the absence of new business licences, to ensure that its listed companies continue to create value to the shareholders, the Murugappa Group adopted ‘acquisitions’ route to grow. The group grew by acquiring sick units and turning them around, rather than by starting a new business with new licences (Ward & Zsolnay, 2004). For example, in 1978, Carborundum Universal acquired ‘Eastern abrasives’ and turned it around. The acquisition of EID Parry, India’s second oldest commercial name, which was 1.5 times bigger than the entire group, was the boldest such move made by the group in 1981. The group also expanded into services businesses which did not require licences. For example, in 1978, the group started Cholamandalam Investment & Finance Co, a financial service company.
Another example to highlight the group’s ethical behaviour is the way Murugappas handled the liquor business. It is very rare for a business group to sell a highly profitable business division just because it did not fit into its ethical value system. The Murugappa Group acquired EID Parry in 1981 which had a liquor business also. In fact, Indian Made Foreign Liquor (IMFL) division was the most profitable business division of the ailing EID Parry. But the Murugappa Group sold off the IMFL division in 1989 as it did not fit into the value system of the group (Jalan, 2005). This is in response to the changes that happened in the Indian liquor industry’s consumer profile. Till the 1980s, in India, only the upper-class people, who could afford to spend money on it, used to consume IMFL and the lower class was consuming cheap country liquor (Khilnani, 1993; Mohan, Chopra, Ray, & Sethi, 2001). But, in the mid-1980s, the middle class also started consuming liquor. The Murugappa Group did not want to be a reason for middle class’s sufferings and hence got out of the business. This indicated their commitment towards the welfare of the society.
Murugappa’s way of doing business faced a challenge when the Indian economy was opened up in the early 1990s. The Indian government did away with the ‘licence raj’ system and encouraged market competitions. While the economic liberalisation opened up opportunities to expand the business, the same expansion also posed a challenge to the group to keep its value systems intact. Murugappas responded by institutionalising its value system. As a first step, the group defined the set of values and beliefs called the ‘Five Lights. They are Integrity, Passion, Quality, Respect and Responsibility’. They are defined as follows:
Integrity: We value professional and personal integrity above all else. We achieve our goals by being honest and straightforward with all our stakeholders. We earn the trust with every action, every minute of every day. Respect: We respect the dignity of every individual. We are open and transparent with each other. We inspire and enable people to achieve high standards and challenging goals. We provide everyone equal opportunities to progress and grow. Passion: We play to win. We have a healthy desire to stretch, to achieve personal goals and accelerate business growth. We strive constantly to improve and be energetic in everything that we do. Responsibility: We are responsible corporate citizens. We believe we can help make a difference to our environment and change lives for the better. We will do this in a manner that benefits our size and also reflects our humility. Quality: We take ownership of our work. We unfailingly meet high standards of quality in both what we do and the way we do it. We take pride in excellence.
Defining the value system, communicating them and institutionalisation of the same ensured that the group companies continue to follow the ethical path.
The next section analyses how these espoused value system guided the group companies in its corporate governance practices in terms of board practices, professionalisation of management, succession planning and separation of ownership and management.
Professional Management
The Murugappa Group firms were managed by the family members till the early 1990s. This was the practice among all family-owned Indian business firms during that period and suited the then-prevailing environment of limited competition. It also has to be noted here that the availability of professional management talent outside the family was limited in India at that point in the time (Ramaswamy, Li, & Petitt, 2012). But, even then, that is, in the 1970s and 1980s itself, at the Murugappa Group, the family members, who run the companies had to be qualified and expected to behave professionally rather than taking things for granted as a family member. In an interview given in 1981, the family member M. V. Subbiah, the then chief executive officer (CEO) of Tube Investments Ltd said, ‘Being a family member does help to a certain extent because we grow up hearing business being discussed at the breakfast table. Today, we are professionals who are extremely well qualified’ (Bobb, 1981). Mr Subbiah proved his calibre by turning around then newly acquired, hopelessly loss-making EID Parry (Das, 1999).
The environment became highly competitive after the economy was opened up in 1991. Many research works (e.g., Gedajlovic, Lubatkin, & Schulze, 2004) have indicated that in a competitive market, professional management creates more wealth for the shareholders rather than keeping the control with founding family. It is because, in a competitive environment, as the firm grows, it is unlikely that the family will be able to staff all the key positions and have all the necessary skills (Dyer, 1989). Stewardship theory argues that the reallocation of corporate control from owners to professional managers may be a positive development towards managing the complexity of the modern corporation (Muth & Donaldson, 1998).
In India, until the mid-2000s, it was very rare for Indian family-owned business groups to induct professional managers to lead their companies, despite the growing complexities. Lack of professional management affected the group firms’ competitiveness and destroyed shareholder value in many Indian listed firms. However, Murugappa Group’s espoused value of ‘quality’ required them to meet high standards of quality in both what they do and the way they do it and take pride in excellence. The family realised that there are many opportunities available in the liberalised market and hiring professional talent outside the family is essential to make use of the opportunities, in line with their value system. Hence, in 1993, the Murugappa Group started professionalising the management gradually. Initially, the executive chairman position was retained by the family, and professional managers were appointed as the ‘presidents’ of the listed group companies. The company presidents were responsible for running the company at the operational level. In 1999, the group took the next step in the professionalisation of management of its listed companies. The professional managers were appointed as the CEOs and the family members took the position of non-executive chairman (Ramachandran, 2015).
Despite professionalising management, many family-controlled firms in India, do not fully empower the professional managers. There are instances where the professional managers are fired when their plans for the firm differed from that of the promoter family. However, the culture in the Murugappa Group is different. One of the espoused values of the group says, ‘We respect the dignity of every individual. We are open and transparent with each other. We inspire and enable people to achieve high standards and challenging goals. We provide everyone equal opportunities to progress and grow’. This is clearly reflected in the way the group has empowered the professional CEOs. The top management had been given full freedom and it brought in significant changes in the risk-taking attitude of the top executives. ‘Earlier, the focus was on control. Now it’s about finding opportunities’, said V. Ravichandran, a director at Murugappa Corporate Board (MCB), in an interview to Forbes India magazine in 2011 (Ramnath, 2011). The boards of the respective companies ensured that the professional managers seeking opportunities does not come at the cost of the value system, particularly integrity and trust.
Board-level Management
The board-level management practices at the Murugappa Group were also exemplary. In India, the market regulator Securities Exchange Board of India (SEBI) adopted the corporate governance norms for listed Indian company in the year 2000. The regulations called for majority non-executive board in the listed companies among other norms. However, the Murugappa Group had set in benchmarks in board structure well before the new corporate governance norms came into effect.
MCB 1
MCB has been renamed as Murugappa Corporate Advisory Board in late 2017. However, I use the old terminology, as it was known as MCB during the period of study.
MCB also experimented with various global best practices like bringing in outsiders as the chairman, before arriving at the best practices suitable for the group. In April 2001, N. S. Raghavan, a non-family professional, became the non-executive chairman of the MCB. Mr Subbiah, a family member, said in a press meet in 2011, ‘The board’s decision is a part of improving the corporate governance process of the Murugappa Group, initiated in October 1999 for transforming a family-owned business to a professionally managed one’ (Agarwal, 2001). When queried about the resistance from the family to have a non-family member as the group chairman, the family responded that ‘What matters is who can do the job best at a stage. At that stage, we felt that we needed someone to give us an outsider perspective to business’ (Ramnath, 2009). This reflected their value system which demands the group to excel in whatever it does.
Mr Raghavan was given the responsibility to identify a suitable outsider, a professional manager, to head the group, as Raghavan himself was not interested in taking up executive chairmanship. Hence, in October 2002, Raghavan, along with the board, chose P. S. Pai, another non-family member as the executive chairman of MCB. The Murugappa Group claimed that bringing in an outsider as the group chairman was part of their effort to professionalise the group management. Mr Pai was initiallygiven a three-year tenure and then it was extended by one more year. During his tenure, Mr Pai has put in formal management practices at the group level. When Mr Pai’s tenure ended in October 2006, Mr M. A. Alagappan, a family member took over as the chairman of MCB. As on 31 January 2017, MCB had eight members of which only two were family members, including the chairman. Three of the members were independent directors. It was still an insider-dominated board. However, using the stewardship model, Muth and Donaldson (1998) argued that the insider-dominated boards are favoured for their depth of knowledge, access to current operating information, technical expertise and commitment to the firm. Officially, MCB’s mandate covers the following:
Foster and maintain the highest standards of governance.
Review and approve business strategies in line with the group’s vision.
Partner and facilitate the role of CEOs of businesses in the areas of business vision, strategy and performance.
Offer functional strategic assistance to businesses in the areas of IT, finance and human resources.
MCB is not a statutory board and hence it need not follow the corporate governance regulations meant for a listed firm. Still, MCB follows exemplary practices and sets benchmarks in line with their value system. For example, it has majority non-executive directors in the board. Similarly, the independent directors do not stay in the MCB for a long tenure and are rotated after a six- or nine-year stint (Ramanathan & Leena, 2012). This has set a benchmark, as there were no legal restrictions on the tenure of independent directors even for statutory boards till 2013.
Succession Planning
Family business succession has been defined as the passing of the leadership baton from the founder-owner or incumbent-owner to a successor, who will either be a family member or a non-family member, that is, a professional manager (Beckhard & Dyer, 1983). Since the days of founders, the Murugappa Group up had a proper succession planning through its ‘Kartha’ system, which is a unique and flexible Hindu leadership tradition (Ward & Zsolnay, 2004). The Kartha is the family leader, typically the eldest active male member of the family, in charge of guiding family including its businesses. The Murugappa Group followed the ‘Kartha’ system and the Kartha would also be the group chairman with the final say on the business decisions. Typically, the family members did not have retirement age in the Indian family-run businesses. But in the Murugappa Group, in 1980 itself, the then family Kartha Mr AMM Arunachalam informally set the retirement age as 65 for family members in the group companies, by voluntarily stepping down and giving the group chairmanship to M. V. Arunachalam, the eldest next-generation family member.
After the liberalisation, the business environment has changed a lot in India. The value systems of the group required them to meet high standards of quality in both what they do and the way they do it and take pride in excellence. Hence, the group adopted changes in its leadership requirements also, to suit the changed business environment. The group chose to consider the interest and preference of the member into account, instead offering the group chairman position to the eldest active male member of the family. In 1995, when the then group Chairman M. V. Arunachalam retired at the age of 65, responsibility was to be taken up by the next eldest member of the family: the 61-year-old M. V. Murugappan. Instead, the younger, 56-year-old M. V. Subbiah was chosen. Merit and having a longer tenure for chairmanship played a crucial role in succession planning at the Murugappa Group (Ramachandran, 2015). The family value system never allowed a leadership vacuum to form through proper succession planning, thereby protecting the shareholder value at the group companies.
The group’s formal succession planning efforts are not restricted to the family alone. Even at the professional management level, the group has taken efforts to develop proper leadership succession. The group launched its first business leadership programme (BLP), way back in 1991, to internally groom the leaders who would subsequently take on leadership roles within the organisation. The leadership programme was also regularly reviewed for its effectiveness with the help of external experts (Krishnan, Reddy, Srinivasan, & Jaiswal, 2011). However, the commitment of the non-family employees to the organisation and its value system plays a crucial role in determining its performance (Vallejo, 2009). Hence, at the Murugappa Group, while grooming the professional managers, the importance is given not only to the capability but also to the individuals’ value system. ‘The person’s DNA should be in line with the organisation’s value’, insisted Mr Vellayan in an interview (Ramanathan & Leena, 2012).
The group is also one of the pioneers in implementing a well-developed whistleblower policy, long before it became the mandatory norms. Similarly, the group had also adopted a formal ‘code of conduct’ for the top management and employees, well before it was made mandatory by the market regulator SEBI.
Separation of Ownership and Management
One of the important factors that lead to the destruction of shareholder value in family-controlled business is the family split. Because such splits not only disrupt the management process and business climate but usually consume tremendous capital and growth potential as one or more partners are bought out by the other family member(s) (Ward, 1997). Difference of opinions between the family members about the management of the group firms is the major reason for the split. The family-managed businesses are prone to psychodynamic effects like sibling rivalry, children’s desire to differentiate themselves from their parents, marital discord, identity conflict and ownership dispersion among family members (Dyer, 1994).
The 1990s and 2000s witnessed many splits in the family-owned business groups in India. Research indicates that the family splits starts happening in the second generation itself and it is very difficult to hold it together after the third generation (Ramachandran, 2006). But the Murugappa Group, as on January 2017, was being run by the fourth-generation family members. The group remained intact and there were no talks of any possible split in the future also. It was possible for Murugappas to keep the group as a single entity because they were able to successfully separate the ownership and management issues.
The Murugappa Group is very clear that only those family members who can add value will be in the management. ‘Those who can’t will anyway get the benefit from the returns by virtue of being shareholders. At the end of the day, what do you want? Do you want to be suboptimal in managing and get a lower return, or get a higher return under a professional management?’ asked A. Vellayan, the group chairman (Ramnath, 2011). So even when the family members took the CEO position in the listed firms of the group, it was based on merit rather than based on family ties. For example, Mr Vellayan Subbiah, a family member, took over as the managing director (CEO) of the group firm, Cholamandalam Investment & Finance Co, in 2010. He was appointed as the CEO as he had the required credentials. He had an engineering degree from the prestigious Indian Institute of Technology Madras and an MBA from the University of Michigan, USA and worked with McKinsey, Carlyle and 24/7 Customer, before joining the family business. He was heading LaserWords, the group’s BPO firm when the family asked him to move to Cholamandalam. He proved his mettle at Cholamandalam by turning around the fortunes of the company in the very first year. To balance the family member CEO, the group appointed an independent director as the chairman the company’s board.
CSR Activities
The value system of the group not only facilitated itself to set exemplary corporate governance practices but also corporate social responsibility (CSR) activities. Historically, the Murugappa Group was involved in a lot of philanthropic activities like running hospitals for poor, etc. In 1953–1954, the Murugappa Group consolidated its philanthropic activities by founding AMM Charities Trust, which later became AMM Foundation. The foundation focused on the welfare of the communities where the group companies operated, with special thrust on education and health care sector. The group also established the Murugappa Chettiar Research Centre (MCRC), which focused on developing devices for the rural and industrial application. In the rural development sector, designing simple technologies for the use of local artisans was its primary objective.
After the 1990s, as the government has reduced the tax rates, the Murugappa Group felt the need to increase its contribution to the social welfare activities, that is, CSR activities. Their value system demanded that they be responsible corporate citizens to make a difference to our environment and change lives for the better. The group also realised the need of right leadership to manage the CSR activities in a more structured manner. Hence, M. V. Murugappan, who became the family Kartha after Mr AMM Arunachalam, took charge of CSR activities. Mr Murugappan, as the head of Murugappa Group’s charitable trusts, utilised his vast experience to streamline the CSR activities and ensured that 1 per cent of the group profits is allocated for the CSR activities. This is in line with their value system which required their social contribution to be in line with their size.
Later, in 2013, the government made it mandatory for the big, profit-making corporate entities to spend 2 per cent of their net profit on CSR activities through Indian Companies Act 2013. The Murugappa Group has come up with a comprehensive policy of CSR in the end of 2014, which applies to all group companies. It focused on the following activities:
Providing basic healthcare facilities to economically backward societies across geographical areas
Improving access to education
Provision of skill development/vocational training
Rural development
Environmental sustainability
Promoting sports, arts & culture
Sustainable livelihood
Conclusion
Overall, the analysis indicates that at the Murugappa Group, the ability of the group to align the espoused values with that of the enacted values helped them to follow exemplary corporate governance and CSR practices voluntarily. This in turn proves that the managers of the Murugappa Group were able to display stewardship behaviour in protecting the interests of the shareholders and society. So when a business group is able to align its espoused values with that of the enacted values, the managers exhibit stewardship behaviour. The ethical values of the Murugappa Group are well known even at the global level. It is evident from the fact that the Murugappa Group won the prestigious ‘IMD Distinguished Family Business Award’ in 2001. The Murugappa Group was the first business group in Asia to get this award given by the International Management Development (IMD) Institute of Switzerland. The award, instituted in 1996, acknowledges the success a family-promoted business organisation has demonstrated in terms of continuity, value creation, social contribution and change management. Because of these same family values, the Murugappa Group remains as a single business group to create more shareholder value in a sustainable manner, even though it is entering into the fifth generation.