Speakers at a forum set out a series of practical steps aimed at ensuring a successful succession strategy in the era of AI

Executives discuss family business survival tips.

They build, they grow, then they fall. The familiar cycle of family businesses has echoed across continents for centuries. In Thailand, where family-run conglomerates dominate the economy, the question remains whether they can they break the third-generation curse?

During the third Family Business Forum 2025, hosted by the Stock Exchange of Thailand (SET) under the theme “Transforming Family Business: Adapt to Survive, Change to Grow”, local and global panellists shared their insights as to why most family businesses crumble and how the next generation of Thai family businesses can rise stronger in the age of artificial intelligence (AI).

Why do most family businesses fail by the third generation?

There’s an old saying: “The first generation builds it, the second expands it, and the third destroys it.”

According to Matt Allen, a professor at the Kellogg School of Management and a second-generation business owner himself, family exposure creates entrepreneurial ambition, but without structure and communication, that same family dynamic becomes the cause of failure.

Research presented at the forum revealed that 75% of startups globally are family-founded. In Thailand, the figure is potentially 99.7%, one of the world’s highest. Yet fewer than half survive to the third generation.

The problem is rarely financial, but rather blurred boundaries between family and business – role confusion, rivalry and resistance to change. Founders tend to value sacrifice and control, while successors prioritise technology, well-being and innovation. Without structure, these differences often turn from potential into conflict, according to analysts.

What are the most common internal challenges?

The speakers pointed to three recurring issues, with the first overlapping roles when family members serve simultaneously as owners, managers and decision-makers.

The second issue is a lack of communication, particularly on topics such as dividends, succession and governance. The third issue is emotional decision-making, particularly when business judgement gives way to family loyalty.

Representatives from major Thai conglomerates such as Central Group and Thai Life Insurance shared how they overcame these pitfalls through structured governance.

“When a family cannot talk openly, business decisions become personal,” they said. “But once everyone agrees on rules, everything runs smoothly.”

How can family businesses adapt and thrive across generations?

Analysts identified three pillars for long-term survival: clear governance, merit-based management, and continuous communication.

At Central Group, now in its fifth generation, a Family Constitution and Family Council oversee decisions concerning leadership, investment and dispute resolution. The council acts as a bridge between family unity and corporate strategy, managing more than 200 members without losing focus or transparency.

Similarly, Thai Life Insurance turned to the capital market to professionalise. The second generation decided to list the company on the SET, ensuring fairness and discipline.

“Once listed, everyone receives dividends according to their shares,” said Varang Chaiyawan, director and deputy chief executive of Thai Life Insurance.

“This structure ended disputes regarding fairness and allowed the company to keep growing, while each family member could live well in their own way.”

Does listing on the bourse really help family businesses?

Listing absolutely helps, and in more facets than merely financial, according to executives.

Listing forces family enterprises to separate ownership from management, adopt transparent accounting, and establish independent boards. The move reduces internal tension and transforms emotional decisions into 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 transparent and fairly distributed. It eased tension and let us focus on growth.”

SET chairman Kitipong Urapeepatanapong agreed, noting listing isn’t just about raising funds.

“Listing is a transformational milestone that brings accountability, encourages innovation, and ensures legacy with longevity,” he said.

According to the SET, there are more than 2,000 large family businesses with strong growth potential in Thailand, and over 800 have already listed. The bourse is working with partners such as commercial banks, the Federation of Thai Industries, and the Board of Investment to identify promising family enterprises for future listings.

The collaboration also aims to promote financial literacy and raise awareness about the process and benefits of becoming a listed company in the Thai capital market, said Mr Kitipong.

What practical steps can families take for successful succession?

According to the panellists, the first recommendation is to separate business and family matters. One of the most practical methods is to establish a Family Council for values and relationships, and a Corporate Board for business performance.

They also recommend family businesses hold regular meetings, which helps establish transparent dialogue across generations.

Next is adopting mentoring systems, allowing senior family members to train successors through structured leadership programmes.

Owners of family businesses are also advised to prioritise merit over hierarchy. Appointing executives should be based on capability, not lineage.

Finally, family-run organisations are urged to build a culture of fairness, partly through transparent dividends and shared information, while clearly defining responsibility reduces rivalry.

Central Group’s rotation-based mentorship and Thai Life’s shareholder equality both serve as blueprints for the next wave of family-led enterprises.

How is the SET supporting this transformation?

The Thai bourse has made family business transformation a national priority with initiatives such as the Family Business Thailand Project. Operated in partnership with the Department of Business Development and the University of the Thai Chamber of Commerce, this project offers executive training on innovation, leadership and digital transformation.

The LiVE Platform Family Business Classroom features more than 180 online lessons and in excess of 10,000 participants, focusing on governance and digital skills. Meanwhile, the SET Research Funding Programme supports academic studies on succession, governance and communication within Thai families.

“Our goal is to help family firms evolve into sustainable, transparent and investable enterprises,” said Mr Kitipong. “They are not just businesses – they are the backbone of Thailand’s economy.”

How does AI fit into the future of Thai family businesses?

AI is the ultimate disruptor and a test of adaptability, said the executives.

Sectors long dominated by family conglomerates, namely retail, logistics, insurance and manufacturing, are being reshaped by automation, data analytics and digital platforms. Businesses that resist innovation risk extinction.

But firms that embrace AI can unlock new potential. From smart supply chains to predictive customer insights, AI can transform legacy operations into global competitors.

“AI is no longer optional – it’s existential,” said Mr Kitipong. “Families that adopt it will survive. Those that don’t will disappear.”

The SET is promoting AI-readiness programmes that train family firms in responsible AI use, covering ethics, cybersecurity and regulatory compliance to ensure that technology enhances but does not replace human leadership.

Can Thai family businesses truly break the cycle?

They can if they evolve before a crisis forces them to change, said Prof Allen.

“Legacy is not about control. It’s about continuity,” he said. “Families that lead with purpose and adapt with discipline will not only survive the third generation, they’ll thrive in the fourth.”

Mr Kitipong added: “When families learn to communicate, share values, and let professionalism guide the business, the legacy doesn’t end – it multiplies.”